May 2025 Volume 7

INDUSTRY NEWS

U.S. MANUFACTURERS EXPECT PROFIT TO INCREASE DESPITE TARIFFS By Nicole Jaeckel

the quarter, and how those may be impacting business. Some of the factors currently driving sentiment are continued higher cost of doing business, upward wage pressure, competition with LCC’s, and difficulty finding skilled labor. For the past three years we have seen these same top concerns be at the forefront of manufacturers' minds, regardless of the political climate.

Pulse Barometer for North American Manufacturers

Wipfli*, a top 25 U.S.-based advisory and accounting firm, regularly conducts market research within the manufacturing industry to examine key trends, benchmarks, and forecast indicators. The company has collected and analyzed millions of data points from thousands of manufacturing companies across multiple processes, including tool builders, plastics processors, metalformers, forgers, die casters, screw manufacturers, and contract machinists. As a leading manufacturing benchmarking resource, Wipfli has more than 9 years of trended manufacturing operations and business data. The company conducts its Manufacturing Pulse studies during the first, second, and third quarters of each year, which allows analysts trend data year over year and identify insights helpful to the industry. Wipfli recently completed the first 2025 Manufacturing Pulse study with nearly 300 total participants. The size of the respondents varied from less than $5M annually to over $75M annually. While most respondents were from the Midwest, we had representation from every U.S. region, Canada and Mexico. Respondents sell into all industries, with the largest percentage being the automotive industry at 63%. Less than Half Respondents Optimistic about 2025 The study measures how businesses are feeling about their profit levels, utilization, revenue, and backlog with its HIQ Manufacturing Index. Currently, most manufacturers feel better about Q1 2025 (Index of 57) than they did at the end of 2024 (Index of 52). Additionally, the study collects business leaders’ top concerns for

Tariffs A Major Concern The Pulse Study also asked about tariffs on China, Mexico, Canada, and on raw materials globally. While the survey ended before the 25% tariff on Mexico and Canada went into effect, respondents overwhelmingly stated there would be an impact on business and that tariffs will play a part in business decisions for the foreseeable future. 52% of respondents expect tariffs to impact their business, with 9% saying that they already have impacted their business. In speaking with manufacturers about the current tariff situation, Wipfli learned companies outside of the U.S. have already put holds on contracts, are looking for suppliers outside of the U.S., and some are looking at options to establish a U.S. manufacturing location. Finally, 63% of respondents were concerned about raw material tariffs and their impact on business. The Harbour IQ Manufacturing Index is intended to provide a quick look at the overall expansion or contraction of the industry from a forward-looking perspective. The index is calculated with a maximum total of 100 points.

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