Wipfli, a leading North American accounting and advisory firm ranked among the top 25 in the U.S., has published its 2025 manufacturing benchmarking report. The study, conducted annually since 2016, offers an in-depth analysis of performance metrics and strategic trends across key industrial sectors such as metal fabrication, plastics processing, die casting, tool and die making, and contract machining. This year’s data draws from 285 operational sites representing 249 companies, evaluating financial health, workforce management, production efficiency, and sales dynamics. n nThe findings highlight how top-performing manufacturers—defined by sustained profitability and output over the past five years—are navigating a complex economic landscape. Although business confidence dipped in the second quarter due to uncertainty around trade tariffs, many firms are focusing on internal improvements to stabilize operations and prepare for potential market shifts. n n”The manufacturing sector is under significant pressure,” notes Laurie Harbour, a partner at Wipfli. “Some hiring is occurring, but it’s driven more by operational necessity than expansion. To survive and adapt, companies must act quickly to enhance efficiency and reduce vulnerabilities.” n nSentiment at the start of 2025 was cautiously optimistic, but deteriorated during Q2. Key concerns cited by executives include rising raw material costs due to potential tariffs, inflationary pressures, the threat of recession, and increasing overall operating expenses. While inflation and wage demands remain issues, their impact has eased compared to the previous year. n n”Uncertainty around tariffs is disrupting planning,” Harbour explains. “Yet we’re seeing firms take initiative where possible—through tighter cost controls, process optimization, and strategic investments in technology.” n nFinancial and operational performance remains resilient despite margin compression. Top-tier manufacturers achieved an average output of $139,800 per employee in 2024, slightly below the record $143,593 set in 2023. Median EBIT for high-performing firms held steady at 7.8%. When assessing creditworthiness, 46% of surveyed manufacturers were deemed bankable, 23% were classified as marginally bankable, and 31% fell into a financially vulnerable category. n nLabor and overhead expenses continue to strain budgets. While 37% of companies reported hiring—either to fill vacancies or support growth—this occurred amid stagnant profit margins and uncertain demand. Meanwhile, 38% chose to maintain current staffing levels, reflecting a conservative stance as firms await clearer economic signals before increasing payroll. n nCapacity utilization also revealed a notable gap between expectations and reality. Manufacturers projected 63% utilization for Q2 2025, but actual usage reached only 53%, the widest shortfall in recent history. This discrepancy suggests a widespread hesitation to commit to new production or inventory expansion. n nCapital spending plans for 2025 are more restrained than in 2024, when firms invested in automation and digital systems despite high borrowing costs. With trade policies still unclear, many are delaying major investments until the regulatory environment stabilizes. n nSales activity remains sluggish, though there has been an uptick in customer inquiries. The average conversion rate across all sectors was 11.2% of quotes turned into orders, with plastics processors performing best at 12.2%. Increased quoting activity may indicate growing interest in reshoring and supplier diversification, though actual order commitments remain limited. n nParticularly in the automotive industry, ongoing restructuring by OEMs—including the discontinuation of certain vehicle trims and consolidation of product lines—is contributing to customer churn and volume reductions. n nDespite flat profitability and underused capacity, manufacturers are actively streamlining operations. Companies are closely tracking debt-to-earnings ratios and implementing initiatives focused on waste reduction, labor efficiency, and improved production scheduling. n n”Even in difficult conditions, the sector is proving adaptable,” Harbour observes. “Success will depend on staying ahead of challenges and concentrating on areas within a company’s control.” n nThe full benchmarking report is available only to participants who contribute data to at least one section of Wipfli’s annual survey. It includes granular insights across finance, operations, HR, and sales, along with expert commentary from consultants deeply engaged with the manufacturing industry.
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Manufacturers show resilience amid economic uncertainty
Wipfli, a top 25 accounting and advisory firm, has released its 2025 manufacturing benchmarking study, offering a comprehensive look into the state of North American manufacturing. Conducted annually since 2016, the study provides critical insights into performance trends, operational benchmarks, and strategic priorities across sectors, including plastics processors, metal formers, die casters, tool builders and contract machinists. n nThis year ‘s survey analyzed responses from 285 locations across 249 companies, examining finance, operations, HR, and sales performance. Top performers – those with the highest profit and throughput over five years – were highlighted, along with industry sentiment, investment trends and key challenges. Despite a Q2 dip in sentiment due to tariff concerns, manufacturers are working to stabilize operations and prepare for future shifts. n n”Manufacturers are doing their best to hold on in a tough environment,” says Laurie Harbour, 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.” n nIndustry sentiment and economic outlook n nManufacturers entered 2025 with cautious optimism, but sentiment declined sharply in the second quarter. The most frequently cited concerns included raw material tariffs, inflation, recession risk and the rising cost of doing business. While inflation and wage pressures remain, their severity has lessened compared to 2024. n n”Tariff uncertainty is weighing heavily on decision-making,” Harbour says. “But we ‘re also seeing manufacturers take control where they can – through cost management, efficiency and targeted investment.” n nOperational efficiency and financial health n nDespite margin pressures, manufacturers continued to demonstrate strong operational discipline. Efficiency among top performers averaged $139,800 per employee in 2024, only slightly below the 2023 peak of $143,593. Median EBIT for top performers held steady at 7.8%. n nDebt-to-earnings ratios showed that 46% of manufacturers remain in a bankable position, 23% identify as somewhat bankable while 31% fall into the “questionably bankable” category. n nLabor and SG&A trends n nLabor and SG&A costs remain problematic, and responses around hiring reflect the uncertain market. While 37% of manufacturers reported hiring for growth or open positions, this activity is occurring despite persistent market challenges and flat profitability. The fact that 38% maintain current staffing levels underscores a cautious approach, with many companies opting to avoid additional labor costs until economic conditions improve. n nCapacity utilization and investment behavior n nForecasted capacity utilization for Q2 2025 was 63%, but actuals came in at 53% – the largest delta observed in recent years. This gap reflects a broader “wait-and-see” approach, as manufacturers delay new product launches and inventory increases. n nCapital expenditure plans also reflect this caution. While manufacturers invested in automation and digital technologies in 2024 despite high interest rates, plans for 2025 are more conservative as companies await clarity on trade and tariff policy. n nSales activity and market opportunity n nSales performance remains a challenge, but quote activity is on the rise. Hit rates across all manufacturing sectors averaged 11.2% (by number of quotes), with plastics processors leading at 12.2%. This increase in quoting suggests that customers are exploring reshoring options and testing new supplier relationships – but not necessarily committing to new orders. n nChurn, particularly in the automotive sector, continues to impact manufacturers. OEMs are rationalizing product lines, leading to reduced volumes and the elimination of certain trim levels. n nWhile profitability remains flat and capacity utilization fell short of forecasts, manufacturers are taking steps to organize their businesses and manage costs. Debt-to-earnings ratios are being closely monitored, and many companies are focusing on waste reduction, labor optimization and smarter scheduling. n n”Even in a tough environment, manufacturers are showing they can adapt,” Harbour adds. “The key is to stay proactive – not reactive – and focus on what ‘s within your control.” n nThe benchmarking study is available exclusively to manufacturers who participate in at least one section of Wipfli ‘s manufacturing benchmarking survey. It includes detailed analysis by functional area – finance, operations, human resources, and sales – and commentary from Wipfli advisors who work closely with the businesses surveyed.