This document focuses on a number of topics that pertain to the machine tool/manufacturing industry as a whole, including trends to watch in 2026, uncertainty attributable to tariffs, opportunities for women in the industry, recent sales and investments made by major automotive companies, and the recent spike in machine tool orders. It also includes a brief commentary on the performance and outlook for the manufacturing industry.
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5 Manufacturing Trends to Watch in 2026: Some of the key challenges that producers dealt with for most of 2025 include tariff uncertainty, labor shortages, geopolitical issues and supply chain volatility. Manufacturers are now planning for another 12 months of uneven demand and tight margins, with a renewed focus on efficiency and better control over their supply networks. In a new report, Deloitte has identified five different ways manufacturers can ride out the conditions that 2026 may bring and also prepare their operations for the future.
1. Use Tech to Boost Competitiveness and Agility – Investment in smart manufacturing is likely to continue in 2026 as manufacturers seek to improve competitiveness, agility and resilience in the face of uncertainty and complexity. A recent survey taken by Deloitte shows that 80% of companies plan to invest 20% or more of their improvement budgets in smart manufacturing initiatives, with a focus on foundational tools and technologies.
2. Leverage More Digital Supply Chain Management Tools – The future could bring greater trade certainty as the U.S. has brokered tariff agreements with the United Kingdom, Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union, and additional deals could follow. To mitigate potential challenges, manufacturers can continue to invest in digital technologies like agentic AI, which can provide enhanced visibility and agility by autonomously sensing and mitigating supply chain risk while optimizing costs.
3. Look to Growing Sectors Like Semiconductors for New Opportunities – Semiconductor manufacturing investment will likely continue to grow. As of July 2025, companies had announced more than $500 billion in private sector commitments to revitalize the U.S. chip making ecosystem, setting the stage for a projected tripling of domestic capacity by 2032. These projects are expected to create more than 500,000 jobs in the U.S. Companies that can harness these growth opportunities may be better positioned for the future, especially if economic uncertainty continues.
4. Use an Adaptive Workforce Planning Framework to Address Uncertainty – The competition for skilled labor remains intense, especially as manufacturers invest in advanced digital tools and smart manufacturing facilities. Equipping workers with the skills and knowledge they need to maximize the potential of smart manufacturing and operations is a top concern. Companies that can remain focused on the long-term goal of creating a world-class workforce, while managing potential uncertainty and volatility, may gain a substantial advantage over their competitors. For instance, agentic AI could be used to capture workers’ unspoken knowledge and generate standard operating procedures, thereby accelerating onboarding and training.
5. Make Targeted Tech Investments Focused on Problem Solving – Manufacturers should prioritize a renewed strategic focus and targeted technology investments in the year ahead. This will help maintain a competitive edge, continue to drive innovation and achieve sustainable growth amid uncertain economic conditions. As operations and global supply chains grow increasingly complex, manufacturers can leverage advanced technologies to optimize costs, enhance decision-making, improve customer experience, and create new solutions to longstanding challenges.
Tariffs Remain Heart of Manufacturing Uncertainty: Tariff-related supply chain effects are at the heart of uncertainty as the manufacturing industry encountered a faster month of contraction in November. The Institute for Supply Management’s (ISM) latest Purchasing Managers’ Index registered 48.2% in November, down 0.5 percentage points from the prior month. A PMI index below 50% indicates an industry in contraction.
The pullback with new orders, employment and supplier deliveries led to the November drop. Backlog orders decreased slightly to 44%. According to the ISM report, of the six largest manufacturing industries, only food, beverage and tobacco products reported expansion in backlog orders last month, reflecting uncertainty around the future of tariffs. In November, the U.S. Supreme Court heard oral arguments on whether President Trump’s unlimited use of tariffs under a self-declared national emergency was legal. The court has yet to deliver a ruling or set a timeline for when it will issue one. The longer this drags on, the longer we can expect weakness in manufacturing.
The transportation equipment sector has been particularly hard hit by the tariffs due to their impact on the cost of commodities such as aluminum and steel, and there doesn’t appear to be anything on the horizon that’s going to turn the ship around until there is more certainty regarding the legality of the tariffs. Once manufacturers have that knowledge, they will be in a better position to make decisions.
All things considered, manufacturers have grown optimistic about the year ahead, as the end to the government shutdown helped raise confidence. Optimism is being fueled by hopes of improved policy support, including lower interest rates, as well as greater political stability, though it is clear that uncertainty remains elevated and a drag on business growth in many firms, holding confidence well below levels seen at the start of the year.
Women Working in Manufacturing: Shaping the Future of the Industry: Deloitte predicts that nearly 1.9 million of the 3.8 million manufacturing jobs to be filled over the next decade will go unfilled unless efforts are made to close the skills and hiring gaps. As such, the need to engage untapped talent has never been more urgent. Women make up half of the population but only about a third of the manufacturing workforce, so the solution is obvious. The challenge lies in identifying and removing the barriers that women face and providing the support they need to thrive.
The idea that women don’t belong in manufacturing is not just outdated, it’s historically inaccurate. From textile mills of the industrial revolution to the legendary “Rosies” of World War II, women have long been essential to the industry’s growth and resilience. There are countless examples of women who’ve driven innovation, led teams, reimagined operations, and showed up day after day to keep production moving. Currently, only 29% of the manufacturing workforce is made up of women, with just 12% in leadership roles. Women must be able to see themselves in the roles and then see themselves advancing. Without clear visibility of career growth, retention becomes a challenge.
One of the major hurdles is perception. Many still associate manufacturing with the “three D’s” (dark, dirty, and dangerous) despite modern advancements that have made today’s shop floors clean, automated, high-tech, and dynamic. And beyond the factory floor, manufacturing includes career paths in HR, communications, sales, design, supply chain management, and more, roles that appeal to a wide range of skill sets. For too many women, manufacturing remains an invisible or unappealing option. For manufacturers to be top employers of choice, they need to be attractive to today’s job seekers.
Manufacturing doesn’t just need women, it needs to show women that they belong. That they can build rewarding, resilient careers. That they can lead, innovate, and grow. If women don’t enter manufacturing roles in greater numbers, the future of the industry is at risk.
Automotive Industry Keeps Rolling: During the third quarter of 2025, nearly every major OEM in the automotive industry reported sales increases compared to the same period a year ago. Much like this spring when buyers hurried into showrooms ahead of tariff deadlines, the third quarter brought another sales surge. This time it was the expiration of the $7,500 federal EV tax credit at the end of September that drove a wave of deliveries, lifting U.S. light-vehicle sales and setting records for EV sales.
General Motors was among the biggest winners. The company’s U.S. light-vehicle sales rose nearly 8% in the quarter, helped by record EV sales. For the first nine months of the year, GM has already sold more EVs than it did in all of last year. Ford also set a record for EV sales. Its overall U.S. sales rose 8.5% in the quarter. Overall, U.S. consumers are expected to buy 16.1 million new vehicles this year, a slight increase from the 16 million sold in 2024.
With sales up, OEMs are investing in people, plants and equipment. For example, in June, General Motors announced a sweeping $4 billion investment across its U.S. manufacturing facilities over the next two years, aimed at increasing domestic production of both gas-powered and electric vehicles. A month earlier, GM committed $888 million to upgrade its assembly plant in Buffalo, NY, to produce the company’s next-generation V-8 engine. Among other automotive companies that have announced plans are the following:
- Hyundai Motor Group will invest $21 billion in the U.S. from 2025 to 2028 to expand its manufacturing capabilities, advance future technologies, and enhancing energy infrastructure in America.
- Stellantis announced a historic $13 billion investment to expand its U.S. operations over the next four years, the largest in the company’s 100-year history. The plan will boost U.S. production by 50%, add five new vehicle launches, refresh 19 products, and create more than 5,000 jobs across Illinois, Ohio, Michigan and Indiana.
- Toyota announced a $912 million investment to boost advanced powertrain production and expand hybrid-electric vehicle assembly across the U.S.
The U.S. recent sales performance and investments by the automotive industry is forecast to perform stably but cautiously in 2026, with light-vehicle sales around 16 million units (flat to slightly down from 2025). Growth will be limited by tariff-driven price increases, affordability challenges, and a sharp EV slowdown with EV market share potentially dropping to around 6% after incentive expirations, while hybrids and ICE vehicles gain traction, supported by lower interest rates and healthier used-vehicle supply.
Machine Tool Orders Spike in Q4: In October 2025, U.S. machine tool orders surged to $538.9 million, marking a 9.0% increase from September and a 40.3% rise from October 2024, the strongest performance since March 2023 and indicative of the growing demand for more advanced automation.
The Association for Manufacturing Technology (AMT) attributed this positive shift to renewed tax incentives for capital equipment purchases and robust consumer and government demand for manufactured goods. Contract machine shops, the sector’s largest buyers, achieved their highest order value in over two-and-a-half years, while aerospace manufacturers showed rising demand even amid Boeing strikes and a government shutdown.
Significant growth also emerged in orders for industrial engines, turbines, and transmissions, driven by data center construction and coal plant upgrades. Regionally, the West (+51.7%) and Northeast (+32.9%) showed the most improvement with all six regions posting strong year-over-year growth and most exceeding 2024 year-to-date totals, signaling cautious optimism for future momentum.
Manufacturing Industry Outlook and Performance
In 2025, the U.S. manufacturing industry faced a challenging economic environment. The ISM manufacturing purchasing managers’ index remained below 50 for much of the year, signaling contraction in the sector. Costs rose, employment fell, and manufacturing construction spending, an indicator of investment in new or expanded facilities steadily declined. These challenges were due in large part to trade policy uncertainty and tariffs.
Even with these challenges, U.S. manufacturing leaders are heading into 2026 with a cautiously optimistic outlook. The passage of a major tax and spending bill, commonly called the One Big Beautiful Bill Act, includes several tax provisions that could lower costs and encourage manufacturing investment. The announcement of additional revised U.S. trade deals, such as those struck with the United Kingdom and Vietnam, could help reduce uncertainty, while interest rate cuts might help reignite demand for manufactured goods.
Despite near-term headwinds, including persistent raw materials pricing pressure and ongoing contractionary readings in monthly PMI data, respondents express increasing confidence that business prospects will improve through the year, with momentum building into the second half of 2026
“It’s encouraging to see that we have some optimism for next year, especially given the last few months of chaos and wringing of hands,” said Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee. “I think folks are trying to be optimistic that the chaos is actually going to be over with a looming U.S. Supreme Court ruling one way or the other, so they will know what their companies are going to do.”