Updates
Navigating Financial Headwinds in Manufacturing
November 4, 2025
A CPA’s Perspective on 2025 Trends
As 2025 draws to a close, manufacturers across North America are facing a complex financial landscape defined by both challenge and opportunity. Persistent inflationary pressures, evolving trade policies, and a cautious investment climate are forcing business leaders to think more strategically about cost, capital, and competitiveness.
From my vantage point as a CPA and advisor to middle-market manufacturing clients, the key to success this year has been agility, both operational and financial. There are four themes that stand out as defining this year’s financial landscape.
By Daniel Krol, CPA – Audit Partner
Tariffs and Trade Policy: A Renewed Focus on Cost Management
Trade tensions and tariff adjustments continue to affect input costs and pricing strategies. The reintroduction of tariffs, particularly on steel and aluminum, has reignited cost volatility. Many manufacturers are reporting material cost increases of 8 to 10 percent, prompting manufacturers to once again reevaluate supply chains, consider reshoring, and negotiate contracts with greater precision.
In this environment, cost management discipline, from granular job costing to supplier risk analysis, has become a strategic necessity rather than a back-office exercise.
Financial teams must now incorporate tariff sensitivity into their forecasting models and scenario planning to avoid margin erosion. We advise our clients to have an arsenal of strategies to navigate the volatility.
Manufacturers should consider dual sourcing or regional diversification to reduce dependency on tariff-affected countries. They should integrate real-time cost analytics with FP&A or ERP tools that track raw material costs in real time. They should also leverage tax and incentive opportunities, such as tariff engineering or R&D tax credits, to align cost management with tax efficiency. Manufacturers that can build their arsenal of cost management strategies are able to maintain margins and competitiveness.
Labor Costs and Talent Gaps: Strategic Hiring Amid Uncertainty
While inflation has cooled slightly compared to 2024, wage pressures remain elevated. According to Wipfli’s 2025 benchmarking study, top-performing manufacturers averaged $139,800 in output per employee, yet hiring remains cautious. Many firms are hiring out of necessity rather than growth, and labor remains one of the most cited challenges in the sector. Even as labor and SG&A costs remain problematic, many manufacturers are finding ways to maintain profitability by taking steps to organize their businesses and manage costs.
As advisors, we recommend clients prioritize strategic hiring, focusing on retaining core technical talent while leveraging automation and outsourcing for efficiency. Smart workforce planning, combined with data-driven compensation analysis, is helping companies navigate a tight labor market without overextending payroll.
Real-Time Financial Insights: The Rise of FP&A Technology
Financial Planning and Analysis (FP&A) technology has moved from large enterprises into the middle market. Modern platforms now allow manufacturers to connect operational data with real-time financial reporting, transforming how leaders plan, forecast, and respond to change. For CFOs and controllers, adopting FP&A tools is no longer just about efficiency. It is about agility and confidence in decision-making.
Real-time FP&A tools are allowing manufacturers to respond to rapid changes in supply chain costs, project delays, and regulatory shifts. These tools enable faster decision-making and more accurate cash flow forecasting, which is critical in today’s volatile environment.
As a Partner in a CPA firm that is embracing new technology and AI into our own practice, we are seeing firsthand how the right tools can transform how businesses make decisions. We also understand the real challenges that come with implementing new systems, from data integration to employee adoption, because we’ve faced them ourselves.
This perspective, combined with our experience working alongside manufacturers, allows us to help clients confidently adopt FP&A technology into their workflows.
Investment Trends: Strategic Growth Amid Caution
Despite higher capital costs and cautious lending environments, many manufacturers are still investing, just more selectively. The focus has shifted toward strategic growth:
- targeted automation
- digital transformation
- acquisitions that strengthen core capabilities
A recent analysis noted that U.S. manufacturing construction spending has surged and that nearly $220 billion in domestic manufacturing capacity has been pledged through 2026, creating new manufacturing jobs and strengthening U.S. supply chain resilience.
For manufacturers, this suggests that while broad investment enthusiasm may be tempered by caution, strategic bets in advanced manufacturing, reshoring, automation, and digitalization are still very much alive, and arguably even more important in a constrained growth environment.
By aligning expansion or upgrade plans with these higher-return, policy-supported pockets, manufacturers can position themselves for resilient growth even amid broader economic ambiguity.
In Summary
The year ahead demands both vigilance and vision. Manufacturers that combine financial discipline with forward-looking strategy, leveraging technology, talent, and transparency, will be best positioned to turn headwinds into opportunities. As CPAs and advisors, our role is to help clients not only survive but thrive by equipping them with the tools, insights, and strategies needed to make confident decisions in uncertain times. In order to thrive, manufacturers need to be proactive, not reactive, and continue to focus on what they can control.
If your organization is looking to strengthen its financial planning or explore new growth opportunities, let’s connect. Email us at info@bcpllc.com.
About Bowers
Bowers aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need manufacturing services.
Bowers CPAs & Advisors is a nationally recognized accounting and advisory firm with offices in Syracuse, Rochester, and Watertown, New York. For over 40 years, we have provided a full spectrum of services -including audit and assurance, tax, business valuation, forensic accounting, financial planning, and client accounting advisory services (CAAS)—to privately held and closely held businesses across a wide range of industries.
As a proud member of the AICPA’s G400, a consistent recipient of the CNY Best Places to Work award for over seven years, and recognized as a Top 300 Firm nationally, Bowers is distinguished by its integrity, deep industry expertise, and innovative approach to problem-solving. Our personalized, client-first approach is matched by our commitment to professional development and delivering strategic insights that help our clients grow and thrive in a complex financial landscape.
