Multiregional manufacturing has become non-negotiable for most brands. The industry is now driven by tariffs, disruptions, and the need to reduce concentrated risk.
As we enter 2026, the strategy itself hasn't changed. However, the advantages and risks for manufacturers have shifted.
We believe four main factors will shape manufacturing dynamics in the year ahead. Our insights are based on what we're seeing across regions, programs, and partners
Our Predictions for the Year
2026 is the year to take your manufacturing strategy to new heights.
1. Tariffs will remain active, but escalation will become more targeted
We expect trade tensions to continue. But we will see selective actions rather than broad escalation.
China–U.S. trade will remain complex but relatively stable. U.S. relationships with India and other regions, like Southeast Asia, could meaningfully influence sourcing decisions.
Watch for narrow tariff adjustments in specific product categories, and see how quickly brands adjust strategy rather than react.
2. Supply chain diversification will continue, but progress will be uneven
Brands will continue to move toward diversified supply chains. However, not all regions will scale at the same pace.
Vietnam continues to develop as a strong competitor to China in select categories. Meanwhile, India is improving rapidly across precision tooling, textiles, plastics, and mixed-production programs.
India's advantage is shifting from cost to engineering depth, automation, and problem-solving at scale. High-volume consumer electronics and complex assemblies remain easier to ramp in China.
Watch for category-specific wins, not symbolic diversification.
3. AI will accelerate workflows, but it will never replace engineering judgment
AI will play a growing role in documentation, planning, and supply chain coordination. It will reduce friction and improve speed-to-market in incremental but meaningful ways.
What will AI never replace? Human judgment. Manufacturing teams still need the engineering judgment required for complex DFM decisions, tolerance strategy, material tradeoffs, and tooling design. Those remain firmly human-led.
Watch for small but meaningful gains in speed, planning, and coordination, but no breakthroughs in engineering automation.
4. Execution quality will matter more than geography
Manufacturing footprints will become more distributed, and risk shifts upstream. Success in a multiregional environment now depends on whether products are engineered to transfer cleanly across suppliers and regions.
Tooling strategy, tolerance decisions, material selection, documentation, and quality systems all determine whether diversification works in practice. Resilience is no longer added later. Manufacturers build it in from the start.
Watch for fewer reactive moves with a more intentional system design.
FAQs for Manufacturing in 2026
What is driving the need for changes in manufacturing in 2026?
Labor shortages, with more than 500,000 job vacancies, are accelerating the adoption of AI and automation. Another factor is supply chain resiliency.
How is AI transforming day-to-day operations on the shop floor?
The biggest transformation we see is in predictive, self-optimizing systems that can adjust in real-time. The key is that these systems still need human judgment to create the final product, as well as a data-collection point (an ERP system) to make planning and documentation more robust.
What is multiregional manufacturing?
This is a strategy that establishes production facilities across multiple geographic regions to counter supply chain issues, respond quickly to market demand, leverage the most advanced technological capabilities, and optimize labor costs. Firms that employ this strategy are generally more productive.