Skilled Labor Shortage Continues to Challenge U.S. Manufacturing Sector

A recent survey of U.S. manufacturing leaders highlights that the skilled labor shortage is anticipated to remain the most pressing issue for the industry as it moves toward 2026. The findings were released as part of CADDi’s 2026 Manufacturing Outlook Study, which surveyed over 200 manufacturing professionals in the U.S. and was conducted in collaboration with the Society of Manufacturing Engineers.

Impact of Skilled Labor Shortages

According to the survey results, a staggering 79% of manufacturing executives cite the lack of skilled workers as their primary barrier to growth. This labor crunch is particularly pronounced on the shop floor, where 90% of respondents indicated that manufacturing departments are most affected. Other areas facing challenges include operations (48%) and design and engineering (40%).

Additional Pressures Faced by Manufacturers

While the labor shortage remains a significant concern, manufacturers are also grappling with various external pressures:

• Nearly half of those surveyed (47%) noted that tariffs and ambiguous trade policies complicate long-term planning.
• 38% expressed concerns regarding geopolitical instability that could disrupt supply chains.
• A significant 61% highlighted rising costs and inflation as other critical obstacles.

“Manufacturing teams are facing shrinking headcounts despite rising volatility and pressure,” said Yushiro Kato, CEO and Co-Founder of CADDi. “To mitigate the labor shortage’s impact, companies require quicker solutions, enhanced cost transparency, and data that empowers them to make informed decisions.”

Shifts in Investment Strategies

As manufacturers face these challenges, their investment strategies are evolving. The report indicates that 69% of companies plan to allocate more funds toward physical assets such as robots and equipment in 2026, marking a 9% increase from the previous year. In contrast, investment in operational systems like ERP and MES has decreased to 33%, down from 60% in 2025.

This shift suggests that manufacturers are prioritizing tools that yield visible outcomes on the shop floor over broad system upgrades. Furthermore, 62% of respondents stated that their focus has shifted toward enhancing recruitment, training, and retention efforts to address the ongoing labor gap.

Future of Manufacturing Growth

“Our research indicates that manufacturing growth in 2026 will not stem from widespread expansion,” Kato observed. “Instead, it will arise from a more intelligent utilization of existing assets. Leveraging parts data can enable leaders to automate inventory tracking, streamline procurement, and maintain production amidst labor shortages and global uncertainties.”