Every calendar year starts with a measurable amount of uncertainty, and 2025 was no different.
But for many manufacturers, the year shook out in a way that was unexpected, and the results were ultimately wildly uneven for businesses across the country.
For some companies, uncertainty around tariffs, consumer confidence, inflation and interest rates led to a pause in expansion this past calendar year. For others, higher costs were passed along and business hummed along, more or less, as usual. Further still, some businesses announced U.S. expansion plans based around reshoring while others shuttered existing facilities.
In a recent article for Forbes, Ethan Karp detailed how manufacturers spent 2025 digesting the defining themes of a tumultuous year but will see more concrete consequences in 2026, adding “not everything will break in the same direction.”
More to the point, Karp – the CEO of the MEP’s nonprofit consulting group MAGNET – noted that manufacturers can’t maintain a holding pattern for another year, even if they wanted to: “They must plan for multiple scenarios, invest with discipline, and lead with resilience,” Karp said, “Because in 2026, the market won’t just react. It will decide.”
Multiple scenarios could mean more tariff whiplash; increasing pressure around high prices or more shifts in the labor-tech balance on your plant floor. We have few ways of knowing, and that’s the problem.
And while we can’t necessarily plan for all of the possible variables, there are a few predictions that seem to be surfacing time and again among industry stakeholders. Let’s consider these scenarios to be highly likely in 2026:
AI momentum will remain
A mid-year survey of IEN readers highlighted a disconnect: despite all we hear about AI, a large swath of individuals still don’t exactly trust the technology. And since we’ve seen so many tech “panacea” come and go, it’s easy to be dismissive about what artificial intelligence might mean for the industry. But experts are cautioning businesses not to underestimate it, and 2026 looks to be another year where enhancements are continuing to lay the groundwork for what could ultimately transform many operations.
Inc.com noted recently that the biggest barrier between AI and reality for many organizations right now is the gap between executives’ expectations and the skills and experience their workers have. While this gap can be closed by retraining, the report said, “many companies are proving slow at investing in this kind of schooling.” As such, manufacturers who are brave enough to consider this training opportunity low hanging fruit might wind up with a competitive advantage.
Labor challenges will persist
Karp believes the challenge of filling entry-level production positions will shift, with the gap instead widening when it comes to shortages among highly technical talent. A new JPMorganChase report emphasizes this problem, adding that high-tech industries like semiconductors and defense are being hit particularly hard, possibly posing a risk to development, expansion – even national security. Fortunately, the Alliance for American Manufacturing (AAM) has pointed out a potential solution in its year-end trends report. AAM noted that, starting July 1, Pell Grant programs would be expanding to include short term training courses, widening the net in support of workers in industries like manufacturing.
According to AAM, “federal support for programs under 15 weeks — covering CNC operation, industrial maintenance and robotics — opens the door for thousands of learners” and could “reshape the talent landscape for U.S. manufacturing.”
Supply chain management will continue to change
Volatility in supply chains has been an ongoing threat since the pandemic, and manufacturers continue to adapt. For many that’s taken the form of diversification, near or reshoring, and the like. Tariffs have added nuance to these calculations, meaning more changes are certainly set to take place. But many experts believe that monitoring and improvement techniques will continue, with manufacturers placing emphasis on digital tools to help. In fact, despite potential risks on the horizon, Deloitte says businesses can lean on digital tools, including agentic AI, to boost agility and that these types of solutions "may become increasingly important to manage risk."
Uncertainty is certain
Though manufacturers have long-dealt with the challenges of labor, tech and supply chains, each year is different. And while there are few ways to hedge against the truly unexpected – and 2025 had a few of those moments, let’s be honest – then the best we can do is keep an eye on these likely trends and continue to take steps to maintain an agile foundation in order to address them as they come. In the end, growth is as much about finding new customers and markets as it is about risk mitigation and risk is a constant that you'll find in every industry forecast, in some form, until the end of time. Luckily, manufacturers have plenty of experience in facing risk with new solutions as the market requires.
