(Source: Canva)

 

The US manufacturing sector entered 2025 facing a difficult macroeconomic landscape. Indicators such as the Institute for Supply Management’s Purchasing Managers’ Index consistently remained below the expansion threshold of 50, signaling ongoing contractions across industry. Rising operational expenses, declining employment, and reduced manufacturing construction, typically a key indicator of new capital investment, highlighted the challenges manufacturers faced throughout the year. Much of this pressure stemmed from policy uncertainty and fluctuating tariff environments, which more than 75% of manufacturers identified as their biggest concern.

Even amid these headwinds, 2026 is shaping up to offer new opportunities for growth. Recent legislative developments, particularly the One Big Beautiful Bill Act, have introduced tax incentives that may lower operational costs and stimulate investment. Newly renegotiated trade agreements with several countries could ease global tensions, while expected interest rate reductions may support renewed demand for manufactured goods. Nevertheless, manufacturers will likely need to prepare for multiple economic scenarios: continued stagnation, further contraction, or potential recovery.

To help organizations build resilience and uncover strategic opportunities, the following report highlights five transformative trends expected to define the 2026 manufacturing landscape.

 

Smart Manufacturing & Operations: Technology and Agentic AI as Drivers of Agility

Investment in smart manufacturing is expected to grow as companies attempt to strengthen efficiency, adaptability, and operational resilience. Deloitte’s 2025 survey of 600 manufacturing leaders found that 80% plan to dedicate at least 20% of their improvement budgets to smart manufacturing initiatives, ranging from automation and advanced analytics to cloud-based infrastructure and sensor technology.

Executives overwhelmingly view smart manufacturing as the primary source of competitiveness in the next three years, citing benefits such as increased throughput, expanded capacity, and higher workforce productivity.

A major catalyst for this shift is the rise of agentic artificial intelligence, AI systems capable of autonomous reasoning, planning, and decision-making. Adoption is expected to grow rapidly between 2025 and 2028, offering new value across multiple business areas:

  • Identifying and engaging alternative suppliers during disruptions
  • Preserving institutional knowledge as older workers retire
  • Automating shift reports, task instructions, and operational planning
  • Accelerating equipment diagnostics and customer support

Agentic AI also lays the foundation for physical AI, where autonomous robotics support human productivity. Nearly one-quarter of manufacturers surveyed expect to adopt physical AI within two years, more than double current levels.

To scale these technologies successfully, companies will need to evaluate cost, workflow design, talent readiness, governance, and data infrastructure. Organizations that make these investments early may be better positioned for widescale AI integration in 2026.

 

Supply Chain Transformation: Digital Tools to Manage Rising Global Complexity

Manufacturers navigated significant supply chain pressure in 2025 due to shifting trade policies, tariff changes, and volatility in cross-border logistics. Many responded by increasing inventory levels or redesigning their supplier networks. Still, 78% reported that trade uncertainty remains their top risk heading into 2026.

New trade agreements involving the UK, Vietnam, Japan, Indonesia, the Philippines, South Korea, and the EU may offer greater clarity. Ongoing renegotiations of the US–Mexico–Canada Agreement could further stabilize tariff expectations. Yet sourcing challenges are likely to persist throughout 2026.

To address this, manufacturers are leveraging advanced digital technologies. According to a Thomson Reuters Institute survey, most global trade professionals are already using tools that analyze trade routes, identify cost-saving opportunities, and model potential disruptions.

Agentic AI introduces a step-change in capability, allowing supply chains to autonomously:

  • Detect tariff, weather, or geopolitical disruptions
  • Notify key decision-makers of potential impact
  • Quantify operational and financial risks
  • Recommend alternative routing or supplier options
  • Begin supplier negotiations pending human approval

As global supply chains become more interconnected—and more unpredictable—digital and AI-driven supply chain tools may become essential for maintaining competitiveness.

 

Manufacturing Investment: Incentives, Data Center Expansion, and Semiconductor Demand

Survey results from early 2025 suggest that several policy-driven factors could encourage reshoring, including a larger skilled labor pool, regulatory reform, lower corporate taxes, and uniform tariffs. If trade policies stabilize, even if costs rise, investment in domestic manufacturing may increase.

Recent legislation has strengthened these incentives. The One Big Beautiful Bill Act preserves a 21% corporate tax rate and makes several permanent provisions beneficial to manufacturers, including full expense for new equipment and immediate R&D deductions. Meanwhile, the administration’s AI Action Plan is expected to accelerate the construction of data centers and semiconductor facilities.

The data center boom is already reshaping the industrial landscape. Funding for small modular reactor startups soared to nearly $4 billion in 2024, and major OEMs have secured long-term contracts to supply electrical components and power systems, many of which are already been sold out for several years.

Investment in semiconductor manufacturing continues to surge as well. By mid-2025, private-sector commitments exceeded $500 billion, with projections that domestic chipmaking capacity could triple by 2032. The increased advanced manufacturing investment credit—from 25% to 35%—may further amplify growth.

Manufacturers that can seize these opportunities may emerge stronger in 2026, especially if economic uncertainty persists.

 

Aftermarket Services: Agentic AI to Transform Customer Experience

Aftermarket services—support, parts, maintenance, and repair—remain a profitable segment for industrial manufacturers, often generating margins twice as high as equipment sales. They also provide steady revenue in volatile markets.

Agentic AI enhances aftermarket operations by automating service planning and execution across interconnected systems such as inventory databases, customer portals, and manufacturing execution systems. Potential capabilities include:

  • Predicting part failures and automatically scheduling repairs
  • Adjusting service-level agreements based on risk and equipment usage
  • Validating warranty claims using telemetry and usage data
  • Managing inventory allocation and replenishment autonomously

To prepare for this next-generation aftermarket model, companies can identify which service activities could be supported by AI agents and evaluate the data, workflows, and approval structures needed for full deployment.

 

Talent: Building an Adaptive Workforce for an AI-Enabled Future

Competition for skilled labor intensified in 2025, particularly as companies adopted smart manufacturing technologies. Over one-third of executives expressed concern about upskilling workers to effectively operate advanced digital tools.

Manufacturers must also confront shifting product portfolios, rising reshoring activity, and evolving immigration policies—critical issues given that nearly 25% of US manufacturing production workers in 2024 were immigrants.

Uncertainty in 2026 could further complicate workforce planning. To remain flexible, organizations are increasingly turning to a “build, buy, or borrow” approach:

  • Build: train and develop core talent, improve employee experience, and create attractive career paths
  • Buy: specialized experts when internal development is costly or slow
  • Borrow: use contract or temporary workers for fluctuating labor needs

Digital tools may also support workforce development. Agentic AI, for example, can capture expert knowledge and generate standard operating procedures, accelerating onboarding and reducing training time.

Manufacturers that balance short-term uncertainty with long-term workforce strategy may gain a significant competitive edge.

 

Conclusion: Technology + Strategy as the Foundation of 2026 Growth

To succeed in 2026, US manufacturers should embrace targeted technology investments and a renewed strategic focus. As operations grow more complex and global markets remain unpredictable, advanced technologies, especially agentic AI, can help optimize costs, strengthen decision-making, elevate customer experience, and open pathways to innovation.

Combined with supportive policy environments, booming demand for semiconductors and data center infrastructure, and strong investment incentives, manufacturers have a unique opportunity to build for the future. Those who act decisively, while continuing to prioritize workforce agility, may be best positioned to thrive in the coming year and beyond.

 

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