By Laurie Harbour, partner, Wipfli Advisory LLC
The plastics manufacturing industry is navigating an increasingly complex business landscape. Economic pressures, shifting global trade dynamics and structural labor challenges are squeezing profitability and forcing leaders to rethink strategies for sustainable growth.
Economic pressures and tariff impacts
Global trade remains one of the most significant external factors influencing plastics processors. The United States now carries an average tariff rate near 18% – the highest since the 1930s – adding cost burdens across supply chains. With tariffs on raw materials like steel, aluminum and copper stacking as high as 85% in some cases, manufacturers face rising input costs that are difficult to pass along to customers. Additionally, in August, the steel and aluminum tariffs have been extended to injection molding equipment, industrial robots, and injection, blow and compression molds. With a majority of injection molding equipment being built overseas, these tariff pressures have made investing in capital equipment challenging and have prohibited growth among US plastic manufacturers.
Manufacturing performance in decline
Although durable goods demand has rebounded in 2025, the industry data from 2024 into 2025 paints a sobering picture. Wipfli LLP recently conducted its 2025 manufacturing pulse study, focused on gathering data and insight from manufacturers across different sectors. More than 310 facilities across plastics processors, stampers and tooling participated in the study. The results showed that revenue growth in plastics is expected to contract by 4.8% and profitability is expected to decline industrywide.
Average manufacturing capacity utilization fell from 67% to 53% in 2025, signaling that many facilities are running well below their potential. However, the plastics industry continues to drive efficiency – perhaps out of necessity based on the current business climate – with throughput improving in 2024 to $118,000 per full-time equivalent compared to $115,000 per full-time equivalent in 2023. Additionally, those companies deemed top-performing processors (the top 10% of plastic processors that have performed well for three of the last five years) are being tested, though their throughput gains show that operational discipline and efficiency improvements are critical levers for maintaining stability.
The financial outlook underscores this squeeze: Companies with higher debt-to-earnings ratios are finding themselves increasingly “non-bankable” as elevated interest rates make it harder to service debt.
Plastics processors increasingly are focused on the factors driving up their cost of business. Raw material tariffs ranked as the industry’s top concern, followed closely by rising operating expenses, the looming threat of recession, persistent inflation and the ongoing challenge of securing price pass-throughs with customers.
All of these pressures, combined with broader economic uncertainty, have left many manufacturers stuck in a wait-and-see mode. Unfortunately, too many leaders have set aside their business strategies and growth goals while they wait to see how changes will affect customers and their own operations. This hesitation has created a kind of paralysis – stalling performance, slowing investment and eroding competitiveness. Left unchecked, this approach not only weakens individual companies but also threatens the overall health and resilience of the plastics industry.
Market trends: Pockets of growth amid slowdowns
Across key end markets, most industries are experiencing revenue contraction. Aerospace, automotive, appliances and medical devices all report expected declines in 2024-2025, ranging from 4% to over 10%. Automotive stands out as both a risk and an opportunity: US sales are projected at 15.7 million units for 2025, but new tariffs on imported vehicles could suppress volumes by as much as 10%-15%. For plastics processors tied to this sector, volatility is likely to continue.
At the same time, longer-term growth opportunities are emerging. Sectors such as data centers, semiconductors and automation are forecast to expand significantly through 2032, with compound annual growth rates fueling multibillion-dollar market opportunities. For plastics manufacturers willing to diversify and innovate, these markets could provide new avenues of stability and profitability.
From wait-and-see to action
The biggest danger for manufacturing is complacency. Many plastics processors remain stuck in the wait-and-see mindset, hoping for stability in markets, costs and policy.
It’s critical for companies to take decisive action during this period. Focus on what can be controlled and make strategic decisions that will drive business forward. There are numerous plastics processors that are experiencing a significant decline in revenue, yet their profitability is increasing. This is the result of leadership making tough – but necessary – choices that protect margins and align supply with demand.
For those wondering where to begin, the following are a few proactive steps to counteract these headwinds:
- Gather and leverage data
Too many manufacturers still rely on gut instinct or outdated reports when making key business decisions. Data on tariffs, material costs, customer demand and sales pipelines needs to be current and integrated into planning. Manufacturers should implement dashboards that monitor financial performance, quoting accuracy and production metrics in real time. By using data analytics, companies can identify hidden cost drivers, forecast disruptions and make informed decisions about pricing and investment. - Strengthen sales processes
Sales increasingly is the weak link for plastics processors. Margins are under pressure, and many sales teams fall back to competing on price rather than value. A modern sales process must start with a clear, differentiated value proposition that resonates beyond cost. Companies should analyze their quoting and costing strategies – moving from a cost-plus model to market-based pricing where appropriate – and track win/loss data to understand why deals are won or lost. Building stronger collaboration between sales and operations helps ensure that quotes are realistic, profitable and aligned with production capabilities. - Improve operational efficiency
With margins narrowing, operational performance is one of the few levers manufacturers fully control. Efficiency improvements – such as reducing lead times, automating repetitive processes or adopting digital dashboards for production monitoring – translate directly into competitiveness. Continuous improvement programs, lean initiatives and targeted investments in automation can boost throughput without requiring additional labor. In an environment where labor remains scarce, squeezing more productivity out of existing assets is essential. - Understand tax and incentive structures
Tax incentives, credits and grants often are overlooked sources of relief for manufacturers. Plastics processors should evaluate opportunities included in the One Big Beautiful Bill, such as R&D tax credits, work opportunity tax credit, energy efficiency incentives, capital expenditure incentives and state/local grants that can offset the cost of modernization or hiring. Strategic tax planning also means staying on top of changing rules, from estate and SALT deductions to international provisions that could affect global supply chains. By proactively aligning financial strategies with available incentives, manufacturers can protect margins and free up cash for reinvestment.
The path forward
The plastics manufacturing industry is under pressure, but not without options. Companies that diversify markets, embrace technology and refine operational and sales processes are better positioned to weather uncertainty. With global competition, economic turbulence and trade policy reshaping the playing field, plastics processors that act decisively will not only survive but also emerge as the leaders in a redefined manufacturing landscape.
Laurie Harbour is a partner at Wipfli with more than 35 years of manufacturing and consulting experience. Prior to joining Wipfli, she was the co-owner of Harbour Results, Inc. and has spent her career helping clients develop strategies, improve operations, reduce risk and optimize business performance. For more information, visit
www.wipfli.com.