New England Biz Law Update
North American manufacturers are demonstrating resilience in the face of economic uncertainty, though significant challenges remain, according to a 2025 manufacturing benchmarking study released by Wipfli, a consulting and accounting firm.
The annual study, conducted since 2016, examined performance trends, operational benchmarks and strategic priorities across sectors. This year’s survey analyzed responses from 285 locations across 249 companies, with findings focused on finance, operations, human resources and sales.
Top performers, those with the highest profit and throughput over five years, were highlighted along with industry sentiment, investment activity and ongoing challenges. Although sentiment dipped in the second quarter due to tariff concerns, manufacturers continue working to stabilize operations and prepare for future shifts.
“Manufacturers are doing their best to hold on in a tough environment,” said Laurie Harbour, a Wipfli partner. “While some are hiring, it’s often out of necessity rather than growth. The industry must act swiftly to improve operations and navigate uncertainty.”
Industry sentiment and outlook
Manufacturers entered 2025 with cautious optimism, but sentiment declined in the second quarter. The most common concerns included raw material tariffs, inflation, recession risk and rising costs of doing business. Inflation and wage pressures remain, though their severity has eased compared with 2024.
Efficiency and financial health
Despite margin pressure, manufacturers maintained operational discipline. Efficiency among top performers averaged $139,800 per employee in 2024, slightly below the 2023 peak of $143,593. Median EBIT for top performers held at 7.8%.
Debt-to-earnings ratios showed 46% of manufacturers remain bankable, 23% identify as somewhat bankable and 31% fall into the questionably bankable category.
Labor and costs
Labor and selling, general and administrative costs continue to weigh on manufacturers. Hiring reflects market uncertainty, with 37% reporting they are filling roles for growth or open positions. At the same time, 38% are maintaining current staffing levels, indicating a cautious approach until economic conditions improve.
Capacity and investment
Forecasted capacity utilization for the second quarter was 63%, but actual performance came in at 53%, the largest gap seen in recent years. The report attributed the shortfall to manufacturers delaying product launches and inventory expansion.
Capital expenditures reflect similar caution. Investments in automation and digital technologies accelerated in 2024 despite high interest rates, but companies are scaling back plans for 2025 as they wait for clarity on trade and tariff policy.
Sales and market activity
Sales remain challenging, though quoting activity is rising. Hit rates across manufacturing sectors averaged 11.2%. The increase suggests customers are exploring reshoring and testing new supplier relationships, though commitments to orders remain limited.
The full benchmarking study is available to manufacturers who participate in Wipfli’s annual survey. It includes detailed functional analysis and commentary from Wipfli advisors who work directly with manufacturers.
