Growth optimism in a high-risk, high-cost world
HLB Survey of Business Leaders 2026 - Manufacturing sector outlook
Confident growth amid a complex and costly risk environment
Manufacturing leaders enter 2026 with a markedly different mindset to that of the early 2020s. Confidence has returned, but it is a measured confidence shaped by several years of disruption, inflationary pressure and geopolitical uncertainty. Rather than waiting for volatility to ease, manufacturers are planning and investing on the assumption that uncertainty is now a permanent feature of the operating environment.
Sector risks
of leaders are concerned or very concerned by trade flow disruption in 2026.
Insights from the 2026 HLB Survey of Business Leaders, based on responses from 167 manufacturing leaders globally, reveal a sector that has moved beyond crisis response and into a phase of structured reinvention. Risk remains elevated, but it is being actively managed. Investment is increasingly focused on operational efficiency, digital transformation and artificial intelligence, while customer-centric innovation is gaining momentum, albeit with execution gaps still to address.
Manufacturing leaders report strong confidence in their ability to grow revenues over the next 12 months, even as they acknowledge the intensity of the risk landscape. More than four in five manufacturers (81%) are confident about revenue growth, including 34% who are very confident and 47% who are somewhat confident. Only 20% express limited or no confidence in their growth outlook.
This confidence exists alongside widespread concern about macroeconomic and cost pressures. Trade flow disruption remains the most prominent risk, with 81% of leaders concerned or very concerned, followed closely by inflation risk at 79%, geopolitical risk at 78%, and economic uncertainty at 77%. Resource costs also continue to weigh heavily, cited by 75% of respondents as a significant concern.
What distinguishes the current environment is the breadth of risks manufacturers are managing simultaneously. In addition to headline macroeconomic pressures, leaders report high levels of concern across cybersecurity threats, tax risk, regulatory change, social instability, environmental and climate risks, exchange rate volatility, as well as access to skilled talent. This reflects a shift away from a single dominant threat towards a multi-dimensional risk profile requiring constant prioritisation and trade-offs.
Views on the global economy reinforce this balanced outlook. While 44% of manufacturers expect global economic growth to increase over the next 12 months, 31% believe it will remain unchanged and a quarter anticipate a decline. Optimism is present, but it is tempered by realism.
Longer-term planning meets accelerated digital investment
Against this backdrop, manufacturers are continuing to plan on medium to long-term horizons, even as the pace of investment and decision-making accelerates. Strategic planning cycles remain largely structured.
of leaders operate on a three- to four-year cycle, while 31% plan on a one- to two-year horizon.
A slim majority of manufacturing firms operate on a three- to four-year time horizon (40%, while 31% plan on a one- to two-year horizon). This indicates that traditional planning disciplines remain firmly embedded across the sector.
While there is growing interest in adaptive and scenario-based approaches, most manufacturers are not abandoning structured cycles altogether. A small proportion also report having no formal planning process, reinforcing the diversity of maturity levels across the sector.
Where change is most evident is in investment priorities. Enhancing cyber and data security, as well as digital and emerging technology adoption are commanding increased attention and further investment, at 64% and 60%, respectively. Only a very small minority of leaders told us they plan to decrease investment in these two areas. This marks a clear shift from the previous year, where 46% of those surveyed planned to increase or significantly increase digital investment.
The proportion of leaders holding investment flat has also fallen sharply, from 46% to 32% year-on-year. This suggests a growing conviction that digital capability is no longer optional, even in a high-cost environment.
Strategic planning techniques reflect this transitional phase. Nearly half of manufacturers (46%) report using adaptive planning approaches, yet 41% still rely on comprehensive long-term planning and the same proportion continue to use centralised executive decision-making models. Rather than a wholesale shift to agile-only models, manufacturers appear to be layering adaptive techniques onto established governance structures.
Longer-term planning meets accelerated digital investment
Against this backdrop, manufacturers are continuing to plan on medium to long-term horizons, even as the pace of investment and decision-making accelerates. Strategic planning cycles remain largely structured. Around 31% of manufacturing leaders plan on a one- to two-year horizon, while a further 40% operate on a three- to four-year cycle. Only 21% use a continuous or rolling planning model, or cycles shorter than 12 months.
This indicates that traditional planning disciplines remain firmly embedded across the sector. While there is growing interest in adaptive and scenario-based approaches, most manufacturers are not abandoning structured cycles altogether. A small proportion also report having no formal planning process, reinforcing the diversity of maturity levels across the sector.
Where change is most evident is in investment priorities. Enhancing cyber and data security, as well as digital and emerging technology adoption are commanding increased attention and further investment, at 64% and 60%, respectively. Only a very small minority of leaders told us they plan to decrease investment in these two areas. This marks a clear shift from the previous year, where 46% of those surveyed planned to increase or significantly increase digital investment.
The proportion of leaders holding investment flat has also fallen sharply, from 46% to 32% year-on-year. This suggests a growing conviction that digital capability is no longer optional, even in a high-cost environment.
Strategic planning techniques reflect this transitional phase. Nearly half of manufacturers (46%) report using adaptive planning approaches, yet 41% still rely on comprehensive long-term planning and the same proportion continue to use centralised executive decision-making models. Rather than a wholesale shift to agile-only models, manufacturers appear to be layering adaptive techniques onto established governance structures.
Execution-led transformation through efficiency, cost control, and AI
The operational response to volatility is pragmatic and execution-focused. Improving operational efficiency is the primary growth lever for manufacturers in 2026, cited by 65% of leaders. This outpaces both cost reduction initiatives, selected by 56%, and the adoption of new technology, chosen by 52%.
Growth levers
of manufacturing leaders plan to launch new products or services in the year ahead, alongside a drive towards improved efficiencies.
Rather than pursuing growth through a single lever, manufacturers are taking a multi-pronged approach. Alongside efficiency and cost control, more than half plan to launch new products or services.
Artificial intelligence (AI) is already embedded across many core manufacturing activities. In 2026, 34% of manufacturers report using AI for process automation, 33% for document processing, and 32% for quality control. AI is also supporting commercial and innovation functions, with 30% using it in sales and marketing and 29% in research and development.
Importantly, AI adoption is extending into workforce-related applications. A quarter of manufacturers use AI in performance management systems and employee training and development, while 19% apply it in recruitment and HR processes. This points to a broader view of AI as an enabler of organisational agility, not simply a tool for operational automation.
External support requirements closely mirror these priorities. Manufacturers identify automated and AI-powered decision-making as the leading area where external expertise is needed, cited by 41% of respondents. Enhancing cyber and data security follows at 37%, alongside digital transformation and emerging technology adoption at 36%. For many organisations, progress depends on combining internal capability building with targeted external advisory support.
Customer-led innovation rises, but execution gaps persist
Customer focus is becoming increasingly central to manufacturing growth strategies. Nearly three-quarters of leaders (74%) have prioritised customer-driven product or service innovation over the past 12 months, making it the most prominent customer-related initiative across the sector.
Data-driven decision-making is also becoming mainstream. Sixty-five percent of manufacturers report investing in customer data analytics, segmentation, and personalisation, while 44% have implemented or enhanced customer feedback programmes. These initiatives indicate a shift towards deeper customer insight and more targeted value propositions.
Customer experience is no longer viewed solely as a front-line concern. More than half of manufacturers (55%) have invested in culture and training initiatives for their employees to embed customer-centric behaviours across the organisation, and 47% have redesigned organisational structures around stages in the customer journey. These figures reflect a more holistic approach to customer experience, spanning operations, people, and governance.
Despite this progress, execution challenges remain. Only 13% of manufacturing leaders identify customer acumen as a key internal weakness. However, 22% cite workforce effectiveness as a weakness and 23% point to innovation capability gaps. This suggests that while customer intent is strong, the organisational capacity to consistently translate insight into differentiated offerings remains uneven.
Brand and partnerships also appear under-utilised as levers for customer growth. Just 9% of leaders view brand strength as a priority weakness, and only 7% highlight new partnerships. Correspondingly, only 20% plan to pursue joint ventures or strategic alliances, and the same proportion intend to collaborate with entrepreneurs. Many manufacturers continue to prioritise internal levers over ecosystem-based approaches to value creation.
From defence to disciplined reinvention
Taken together, the findings point to a sector at a clear pivot point. Compared with earlier years marked by acute pessimism about global growth, manufacturing leaders in 2026 display a more balanced and forward-looking stance. Confidence in company-level revenue growth is strong, even as views on the global economy remain cautious.
Risk is not being avoided, but actively managed. Faced with sustained economic, cost, and geopolitical pressures, manufacturers are choosing to invest selectively in digital, AI, and operational transformation rather than retreating into short-term cost-cutting alone. Transformation efforts are grounded in execution, with a strong emphasis on efficiency, data, and technology-enabled decision-making.
Customer focus is clearly rising, supported by increased investment in analytics, innovation, and organisational redesign. However, weaknesses in workforce effectiveness and innovation capability suggest that the next competitive frontier will be turning customer insight into consistently differentiated experiences at scale.
As manufacturers move from defence to disciplined reinvention, trusted insight, and practical execution support will be critical. HLB’s global network combines local market knowledge with international perspective to help manufacturing leaders turn confidence into measurable performance in an increasingly complex world.
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