Top Financial and Operational Trends and Challenges Facing Manufacturers in 2026

Manufacturers are heading into 2026 with plenty on their minds. Many of the pressures that shaped the last few years are still here, although companies are learning how to move through them with more creativity and planning. Labor is tight, input costs keep shifting, and tax rules continue to evolve. At the same time, opportunities are emerging for businesses that want to take a closer look at their operations, their equipment needs, and their long-term financial strategy.

Here are the manufacturing trends we are seeing most often in our conversations with clients at CJBS.

Labor Shortages, Wage Changes, and Workforce Concerns

Labor continues to be a challenge for manufacturers of all sizes. A growing number of companies are turning to third-party labor providers to fill production needs. This structure can be helpful, although manufacturers pay a premium since the benefits and insurance are handled by the labor company. Even then, many labor agencies are short-staffed themselves, which makes it tricky to match workers with clients who need support right away.

There is also a human side to the labor conversation. In the Chicago area, for example, recent immigration enforcement activity has made many workers nervous about coming in, even when they have documentation. Employers are seeing attendance issues that have nothing to do with willingness to work and everything to do with fear.

Wages are another important topic. Illinois has been raising its minimum wage by roughly 2.5 percent per year, and it currently sits at $16.60 per hour. The state will continue moving toward a $20 rate over the next few years. The upcoming change to tipped wages through 2028 will matter as well, especially for any manufacturer with food service or hospitality-adjacent operations. All these factors make workforce planning feel more complicated than in previous years.

The Growing Role of Automation and Why Timing Matters

With labor costs rising and workers harder to find, many manufacturers are taking a closer look at automation. Robots can step in where labor gaps exist, although workers are still needed for tasks that require manual skill and decision-making. Several of our clients use automation for one part of their process while relying completely on people for another.

The financial side of automation is just as important as the operational side. If a company expects a strong year and wants to explore equipment that may reduce its tax burden, the timing has to be intentional. Equipment must be purchased, delivered, installed, and running by year end for depreciation opportunities. This means planning for automation cannot wait until late fall. Many businesses begin exploring these projects in the summer so they have time to evaluate quotes, manage lead times, and complete installation before December closes.

Waiting too long can push implementation into January, which removes the ability to deduct that equipment for the current tax year. Starting early gives companies more flexibility and avoids unnecessary surprises.

Food and Commodity Cost Volatility

Manufacturers in the food space continue to deal with price fluctuation that can be difficult to predict. Many of the factors that shape commodity pricing, such as weather, global supply, and transportation, are outside anyone’s control. Beef is a good example. Prices in some markets have climbed to nearly $2 per pound, compared to the typical 80 cents to $1 range. That kind of jump affects margins immediately.

Since manufacturers cannot influence these markets, they often focus on buying strategy. Companies with enough cold storage have more room to purchase six months of supply when prices dip. If ground beef drops below a dollar per pound and storage is available, businesses can carry that inventory into periods when costs rise again.

This advantage is strongest for organizations that have invested in proper cold storage. Without it, companies must buy closer to production needs, which limits their ability to respond to seasonal highs and lows. Manufacturers that expand their storage capacity often gain more control over their ingredient costs and can plan production more confidently.

Tariff Changes and the Challenge of Pricing

Tariffs continue to influence certain sectors of manufacturing. Some industries feel little disruption because their customers require domestic materials. Auto suppliers that must use U.S. steel fit this category, since their sourcing does not change based on tariff policy.

Other manufacturers feel the impact far more directly. Toy companies, for example, rely heavily on imported products, and tariff increases affect almost every part of their production cycle. This puts pressure on pricing conversations. Manufacturers want to keep their products competitive while also covering the higher cost of materials.

Many companies are taking a shared approach. They adjust pricing enough to offset part of the added expense while absorbing some of the cost internally. It is a careful balance that requires strong communication and ongoing review of financial data.

R&D Credits and New Opportunities for Manufacturers

Research and development credits have become a larger topic as recent legislation increases the value of qualifying activities. Many manufacturers are surprised to learn that they may qualify. Adjusting a formula, experimenting with production methods, developing a new product, or testing equipment often falls under R&D. These activities happen frequently in the manufacturing world, yet the related expenses are not always documented.

To take advantage of R&D incentives, companies need a third-party study. This evaluation outlines which activities qualify, how much employee time is spent on development work, and which materials were used during experimentation. For companies that innovate regularly, these credits can create meaningful tax savings.

Good recordkeeping makes the process much easier. Companies should track which employees participate in R&D and estimate the portion of their time that goes toward development. Raw materials used during testing should also be documented. Without this information, the study cannot reflect the full scope of R&D work.

The credit may not be worthwhile for very small projects, since the benefit might not outweigh the cost of the study. Larger or more frequent development activity often produces valuable results, and an evaluation can help manufacturers understand their true opportunity.

A Thoughtful Approach to 2026 – CJBS Is Here to Help

The manufacturing landscape is shifting, although companies have more tools and strategies available than in previous years. Workforce pressures, price changes, tariff policy, and technological improvements all play a role in planning for the year ahead. The manufacturers that stay close to their numbers and begin planning early often feel more prepared when market conditions change.

At CJBS, we continue to support manufacturers through these decisions. Our team helps evaluate automation timing, analyze commodity impacts, explore R&D credit options, and build financial plans that support growth and stability.

With careful planning and a clear look at the year ahead, manufacturers can move into 2026 with more confidence and a stronger understanding of their opportunities.