Top 2026 manufacturing trends to watch

^{This article was originally published on RSM US.}

Manufacturing leaders need to understand the biggest issues and trends shaping the industry if they want to stay competitive and adaptable in 2026. Fast-moving technology—including automation, artificial intelligence, and smarter factories and products—is changing how things get done, so having a clear plan for using data is more important than ever. As interconnectedness increases, so does the risk of cyberattacks, which means companies also must be proactive about protecting sensitive operations and data.

Managing global supply chains isn’t getting any easier, especially with geopolitical and trade tensions. Companies need to be strategic about who they work with and where they source materials so they can remain flexible and responsive as challenges arise and constraints shift. Finding, upskilling and keeping talented workers—especially those with the skill sets needed to use AI and other new technologies—is a must, especially as the labor market remains challenging for middle market companies.

Here are the top five trends RSM has identified for the manufacturing industry in 2026:

Machines, assembly lines, smart sensors, robots and other devices generate enormous amounts of industrial data that manufacturers are increasingly using to shape strategic business decisions. As more companies implement advanced technologies and “factories of the future” become reality, a robust data strategy is essential for translating raw information into predictive insights—and for leveraging those insights to optimize processes, strengthen risk assessment and help organizations maintain a competitive edge. Manufacturers are also modernizing their offerings; more technology-driven products bring new data, insights and value to help customers improve their margins. That, in turn, can help manufacturers boost customer retention.

From a talent and workforce perspective, successful data-driven manufacturing operations require employees with the skills necessary to understand and act on digital insights. This means companies must invest not only in business and industrial technologies—information technology (IT) and operational technology (OT)—but also in upskilling teams to support advanced Industry 4.0 technologies. Many middle market manufacturers lag their larger counterparts in technology and workforce capabilities. Building a flexible, scalable and interconnected IT-OT environment—paired with ongoing training—will be critical for enabling data-driven operations and addressing challenges.

On the factory floor, automation and AI are reshaping day-to-day operations. Manufacturers are increasingly adopting AI and machine learning to optimize processes, empower workers and unlock operational efficiencies. The potential of AI to enhance predictive maintenance, optimize the supply chain, identify capacity bottlenecks and improve quality control is only the beginning. Increased productivity, enhanced decision making and greater cost savings will continue to drive broader adoption of the technology across the middle market. By planning thoughtfully, investing in infrastructure and focusing on ethical deployment, companies can harness automation and smart manufacturing to drive business growth and workforce evolution.

While advanced technologies are streamlining many aspects of traditional manufacturing and breaking down longtime barriers to innovation and collaboration across the value chain, they are also creating more opportunities for cybercriminals to target manufacturers.  According to the 2025 RSM US Middle Market Business Index special report on cybersecurity, nearly 1 in 5 (18%) middle market companies surveyed experienced a data breach in the previous year, falling from a record-high 28% in the 2024 report. The decline in reported breaches is certainly positive, but the 2025 results are consistent with data from years prior to the spike in 2024. In addition, with methods becoming more sophisticated, some attacks may now go undetected, highlighting the importance of continuously strengthening controls.

Manufacturers—and any third parties they work with—need to raise the bar on protecting themselves in an environment where workers, machines, supply chains and organizations are becoming ever more digitally connected. Understanding which critical information and intellectual property assets need protection from potential cyberattacks—and taking action to put those protections in place—will increasingly become a source of competitive advantage.

Ongoing geopolitical tensions and protectionist U.S. trade policies are compelling companies to reassess and reconfigure their supply chains. The administration’s focus on tariffs has intensified uncertainty for importers, who face higher costs and increased operational complexity. With the tariff landscape continuing to evolve, businesses must proactively evaluate their sourcing strategies and diversify supply chains to mitigate disruption and maintain competitiveness in this shifting global environment.

At the same time, robust third-party risk management is essential for safeguarding operations and maintaining resilience. Companies must carefully assess and monitor the risks posed by partners, vendors and logistics providers. Proactively identifying vulnerabilities—such as exposure to cyberthreats, regulatory changes or supply disruptions—enables manufacturers to implement effective controls and contingency plans, ensuring business continuity and protecting their competitive position in a volatile global environment.

Companies prioritizing digitizing their supply chains will be more resilient and better positioned to respond to future shifts in supply and demand (for instance, the ongoing surge in demand for data center infrastructure components). Digitization will be essential in the new era of globalization as companies diversify where they source and make their goods.

As manufacturers grapple with technology’s increasing role throughout their organizations, the impact on their workforce will be significant. The dynamic and fast-paced environment created by today’s advanced technologies—from intelligent robotics to big data and the industrial Internet of Things—will require the current workforce to adapt. It will also require companies to be more intentional and creative in attracting and retaining talent.

We expect this will bring a renewed emphasis on cultivating skills for an environment where analytics increasingly drive business decisions and humans more commonly work alongside robots. Manufacturers will need to reassess and update their training and workforce development strategies to keep pace with this industry shift. Companies will also need a clear understanding of which core offerings to focus on and which might make sense to outsource. Despite the overall labor market softening from a few years ago, middle market companies continue to report challenges finding the right talent with the right experience. These factors underscore the importance of upskilling workers with the right technology competencies for long-term workforce resilience and adaptability.

Heading into 2026, the manufacturing sector faces an increasingly challenging economic environment shaped by high interest rates and continued uncertainty in the policy and economic outlook. The elevated cost of capital makes financing new projects or expansions more expensive and investment decisions more difficult for manufacturers. At the same time, the administration’s trade agenda has injected greater uncertainty into business planning, prompting caution among global and U.S. manufacturers.

As these pressures converge, investment momentum has slowed across the industry. Manufacturers are reassessing capital expenditures, delaying expansion plans and taking a more conservative approach to financial commitments. The combination of tighter financing conditions, shifting trade policies and geopolitical uncertainties is creating a business environment that is not only more complex but also demands greater agility and risk management from leadership teams. Navigating these headwinds will require manufacturers to optimize operations, closely monitor cost structures, and remain vigilant to policy developments that could further affect competitiveness.