Many manufacturing business owners take a balanced approach to cost, growth, and stability while planning their company’s future. They also increasingly look to financial professionals for guidance, education, and support.
The global economy has undergone many changes in recent years, and that volatility presents notable challenges to the manufacturing industry. Business owners report a range of concerns about external factors.
- 63% are concerned about tariffs on foreign goods and materials
2026 Principal Financial Well-Being Index - 56% are concerned about raw material and supply costs
- 55% are concerned about energy and fuel price volatility
- 51% are concerned about geopolitical uncertainty
- 48% are concerned about supply chain and logistics costs
In an environment where economic and policy conditions can change quickly, manufacturers are increasingly focused on what they can influence most: workforce stability, operational efficiency, and long-term business planning.
As economic pressures continue to shift, manufacturers are focusing on business priorities they can more directly influence. These include managing rising health care costs, improving employee retention, supporting workers’ financial security, and strengthening productivity.
Unlike industries facing more aggressive hiring demands, like construction, they appear focused on workforce optimization rather than expansion. Over half of manufacturers report concern about employee retention
One way manufacturers are addressing employee retention is by offering competitive benefits. Despite their concerns over supply chain costs, tariffs, and raw materials, more than eight in 10 manufacturers want to offer more employee benefits than they already do.
A vast majority of business owners see benefits packages as multifunctional tools for managing workforce stability:
- 90% believe benefits improve productivity
- 90% believe they improve employee retention
- 96% believe they improve recruiting efforts
“Increasing productivity" is the number one reason why a manufacturing business owner is likely to add a new benefit to their package.
Though attention is more focused on employee retention, the second highest driver for benefit additions is attracting new talent in a competitive market.
The manufacturing industry understands specialized skills matter and replacing experienced employees can be costly—that's when benefits can become a key lever for maintaining output and preserving institutional knowledge.
Questions for business decision makers: What benefits are your employees asking for? What additional benefits could you add to the overall package? How are your benefits helping improve productivity, retention, and business continuity?
Many business owners understand that benefits are not a one-size-fits-all solution. Manufacturers recognize the major impact a select and specialized group of employees can have on operations, customer relationships, productivity, and business growth. As a result, key employee benefit planning is becoming an increasingly important business priority. These benefits can help supplement existing insurance and save beyond traditional retirement plans.
One of the reasons for that rise of importance is that manufacturers tend to have more key employees than other industries. For example, 39% of manufacturers have four to 10 key employees, compared to all-industry average of 28%.
95% of manufacturers offer one or more key employee benefits—well above the all-industry average of 75%.
| Key employee benefit | Percentage of manufacturers that offer it2 |
|---|---|
| Life insurance for key employees | 65% |
| Disability Income insurance for key employees | 54% |
| Retirement protection disability coverage | 30% |
| Executive bonus plans | 29% |
| Deferred compensation plans | 24% |
| Split dollar plans | 11% |
Manufacturers offer key employee life and disability insurance at a higher rate than other industries but fall behind the average across all industries with nonqualified plans, such as executive bonus and deferred compensation plans. In the trade and transportation and financial services industries, for example, nearly half of the companies offer an executive bonus plan. There may be opportunities for manufacturers to evaluate whether additional nonqualified benefit strategies align with their retention and continuity goals.
Nearly 80% want to add even more key employee benefits to their packages.
When manufacturing business owners think about business continuity, the conversation often extends beyond equipment, facilities, and production processes. It includes the people whose knowledge and leadership help keep the business moving forward. Thoughtful key employee benefit planning can support retention, strengthen succession readiness, and create stronger alignment between the future of the business and the individuals helping shape it.
Question for business decision makers: What benefits are key employees asking for?
There are three major barriers business owners face when it comes to planning the financial future of their company.
According to business owners, the top three barriers are:
- The business feels too small or too new
- Financial planning seems too complicated
- Needing more capital
Manufacturers are more likely than other industries to seek out and rely on financial professionals to help plan and support the future of their business. Nearly nine out of 10 manufacturing businesses use a financial professional, as compared to the combined-industry average of seven in 10.
Questions for business decision makers: Where can a financial professional help in your business planning? What factors are most important when selecting a financial professional to work with?
Compared to other industries, manufacturers appear to be focused less on expanding headcount and more on retaining critical talent, improving productivity, and maximizing the effectiveness of their existing workforce. Manufacturers have shown adaptability in a challenging economy, a willingness to plan ahead, and eagerness to partner with financial professionals to plan for the future of their companies.
Explore manufacturing business protection and succession trends.
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