Building Resilience: Manufacturing’s Next Phase of Growth

By IMA member Commerce Bank

For a more in-depth analysis of 2026 manufacturing financial trends, find our full trends report here.

The U.S. manufacturing industry continues to demonstrate resilience in a complex economic environment. While output has remained relatively steady and investment has moderated from recent highs, manufacturers continue committing capital to facilities, technology and infrastructure that support long-term competitiveness. Employment remains uneven as companies navigate skilled labor shortages while investing in automation and productivity-enhancing technologies.

A new era of investment

Manufacturing remains a cornerstone of the U.S. economy, contributing roughly one-tenth of gross domestic product, supporting approximately 13 million jobs and accounting for more than half of private-sector research and development spending.

Following the disruptions of the pandemic era, the sector has shifted from recovery to reinvestment. Manufacturers continue to modernize facilities, expand automation, strengthen digital capabilities and invest in technologies that improve productivity and operational resilience.

Manufacturing construction illustrates this long-term commitment. Total manufacturing construction spending reached a seasonally adjusted annual rate of $185.7 billion in April 2026. Although below the record levels reached during the recent semiconductor investment cycle, spending remains dramatically higher than pre-pandemic levels, reflecting continued investment in semiconductor fabrication, electrical equipment, battery production, food processing and other advanced industrial projects.

At the same time, manufacturing output has fluctuated within a relatively narrow range rather than expanding rapidly. The contrast between historically elevated construction spending and more measured production growth suggests companies are investing for future demand, modernization and supply-chain resilience rather than responding solely to near-term increases in output.

The 2026 economic backdrop

Manufacturing activity has stabilized following the rapid swings of the post-pandemic recovery. Growth remains strongest in technology-related manufacturing, electrical equipment and selected capital goods, while other segments continue to experience more measured activity.

Demand remains uneven, but infrastructure, electrification, AI, energy modernization and industrial automation continue to support investment. Although new orders have moderated from post-pandemic highs, backlogs in several capital-intensive industries continue to support production schedules and long-term capital investment. Replacement demand is also supporting activity as manufacturers modernize aging equipment and facilities with more automated and energy-efficient technologies.

Labor remains another defining challenge. Manufacturers continue to report difficulty recruiting skilled technicians, maintenance specialists and other specialized workers. In response, companies are expanding apprenticeships, workforce partnerships and technical training while increasing investments in automation and advanced manufacturing technologies.

Industries shaping manufacturing investment

• Machinery manufacturing continues to benefit from demand tied to infrastructure, agriculture, energy, logistics and automation. Automated distribution centers, process plants and other machinery-intensive projects require specialized facilities and long-term capital commitments.

• Electrical equipment manufacturing remains central to grid modernization, semiconductor fabrication, battery production and AI infrastructure. Demand for transformers, switchgear, power distribution equipment and industrial controls is being supported by the expanding need for electricity and more resilient infrastructure.

• Food and beverage manufacturing remains one of the sector’s largest and most stable contributors. Investment in food-processing facilities, cold storage, packaging automation and supply-chain infrastructure continues to support construction and equipment demand.

• HVAC and refrigeration equipment is benefiting from construction, energy-efficiency upgrades and data-center growth. Demand from healthcare facilities, schools, commercial buildings and advanced computing infrastructure is supporting continued investment in specialized cooling systems and connected technologies.

Together, these industries illustrate a broader trend: Manufacturing growth is increasingly tied not only to production volumes, but also to the infrastructure required to support electrification, automation, energy efficiency and advanced technology.

Four forces shaping the next phase

• Investment in facilities and capacity. Manufacturing construction remains well above pre-pandemic levels, even after moderating from recent highs. Companies are building facilities designed around greater power requirements, advanced controls, automation and long-term operational flexibility. Data-center construction is also creating demand for electrical equipment, cooling systems and specialized manufacturing throughout the broader industrial supply chain.

• Productivity and digital transformation. Automation, robotics, predictive maintenance, digital twins and AI-enabled quality systems are helping manufacturers improve productivity and maximize existing capacity. New facilities increasingly must accommodate higher power densities, robust data networks, robotics-friendly layouts and specialized environmental controls.

• Labor and talent. Workforce shortages remain a structural challenge, particularly in production, maintenance, automation and advanced manufacturing roles. Manufacturers are responding with apprenticeships, technical education partnerships and upskilling programs while also accelerating automation. The result is a workforce strategy that increasingly combines technology investment with the development of more highly skilled employees.

• Supply-chain resilience. Many manufacturers continue moving beyond traditional just-in-time inventory strategies for critical components. Companies are building facilities closer to end markets, freight corridors and supplier clusters to reduce logistics risk and lead-time volatility. Location decisions increasingly reflect the need for reliable utilities, transportation infrastructure, skilled labor and supplier networks.

Looking ahead: 2026–2027 outlook

The baseline outlook calls for stable manufacturing activity and moderate growth supported by continued investment in factories, data centers, electrical infrastructure, logistics facilities and advanced technologies. Production growth may remain measured, but long-term capital investment is expected to continue shaping the industry.

The upside scenario includes stronger business investment and sustained demand for AI infrastructure, electrical equipment, semiconductors and industrial automation. The downside scenario includes persistent financing costs, slowing consumer demand or prolonged trade-policy uncertainty that could temper investment in some segments. However, many large-scale projects already under construction are expected to continue because of their multiyear investment horizons.

Across these scenarios, several themes appear durable: manufacturers will continue investing in facilities and technology; automation will help address labor shortages and improve efficiency; workforce development will remain a strategic priority; regional manufacturing ecosystems will continue attracting investment; and supply-chain resilience will remain central to facility location and capital allocation decisions.

The key takeaways

The first half of 2026 reinforced a trend that has been building for several years: Manufacturers continue making long-term investment decisions amid a complex economic environment. While production, hiring and new orders have fluctuated, investment in facilities, technology and workforce capabilities has remained consistent.

U.S. manufacturing is evolving rather than simply slowing. Companies are investing selectively in projects that improve productivity, strengthen supply-chain resilience and position operations for long-term competitiveness.

For manufacturers, developers, suppliers and lenders, the most important question is no longer simply how much manufacturing output will grow. It’s where manufacturers continue to invest and how those investments will reshape regional economies and industrial supply chains. The facilities under construction today, the technologies being deployed and the workforce strategies taking shape across the country will help define the next chapter of American manufacturing.