Manufacturers are still expanding in 2026 but their location strategies prioritize certainty

Manufacturers are entering 2026 with cautious optimism, but expansion decisions are becoming increasingly disciplined. According to Sikich’s recent Manufacturing Industry Pulse Survey, 85% of manufacturing executives expect revenue growth this year and nearly three-quarters anticipate increasing headcount. Despite continued economic uncertainty, companies are still investing, expanding, and moving projects forward.

What has changed is how manufacturers evaluate growth opportunities. Rather than focusing primarily on cost, many companies are placing greater emphasis on communities that provide execution certainty, workforce sustainability, infrastructure readiness, and long-term operational resilience. In an environment shaped by tariffs, geopolitical instability, labor shortages, rising insurance costs, and supply chain volatility, reducing risk has become central to expansion strategy.

How manufacturers are reevaluating growth

Manufacturers are increasingly asking practical operations questions before making location decisions:

• Can utilities support future growth?
• How quickly can permits be approved?
• Is there workforce alignment with the project?
• Will state and local partners communicate clearly and consistently?
• Are infrastructure and transportation systems reliable?
• Can the community support long-term scalability?

These considerations often carry as much weight as the value of available incentives.

This shift is reflected in the types of growth strategies manufacturers are pursuing. Many companies are favoring phased hiring plans, targeted automation investments, expansions of existing facilities, and regional growth strategies designed to improve supply chain resilience and proximity to customers. The survey’s strong expectations around hiring, modernization, and AI investment reflect that manufacturers remain focused on growth, but with greater operational discipline than in previous years.

Incentives under increasing scrutiny

Incentives remain an important factor in project feasibility and competitiveness, but companies increasingly evaluate them through the lens of execution and long-term partnership. Manufactuers are looking for communities that can help reduce uncertainty – not add to it.

At the same time, evolving state and local policies are creating new challenges. Across many states, manufacturers are encountering higher wage thresholds, longer review timelines, staffing constraints, and additional compliance considerations. Many state incentive programs tie eligibility or benefit levels to regional or county average wage benchmarks, adding complexity in manufacturing-heavy markets.

These policy shifts are directly influencing behavior. In some states, evolving incentive requirements and wage thresholds are shaping which projects move forward and which are ultimately reflected in economic development performance metrics. As qualification standards rise, projects able to secure support may increasingly favor a narrower segment of higher-wage opportunities, while more moderate but still meaningful manufacturing investments struggle to advance through traditional incentive frameworks.

This creates an important consideration for policymakers and economic development leaders. Average wage statistics and project performance indicators can be shaped not only by market conditions, but also by the qualification criteria themselves. While higher-wage job creation remains an important objective, communities must also evaluate how policy design impacts overall project competitiveness, operational diversity, and long-term investment attraction.

Wage thresholds and uneven market impacts

Another challenge emerging in some markets is how average wage thresholds interact with local economic realities, particularly in regions anchored by major employers.

In communities with exceptionally large, high-paying manufacturers, county wage averages can rise to levels that are difficult for smaller or mid-sized manufacturers to meet, even when those companies offer competitive wages, strong benefits, long-term career opportunities, and meaningful local investment.

For example, communities anchored by major advanced manufacturers or Fortune 500 employers may establish regional wage benchmarks that reflect a very different operating scale than what many growing domestic manufacturers, suppliers, or entrepreneurial companies can support in earlier stages of expansion. As a result, some smaller growth-stage companies — the same companies many communities hope to attract, retain, and scale over time — may struggle to qualify for programs designed to support business growth and job creation.

This has become an increasing point of discussion among local economic development leaders, particularly in manufacturing-heavy regions where local competitiveness doesn’t always align with countywide wage averages driven by a small number of dominant employers.

As states continue refining incentive policies, maintaining flexibility to support a broader range of quality manufacturing investment opportunities will remain an important consideration.

The communities that will win in 2026

Rigorous standards aren’t the issue. Most manufacturers are willing to meet high expectations when requirements are transparent and processes remain predictable. The greater challenge is inconsistency and uncertainty during already compressed project timelines.

For economic development organizations, this creates both a challenge and an opportunity.

The communities best positioned to win manufacturing projects in 2026 will combine competitive incentives with responsiveness, workforce readiness, infrastructure capacity, realistic execution timelines, and collaborative partnership.

In today’s environment, certainty has become a competitive advantage.

Manufacturing remains one of the strongest indicators of economic momentum, investment confidence, and long-term regional growth. The sector is still moving forward, but companies are making expansion decisions with greater scrutiny and a much sharper focus on operational resilience.

The projects moving ahead today aren’t necessarily going to the lowest-cost locations. Increasingly, they’re going to the communities best prepared to support long-term operational success in an increasingly complex environment.

Site selection advisors are essential guides to align these considerations with your specific business needs. Sikich’s team is available for a free consultation.