MANUFACTURING AND DISTRIBUTION PULSE SURVEY REPORT 2025
FROM DISRUPTION TO OPPORTUNITY
Economic Uncertainty Reigns
The administration’s trade policy, which has been altered 50 times since inauguration day, has fundamentally altered the economic outlook. Consumer expectations have fallen to the lowest level they have been since the early 1980s, inflation expectations have surged to the highest level they have been in over forty years, and small business optimism has plunged back toward preelection levels. Regional manufacturing surveys show rapidly rising input prices, shrinking orders, and underwhelming prospects for the next several months.
Forecasters have taken note. The odds of recession over the next 12 months have risen, and many forecasters have lowered their real GDP forecast for 2025 and raised their expected unemployment rate. Forecasters also expect faster inflation this year, higher interest rates, and slower employment growth. Of course, recent measures of sentiment and forecasts predate the 90-day reduction to tariffs on Chinese imports announced on May 12, 2025, a move that improved the outlook, albeit not to pre-April 2, 2025 levels, and provided at least a glimmer of certainty regarding the direction of trade policy.
Despite this recent decline in economic sentiment, the expected effects of drastically altered trade policy have yet to surface in economic data. Employers added jobs at a healthy pace in April, and initial claims for unemployment insurance — often considered the most real-time labor market indicator — remain low by historical standards. Retail sales, which were weak in January and February, surged higher in March, although that may be the result of consumers racing to beat the price-raising effects of tariffs.
Front loading efforts were glaringly apparent in March’s trade data. Imports rose by $17.8 billion for the month as domestic companies stocked up ahead of tariffs, and that pushed the trade deficit to a record $140.5 billion. Because much of this purchasing activity was pulled forward, imports will likely sag in the coming months, although there may be another rush to beat tariffs during the current 90-day period of lower tariffs on Chinese imports.
Inflation data, which has yet to capture the effects of higher import taxes, improved considerably during the first four months of 2025. The consumer price index was up just 2.3% year over year in April, the lowest annual rate of price increases since February 2021. While recent disinflation is highly encouraging, tariffs will eventually reignite price increases.
As a result, interest rates appear set to remain higher for longer. Entering 2025, the consensus forecast had the federal reserve cutting rates four times. That forecast has crumbled, with current expectations penciling in just one 25 basis point rate cut this year, and rising bond yields show that investors are not particularly optimistic about the path of interest rates. Of course, uncertainty reigns supreme, and it’s entirely possible that rates fall more than expected in 2025.
That same uncertainty has been particularly harmful for domestic manufacturers. While
factory output increased at a 5.1% annual rate in the first quarter, according to official industrial production data, the industry has lost 82,000 jobs over the past year, while measures of manufacturer sentiment are particularly glum. The ISM Manufacturing PMI shows that industry activity contracted for the 28th time in the past 30 months in April, and respondents indicate a particularly rapid input price escalation. Regional federal reserve manufacturing surveys haven’t been much better, with growing pessimism from New York-based producers who are especially harmed by restrictions on Canadian trade.
The consumer price index was up just 2.3% year over year in April, the lowest annual rate of price increases since February 2021. While recent disinflation is highly encouraging, tariffs will eventually reignite price increases.
Put simply, many economic actors are frozen in place by the uncertainty surrounding U.S. trade policy, and the outlook is unlikely to improve until conditions settle into some semblance of permanence.
Even with these conditions, however, there is some reason for optimism — we’ve been here before. A majority of forecasters expected a recession in 2022 and 2023 due to dismal expectations and sentiment, as well as inflation and high interest rates, and despite ongoing consumer and labor market strength. Notably, the economy breezed through that period, exhibiting faster growth than virtually anyone thought possible. Which is to say, it’s entirely possible that poor sentiment once again fails to translate into weak economic activity.
Ultimately, no one knows how the economy is going to respond to this period of uncertainty and changing trade dynamics — at least not as of this writing in mid-May. Container shipments from China declined significantly in recent weeks, and that will reduce port volumes in the coming weeks and
likely lead to some product shortages. There is also potential for a bullwhip scenario as shipments resume during this current 90-day negotiation period with China, potentially causing a rapid increase in shipping rates.
With hard data yet to reflect recent changes in economic conditions, decision-makers will want to pay close attention to industry specific insights, and that’s precisely why Citrin Cooperman conducts its annual survey of manufacturers and distributors.
and CEO
Dr. Anirban Basu Chairman
Sage Policy Group, Inc.
Summing Up Our Findings
In 2025, the U.S. manufacturing and distribution industries are undergoing rapid and significant transformation driven by shifting trade policies, a slowing economy, technological advancements, and evolving global dynamics. The everchanging tariff environment has caused some businesses to rush into investments or inventory purchases, while others are holding off due to high uncertainty. These challenges are spurring conversations on global supply chain shifts, tariff mitigation strategies, reshoring or nearshoring, improved forecasting on both the financial and purchasing side of the business, and investments in new technology for more accurate insights to succeed.
Citrin Cooperman’s Manufacturing and Distribution Industry Practice strives to provide our clients with insights that will help them continue to grow and succeed in today’s evolving environment. Our sixth annual Manufacturing and Distribution Pulse Survey Report, based on insights from over 500 industry leaders, reveals key trends and perspectives on where business leaders see opportunities to unlock future value in 2025 and beyond. Key highlights from this year’s survey include:
• EBITDA growth has been positive, but managing rising costs has been a major focus.
• Artificial intelligence (AI), technology, and supply chain investments are a focus in 2025.
• Company leaders are managing supply chain, product sourcing, and tariff mitigation.
• Growth and investment outlook vary by sub-industry for 2025 and beyond.
Our survey aggregates insights from manufacturers and distributors in driving future growth, managing through instability, and improving their strategic business planning. We hope you find this report insightful as we explore how manufacturing and distribution leaders are positioning their business for opportunity during uncertainty.
John Giordano
Partner and Co-Leader
Manufacturing and Distribution
Industry Practice
Partner and Co-Leader
Manufacturing and Distribution
Industry Practice
Mark Henry
500
leaders spanning the manufacturing and distribution landscape have weighed in — here’s the profile of participants this year:
For the sixth year in a row, Citrin Cooperman polled senior leaders of manufacturing and distribution companies across the nation to measure the health of their businesses in the moment and to take stock of future priorities, concerns, and readiness to rise to new challenges. Our findings highlight what your peers report on the industry now and their considerations about what’s next. Complete information on the survey methodology and respondent demographics can be found at the end of our report.
66% have revenue of $100 million to over $1 billion.
68% are C-Suite (CEO, CFO, COO, other), founders, business owners, presidents, or SVPs. 85% have more than 500 employees.
*Our 2025 survey report references fiscal year 2024 compared to fiscal year 2023. Our 2024 survey report references fiscal year 2023 compared to fiscal year 2022.
84% are in the consumer products and retail, industrial products, or food and beverage sectors.
88% of the manufacturing respondents are based in the U.S.
Key considerations for growth gains
78% report some/moderate or significant growth in revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA).
The
Topdrivers of EBITDA decline are decreases in product demand, increase in overhead costs, or volatility in product demand.
The
Main Drivers
of EBITDA growth are product demand increases or stabilization, or introduction of a new product line.
Stabilization of Profitability Amid Rising Costs, Customer Expectations, and Other Disruptions
Revenue Growth
Seventy-eight percent of respondents report significant or some/modest revenue growth in 2024 compared to 2023. The number of companies reporting growth last year compared to this is declining. In our 2024 survey report, 96% said year-over-year growth was significant or modest. On top of that, only 17% saw significant revenue growth in 2024, while nearly half or 49% of manufacturing and distribution company leaders had significant revenue growth in 2023. With other headwinds on the horizon, as we’ll address later in our report, it appears that the days of significant growth are a thing of the past.
Net Growth
n Significant growth
n Some/modest growth
n No growth
(same as previous year)
n Some/modest decline
n Significant decline
Significant EBITDA Growth Has Slowed
EBITDA Growth
Earnings growth mirrored revenue growth, with 77% of respondents reporting some/modest or significant growth in EBITDA. Two in ten say EBITDA grew significantly in 2024. The year-to-year revenue and EBITDA performance is strikingly different than 2023 when five in ten said earnings growth was significant and 94% reported significant or some/modest growth. It looks like the days of significant EBITDA growth are behind us.
2024 Net Growth 77%
said EBITDA growth from 2023 to 2024 was significant
n Significant growth
n Some/modest growth
n No growth
(same as previous year)
n Some/modest decline
n Significant decline
EBITDA Growth Drivers
When asked about the top drivers of EBITDA growth or decline, manufacturing and distribution leaders predominantly point to aspects of product demand. EBITDA growth in 2024 is is attributable to top factors like increases in product demand, improvement in product demand, stabilization of demand, or the introduction of new products.
What are the main driver(s) for the growth in EBITDA?
EBITDA Decline Drivers
the root of declining EBITDA are factors like decreased product
Turning a Strategic Focus on Overhead in 2025
Thirty-two percent of respondents identified rising overhead costs including insurance, labor, and other administrative expenses as one of the main contributors to EBITDA decline in their 2024 fiscal year. With revenue and EBITDA showing signs of stabilization, the ability to rely on growth to offset rising overhead costs is quickly becoming more difficult.
Now more than ever, business leaders in the industry must take a proactive approach to cost control by strategically reviewing the key drivers of their overhead. Conducting a review of fixed costs, insurance, labor allocation, and more can uncover opportunities to optimize operations and improve margins. Companies that get ahead of this trend will be better positioned to protect profitability, reinvest in growth initiatives, and weather the next wave of market fluctuations.
Alyssa Kaye Partner, Manufacturing and Distribution Industry Practice
Customer Expectations of Products
Meeting Customer Expectations to Drive Growth
As revenue and EBITDA growth stabilize across the manufacturing and distribution sector, leaders must realign operations to better meet evolving customer expectations. Survey respondents identified product availability, customer service, pricing, and technical knowledge as the most important factors influencing customer satisfaction.
Product availability and pricing remain foundational. To meet demand and remain cost-competitive, companies should invest in real-time inventory visibility, demand forecasting, and data-driven pricing strategies. These tools enable more accurate planning and responsiveness to market fluctuations.
Customer service is equally vital. Today’s customers expect fast, informed, and proactive support. By leveraging AI and digital tools, companies can enhance service capabilities, predicting customer behavior, identifying needs early, and personalizing interactions at scale.
A strong foundation of technical knowledge helps differentiate companies in a crowded market. Customers value partners who not only deliver products but understand their applications and can provide informed recommendations.
By aligning more closely with these expectations, manufacturing and distribution companies can deepen customer relationships, enhance loyalty, and create new opportunities for sustainable growth, even in a flat market. Delivering consistency, value, and expertise across the customer journey is a strategic necessity.
Partner, Manufacturing and Distribution Industry Practice
Emily Richi
TECHNOLOGY AND TECH SKILLS
The promise and practical challenges of technology progress half
say recent cloud-based ERP upgrades were done to support digital transformation initiatives. 69%
say artificial intelligence (AI) technology had the most impact on their business in the past three years.
tie their future competitiveness to either leveraging ERP data to better predict supply chain delays and cost changes or leveraging customer data to better predict customer behaviors. Only 7% 35%
report having mature adoption of AI, while 39% have emerging organizational adoption.
4 IN 10 conduct cyber penetration testing or regular cyber assessments.
Two-thirds
report upgrading their ERP system to more fully leverage technology to achieve business growth/value objectives.
Upgrading and Optimizing Technology and Business Intelligence for Strategic Advantage
Business Impact of Present and Future Technologies
Manufacturing and distribution leaders share that the technologies and initiatives with the most business impact over the past three years are AI, cyber and data security, and business intelligence (BI), followed by internal systems integration work and new ERPs. Looking forward, the most mentioned applications of technology and intelligence to remain competitive are:
No. 1 No. 2
improve predicting supply chain delays/cost changes gathering and analyzing customer data to better predict their behavior.
Which technologies/initiatives have had the most impact on your business in the past 3 years?
Which of the following do you believe is needed now or in the next 3-5 years to keep your company competitive? 54% 52%
The ability to gather and analyze data from suppliers’ ERP systems to better predict supply chain delays and cost changes The ability to gather and analyze customer data to better predict their behaviors
How Forecasting Technology is Reshaping Supply Chains
In today’s volatile market, the phrase “be quick or be dead” resonates more than ever. For manufacturing and distribution companies, agility is not just a competitive edge — it is a survival trait. With 71% of business leaders expecting disruption from tariffs and supply chain instability, the need for responsive and intelligent systems is clear.
Survey results highlight a growing demand for realtime visibility into both supplier and customer data. Over half of respondents cited the ability to analyze ERP data from suppliers and anticipate customer behaviors as critical capabilities for the next 3–5 years. These insights reinforce a broader trend: businesses must shift from reactive to predictive decision-making.
Modern cloud-based systems, when integrated with advanced forecasting and business intelligence (BI) tools, enable just that. By aggregating, normalizing, and analyzing data across the supply chain, organizations can detect risks earlier, model cost scenarios under different tariff regimes, and align
inventory planning to real-time demand signals. AI-enhanced forecasting adds further precision, enabling companies to simulate outcomes, anticipate disruptions, and adjust plans dynamically. The good news is that today’s BI/AI platforms have evolved to be more accessible. With the ability to integrate via API or using an IPaaS solution, once disadvantaged mid-market firms now have the opportunity to outperform larger competitors by deploying nimble, user-driven analytics tools. These platforms empower business users to perform ad-hoc analysis without relying heavily on IT, providing the speed and flexibility that modern supply chain management demands.
In a global landscape where disruption is the norm, robust ERP, BI, and forecasting capabilities aren’t a luxury — they’re table stakes for staying competitive.
Jory Weissman Partner, Digital Services Practice
The AI Adoption Curve and Most Common Uses Today
Applying AI tools for business advantage is a work in progress for most and a learning process for all. Adoption rates vary, yet strides are being made. While only 1% do not use AI in their business at all, only a very small percentage, 7%, consider what they have done to date as “mature adoption.”
Here are the details along the adoption continuum: 32% 39% 21% 7%
actively use Git Hub/Chat GPT (or equivalent) to help prepare business documents, conduct general research, engage in marketing activities, or to enhance customer communications.
have emerging organizational adoption of more structured use of AI powered assistants, such as Microsoft Co-Pilot, and are in a learning phase of “what’s possible.”
report organizational adoption of AI powered assistants, like Co-Pilot, and are actively using them to aggregate business communications data across email, Word, Excel, and PowerPoint files.
have mature AI adoption that includes ERP business data along with all the above uses.
While the manufacturing and distribution industry overall is exploring and implementing AI, the depth of adoption varies significantly when explored across company size. Mid-sized companies ($10M–$99.9M) are the most active in leveraging AI agents like Git Hub, Copilot, and Chat GPT for document creation, research, marketing, and client communications, with 43% mid-sized companies reporting such usage. Meanwhile, enterprises in the $250M–$499.9M range show strong emerging adoption, with up to 52% exploring more structured tools like Microsoft Copilot. Mature AI integration is most prevalent among companies with more than $1B in revenue, where 50% report comprehensive, mature AI adoption. Despite varying levels of maturity, AI is clearly on the radar for many manufacturing and distribution companies across all revenue sizes.
Which of the following is true about the use of AI in your business?
We actively use Git Hub/ Chat GPT (or equivalent AI Agents) to help with preparing business documents, doing general research, and or engaging in marketing activities and to enhance client communications.
We have emerging organizational adoption of more structured use of AI powered assistants such as Microsoft Co-Pilot and are in a learning phase of “what’s possible”.
We have organizational adoption of AI Powered assistants like co-pilot and are actively using it to aggregate business communications data across email, word, excel and PowerPoint files.
We have a mature AI adoption that includes ERP business data along with all of the above services,
We are not using AI in our business.
When Innovation Meets Exposure: AI and Cyber Risk
AI is revolutionizing industries with its capabilities, as shown by 69% of survey respondents noting that AI has had an impact on their business over the last three years. With boosting efficiency, generating content and code in seconds, and offering aroundthe-clock support, the benefits seem limitless. While the power of artificial intelligence can be harnessed for an astonishing number of beneficial purposes, this technology is not without risk.
Businesses face risks when employees use AI tools without proper training. AI chatbots may store sensitive inputs, which could be leaked in future breaches. Companies should implement clear usage policies and restrict access to personnel who have received the requisite training on management approved AI solutions. Even reputable AI platforms aren’t immune to data leaks. A past incident involving Chat GPT exposed user chat histories due to a bug in an open-source library. Before submitting sensitive information to a chatbot, consider the consequences if it were made public. Vigilance is key in today’s AI-driven digital landscape.
Cyber and data security
Manufacturing and distribution companies should adopt a proactive approach to cybersecurity alongside their AI integrations by implementing regular cybersecurity awareness training and spear phishing simulations, including updates on emerging AI-boosted social engineering tactics. It’s equally important to establish clear policies around the use of AI tools, where only trained and authorized personnel should be granted access while permissions should be restricted for employees without management approval. A critically important element of these policies is that employees must be educated on the risks of sharing sensitive information with AI chatbots, emphasizing the potential consequences if chatbot histories were ever exposed. These best practices will help safeguard intellectual property, customer data, and operational integrity in an increasingly digital and AI-integrated environment.
Kevin Ricci Partner,
Risk Advisory and Compliance Practice & Cybersecurity Practice
ERP Updates, Drivers, and Outcomes
Let’s start with why ERP updates are being made. Sixty-three percent of respondents say the primary driver of their most recent ERP upgrades is to more fully leverage technology to achieve business growth/value creation objectives. Seventeen percent say the driver was reducing administrative and technology related costs. Fifteen percent looked to eliminate risks of aging legacy technology.
For added context, we asked for specifics about ERP initiative goals and how things turned out:
Digital Transformation Goals Technical Compliance Goals
35% 23% 29% 14%
upgraded to a new cloud-based ERP solution to support digital transformation and have experienced the value creation objectives anticipated.
upgraded to a new cloud-based ERP solution to support digital transformation and have had a hard time realizing the benefits anticipated.
updated legacy systems for technical compliance and found the updated features and functions had a positive impact on operations.
updated legacy systems for technical compliance and saw no meaningful change in business.
I have not had a recent ERP system upgrade in over 5 years.
What was the primary driver for your most recent ERP system upgrade?
Eliminate risk of aging legacy technology.
over five years.
Reduce administrative and technology related costs.
More fully leverage technology to achieve business growth/value creation objectives.
A smaller group, 5%, have not had an ERP upgrade in
Realizing ERP Value: It’s More Than a Software Upgrade
Despite decades of evolution in ERP technology, many companies still struggle to realize the full benefits of their investments. In this survey, 23% of respondents reported difficulty achieving anticipated value from recent ERP upgrades. While this is relatively low compared to historical norms, it’s important to note that 65% either experienced no positive change or underwhelming results — highlighting a persistent challenge in ERP adoption and implementation.
Common ERP upgrade hurdles aren’t typically about the technology itself. More often, failure stems from missteps in planning, change management, and execution. Issues such as inadequate requirements gathering, limited user involvement, and a “top-
Cyber and data security
down” approach to decision-making often leads to process misalignment and unmet expectations. When system design doesn’t reflect actual day-to-day workflows, users struggle with gaps and workarounds, resulting in frustration and unrealized ROI.
Many companies also fall into the trap of prioritizing “technical compliance” over transformational value. Upgrading to meet support requirements without reevaluating business processes is a missed opportunity. Similarly, the promise of best practices from cloud-based ERP vendors can backfire when legacy processes aren’t fully understood or when change management is treated as an afterthought. To increase the likelihood of success, organizations must invest in thoughtful, user-informed planning.
This includes detailed requirements definition, early and ongoing stakeholder engagement, and structured organizational change management. These activities are not optional — they are essential to minimizing risk, accelerating time to value, and ultimately lowering total cost of ownership (TCO).
ERP success isn’t just about the system — it’s about aligning people, processes, and technology from the outset.
Jory Weissman Partner, Digital Services Practice
Technology Workforce Skills Gap
Manufacturing and distribution leaders are clear about the value and purpose of their technology investments and initiatives, though 18% are not fully confident that they have the skilled talent to make the most of advanced technology. In order for companies to stay competitive moving forward, investing in their technology workforce should be top of mind.
Cyber Risk, Security, and Measures
One quarter of respondents said they dealt with a cyber incident or breach in 2024. How are they preparing for future risk? The top measures in place are cybersecurity awareness training (55%), active monitoring (47%), pen testing (43%), and at least annual cyber assessments (42%). Interestingly, only one in three have cyber insurance or an incident response plan in place. It appears as if there is room for cyber risk management improvements across the board and in most boardrooms.
55%
82%
agree with the statement: “Our employees have the appropriate technology skills to maximize our software currently in place.”
agree with the statement: “Our employees have the appropriate technology skills which will be needed to stay competitive.”
Which of the following cybersecurity initiatives do you currently have in place?
Provide cybersecurity awareness training
Have someone internal/external actively monitoring your cyber activity/security
Over half of companies provide cybersecurity awareness training and almost half (47%) have active monitoring of cybersecurity/activity.
Cloud Application Provider System and Organizational Control Checks
Sixty-three percent of respondents acquire and evaluate System and Organization Controls (SOC) reports on an annual basis and address the complementary user entity controls. Another 33% acquire reports annually but do not evaluate the complementary user entity controls. This leaves 4% who do neither.
For those doing business with the Department of Defense, 84% are compliant with the Cybersecurity Maturity Model Certification or have a plan in place to become compliant.
Have you evaluated the security of your cloud application providers?
Almost two-thirds evaluate the security of cloud application providers annually through SOC reports, and three in five (60%) are compliant with DOD CMMC.
If your company does business with the Department of Defense, are you in compliance with the Cybersecurity Maturity Model Certification (CMMC) 2.0?
We do not acquire SOC reports for our cloud application providers
We acquire and evaluate SOC reports on an annual basis and address the complementary user entity controls.
Not subject to compliance with CMMC We do not do business with the Department of Defense
SUPPLY CHAIN AND LOGISTICS
Product sourcing shifts continue as rising costs persist
source the majority of products from North America, roughly 4 in 10 source products from other parts of the world.
say the top strategy to manage product cost is to manufacture in-house.
Top reshoring challenges
are a lack of tax incentives (52%) and the cost of U.S labor (52%).
Managing Product Sourcing, Cost Management, and Logistic Challenges
Supplier Expectations on Products
Product Sourcing
In past years’ surveys, we learned that supply chain challenges led to companies bringing manufacturing home and/or closer to the customer through reshoring and other measures. Today, we see the effects of those trends in the numbers. Almost two-thirds of this year’s respondents (62%) source the majority of their products from North America, while Asia-Pacific (APAC) comes in second with 11%. The effect of tariffs on these and other key trends remains unseen. We look at tariff risks and tariff mitigation plans in the next section of our report.
Where do you source a substantial amount of your products from?
(Central & South Asia, Northeastern Asia, Southeastern Asia, Australia and Oceania)
Europe, Southern Europe, Eastern Europe, Western Europe)
Top challenges with reshoring include lack of
Product Sourcing by Subsector
Product Cost Management*
The most common ways survey respondents are managing product costs are clear and consistent. The top five are bunched in a tight band of actions:
• Managing more product ourselves 50%
• Outsourcing more manufacturing to third parties 43%
• Relocating sourcing closer to customers 43%
• Renegotiating forward contracts for purchases 41%
• Renegotiating freight contracts 40%
•
Reshoring Challenges*
Reshoring dominated agendas at the height of COVID induced supply chain challenges, but it seems like the trend continues today. As it does, so do many of the common challenges to reshoring that previous surveys revealed. At 52% each, meaningful tax incentives and cost of U.S. labor top the hurdles to reshoring in 2025, followed by capital investment costs and lack of access of skilled labor.
challenges
with reshoring include lack of tax incentives (52%) and cost of U.S. labor (52%).
* Respondents were able to make multiple selections.
Strategic Considerations for New Warehouses
As manufacturing and distribution companies continue to expand while both federal and state/ local policies are enacted to incentivize increased manufacturing, production, and distribution activities, the need for identifying the correct inventory storage, maintenance, and logistics solutions is essential. When a business is identifying prospective new warehouse and distribution locations, there are a myriad of considerations which play a critical role in the site selection process.
Cyber and data security
When opening a new warehouse, businesses should consider strategic, financial, operational, and regulatory best practices. Site selection should align with company needs, including proximity to customers, suppliers, major transportation routes, and labor pools. The facility should offer scalability for future growth while balancing upfront property, construction, and equipment costs. Businesses must also evaluate ongoing operational expenses such as utilities, maintenance, insurance, and labor. Consideration must also be given to the potential
state and local tax impact. Potential ramifications for property tax, sales and use tax, and various business franchise and net income tax must be factored in, along with potential incentives like job creation grants and reimbursements, investment tax credits, workforce training grants, and property tax abatements or payment in lieu of tax (PILOT) programs. Regulatory compliance, IT integration, and cost management are also key.
Each of these considerations plays a critical role in the financial health and operational success of your warehouse or distribution facility. Mapping out a thorough, well-planned approach ensures long-term success and efficiency. For the key criteria that should be considered when opening a warehouse, please read our Essential Checklist for Strategic Warehouse Planning.
Jaime Reichardt Partner, State and Local Tax Practice
RISKS AND HEADWINDS
Growth headwinds (and risks) mount as new tariff storms gather
40% have faced an increase in employee costs. 71% say tariff increases will directly or indirectly impact their business.
1 IN 4 say the high cost of capital is the top challenge they face today.
68% pass inflation costs on to customers 1-4 times a year.
21% of manufacturing and distribution businesses have experienced labor shortages in the past 12 months.
Almost half 15% are exploring tariff mitigation strategies presently. Half say tariffs will have a negative impact on business. ONLY implemented demand planning to mitigate tariff exposure.
Staying a Step Ahead of and Mitigating Risks and Headwinds
— Old and New
Challenges faced in past year
To get a feel for the day-to-day business agendas and actions of manufacturing and distribution companies over the past year, we asked what initiatives or challenges companies faced. The top five most common challenges respondents experienced in the past year are:
Opening of a new warehouse or manufacturing facility Implementation of a new ERP system Applied administrative/ service fees to products and services Sale or contemplated sale of a business division Cyber incident or breach
Respondents were able to make multiple selections.
Challenges Ahead
2024’s agenda items often morph into this year’s priorities and meld with new issues. From the list of multiple challenges leaders were presented in our 2025 survey, many are of relatively equal weight and equivalent sources of concern. These big challenges span high cost of capital, tech upskilling, ability to finance growth and keeping up with technology changes. Multiple plates will be spinning in C-suites and through all layers of operations in the year ahead and need to be managed to sustain revenue growth and profitability.
From the following list, what are your company’s biggest challenges today?
The Strategic Advantage of Early Tax Planning
As manufacturers and distributors continue to grapple with high capital costs, early tax planning can play a key role in maximizing the value of new investments. The 2025 Manufacturing and Distribution Pulse Survey shows that while cost of capital is a top concern, over a third of respondents still plan to invest more than $1 million into their businesses within the next three years.
Many tax provisions that have historically helped offset capital costs — including bonus depreciation, expanded business interest deductions, and lower corporate tax rates — are scheduled to sunset at the end of 2025. Although Congress is expected to address these provisions, the timing and specifics of any legislation remain uncertain.
Cyber and data security
Early planning allows businesses to model different scenarios, assess whether accelerating investments into 2025 could optimize tax benefits, and build
flexibility into their investment strategies. Even if key incentives are ultimately extended, companies that proactively evaluate their options will be better positioned to respond quickly to legislative developments — rather than rushing to react at yearend. Managing high capital costs isn’t solely a tax issue, but smart tax planning can help preserve cash flow, improve after-tax return on investment, and provide a strategic edge during a period of economic and legislative uncertainty.
Brian Ciszczon Partner, National Tax Office
Tariff Impacts and Mitigation Plans
Real or threatened new tariffs and their disruptive effects — good, bad, or other — are affecting markets, clouding economic forecasts, and have the full attention of manufacturing and distribution company leaders. Seven in ten respondents say their companies will be directly or indirectly impacted if tariffs are increased. Half say tariffs will have negative impacts on business. It is early in the process of adapting to tariff changes, yet only 15% are presently exploring tax strategies to mitigate tariff exposure. We suspect this number will continue to rise over the next several months.
If tariffs were to increase, how would this impact your business?
We are exploring strategies to mitigate our tariff exposure
Indirect impact - our products are sourced in the U.S. but pricing will fluctuate based on international tariffs No impact - most of our products aren’t impacted by tariffs
While nearly half of 2025 survey respondents say they already manufacture in the U.S., a sizeable group report that they are considering reshoring (26%) or nearshoring (20%) in the face of tariff changes. To mitigate tax exposure, the most common supply chain specific actions taken to date are demand planning (46%), freight consolidation (40%), and alternative sourcing (40%). 46%
With the possibility of increased tariffs, is your company considering any of the following?
manufacturing to the U.S.
Direct impact -most of our products will be impacted by tariffs
Nearshoring to a country closer to the U.S. (i.e. Mexico or Canada)
Our company already manufactures our products in the U.S.
We are not reshoring, even with the potential of increased tariffs
I haven’t implemented any supply chain strategies to mitigate tariff exposure
Almost half have implemented demand planning (46%) to mitigate tariff exposure, followed by two in five (40%) implementing freight consolidation and alternative sourcing.
Supply Chain Resilience in a Shifting Landscape
In the most recent years, we had the 301 tariffs under President Trump’s first term, the supply chain disruption brought on by COVID and the aftermath, and now a tariff strategy that brings uncertainty. Companies should continuously monitor their supply chains as opposed to only addressing them at the peak of concern. Even during stable periods, your most successful operators and industry leaders are assessing their supply chain on no less than an annual basis to mitigate risk, spend, and exposure. Some common strategies that the industry is exploring include:
Diversification of Suppliers: Companies are increasingly exploring strategies to diversify their sourcing, not only to reduce costs but also to mitigate risk, as overreliance on a single source has become a growing concern for business leaders
Reshoring: Companies must thoughtfully assess its feasibility, considering factors such as capital investment in facilities and technology, as well as the recruitment of skilled labor that has long been outsourced when considering reshoring to the U.S. However, with the right planning and conditions, the long-term benefits such as greater supply chain resilience, reduced geopolitical risk, and improved quality control can make reshoring a highly rewarding endeavor.
First Sale: Any U.S. distributor purchasing goods from brokers or through buying agents may have an opportunity to mitigate the tariff exposure by tracing back to the first sale, eliminating the “middleman” costs from the tariff calculation. Although not directly related, but closely aligned with first sale, for companies that are the U.S. distribution hub for a foreign parent, transfer pricing should be considered in the determination in the amount subject to tariffs.
Foreign Trade Zone (FTZ): FTZs act as a separate, secure area outside of the normal U.S. customs territory for the purposes of tariffs and regulations. Benefits of an FTZ include duty/deferral/exemption, reduced customs procedures, and other strategic and competitive advantages.
Tariff Engineering: Making modifications to the product to have it recategorized under a separate, more favorable tariff rate.
Even if the current tariff issues subside, are you ready for the next disruption?
John Giordano Partner and Co-Leader, Manufacturing and Distribution Industry Practice
Inflation and Rising Costs
Our 2025 survey was fielded in February 2025 at the turn of administration. While economists projected flattening of rising costs and inflation reductions, as of Q2, those projections are in flux and many are in a wait and see mode. The big takeaway from our respondents is that few executives are fully confident about what comes next regarding the effects of inflation and rising costs. Only 27% say they strongly agree that they anticipate customer spending to increase. Only 21% strongly agree that future interest rate declines have increased business spending habits.
Please tell us how much you agree or disagree with each of the following statements in relation to the impact of inflation and rising costs on your business.
My business anticipates our customer spending to increase in 2025 as a result of interest rates.
The future interest rate environment (expected to decline) has increased my business’ spending habits.
Tariffs will have a negative impact on my business in 2025.
My business anticipates our customer spending to decrease in 2025 as a result of inflation.
The future inflationary environment (inflation may increase) has decreased my businesses’ spending habits.
Meanwhile, rising costs caused by inflation are being passed on to customers regularly. It remains to be seen whether customers will continue to accept the increases. Only 8% of respondents do not pass higher inflationary costs to customers. Most businesses are passing these costs on in quarterly, annual, or monthly price increases.
How often are you passing production, supply chain, and other inflationary costs to your customers through raising your prices?
2025 respondents report improvements in cash demand periods. Fifty-six percent note improvement in accounts receivable turnover. Fifty-four percent say inventory turnover either moderately or significantly improved. Perhaps this reflects inflation and interest rates coming down from highs in the beginning of 2025.
How have your accounts receivables turnover and inventory turnover (days to collect receivables and sell inventory) changed as a result of the current interest rates and inflation?
Labor Shortages
The headwinds are clear: Slowing growth in revenues and earnings, lasting and new supply chain pressures, rising costs and inflation, and new tariffs. If those factors together or alone are not enough to top agendas, the labor force has its own challenges and executive demands. Two in five (21%) respondents have experienced labor shortages in the past 12 months. Of these, over half say their sales force (57%) and skilled labor including tech skilled workers (54%) are most impacted by the labor shortage.
Labor Shortages by Subsector
Which areas of the business are most impacted by any labor shortages?
One in five (21%) of businesses have experience labor shortages in the past 12 months. Of these, over half say their sales force (57%) and skilled labor (54%) are most impacted by the labor shortage.
FUTURE OUTLOOK
Leadership’s thoughts on future outlook and investment priorities to support growth
48% are considering a sale of their business within three years to the best of their knowledge.
38% predict a significant increase in workforce investments or upgrades.
37% anticipate a potential expansion into a new facility or plant.
34% are planning for capital investments exceeding $1M.
One-third say the top keys to future growth are entering new markets, supply chain stabilization, utilizing best in class technology, and workforce upgrades.
37% identify upgrades in organization structure/ talent as the way to maximize value if the company were to be sold.
Driving Future Value Presently With Priority Actions, Investments,
and Sale Plans
Growth and Investment Plan Outlook
We asked respondents to forecast actions likely to be taken — all within their control — in the next three years to increase the value of the business. The top three likely actions are significant workforce expansion, expansion into a new facility or plant, and capital investments involving improvements, building, or equipment exceeding $1M. Leaders seem poised to invest to be future ready.
Over one-third of companies expect significant increases in workforce (38%), potential business expansion (37%), and capital investments of over $1M (34%) in the next 3 years.
Growth Plan by Subsector
Consumer Products and Retail
Distribution and Logistics
Key Growth Strategies and Focus Areas
Asked a different way and for a different purpose, respondents say the biggest strategic areas for future growth are entering new markets, stabilizing the supply chain, and utilizing best in class technology.
Key Growth Strategies by Subsector
From the following list, what are biggest keys to your future growth strategy?
Products
Potential Sale Plans
Just under half of respondents foresee a sale of their business in the future: 17% definitely and 31% probably. Experience teaches us that the likelihood of those business sale plans hinges on company success with the growth strategies addressed above and leveraging the value drivers in the section below.
To the best of your knowledge, is your company considering a potential sale of your business in the next 3 years?
Yes, definitely
Almost half (48%) say their company is considering selling in the next three years, and upgrades in organization structure/talent (37%), sales infrastructure (35%), and R&D (35%) are most critical to maximize company value.
Margins, Multiples, and M&A Reality
As we move through 2025, the mergers and acquisition (M&A) market for middle-market manufacturing and distribution companies is showing signs of renewed activity, but seller confidence has tempered compared to recent years. After a sluggish 2023 and modest rebound in 2024, deal flow is accelerating, driven by easing interest rates and strong buyer demand — particularly from private equity funds with record levels of dry powder. However, not all sellers are seeing the upside.
Valuation expectations remain a key tension point. Many owners still benchmark against the elevated multiples of 2021–2022, but buyers today are more selective and disciplined, rewarding companies with resilient margins, clean financials, and strong growth narratives. At the same time, operating headwinds — including input cost volatility from tariffs and other factors, wage inflation, and ongoing supply chain inefficiencies — have compressed margins for many manufacturing and distribution businesses, complicating the sell-side story.
Cyber and data security
attracting strong interest, while others — such as traditional automotive suppliers or building product distributors — are feeling pressure from end-market slowdowns and shifting customer demand.
There is no mass slowdown in exit activity, but owners are taking longer to prepare, and more are delaying sales in hopes of stronger valuations or clearer macro certainty. For manufacturing and distribution business leaders considering a transaction, now is the time to assess internal readiness. Clean financials, operational efficiency, and a clear growth or transition story are crucial to attract the right buyers and maximize value. Owners should also be aware of potential changes to tax policy and regulatory environments as the post-election landscape evolves, especially considering the speed with which policies are being updated or changed.
Value Creation Levers
We asked our survey participants what their company needs to do to maximize its value — regardless of whether they are considering a sale in the next three years. The top four items respondents say they need to focus on to make their business attractive to suitors are:
Other value maximization drivers include ERP systems, physical plants, and corporate governance.
Subsector dynamics are also creating divergence. Segments like industrial automation, defense, and infrastructure-linked manufacturing are
Harper Garrett Director, Transaction Advisory Services Practice
Respondents were able to make multiple selections.
Regardless of whether your company is actually considering a sale of your business in the next three years, if you were to theoretically sell your business, which of the following do you believe you would need to upgrade if your company were to be sold in order to maximize your company’s value?
Respondents were able to make multiple selections.
Value Creation by Subsector
Driving Value with Data, People, and Process
In the 2025 survey, we see organizational talent, research and development, and financial reporting as the key areas for improvement to maximize value. I have seen this trend with most of my manufacturing and distribution clients. In 2023 and 2024 my clients upgraded their ERP systems, operational processes, and equipment. This work was the first step in maximizing value. These same companies continued to improve by upgrading talent through financial reporting, sales, and customer service. These companies are also upgrading the financial reporting process. A more robust ERP system coupled
Cyber and data security
with increased talent in financial reporting allows these companies to provide immediate financial information to key decision-makers. Executives and key decision-makers can keep their companies agile ahead of any economic uncertainty. In 2025, keeping your business agile and your decision-makers informed is a key competitive advantage.
Anthony Harrypersad Partner, Manufacturing and Distribution Industry Practice
Use of Grants, Now and in the Future
Nearly half of the respondents reported successfully utilizing grants available through federal or state programs. However, 53% have not taken advantage of these opportunities due to not exploring them, believing they are ineligible or for another reason. These results suggest that there may be a lack of awareness or understanding about grant eligibility within the industry, highlighting an opportunity for greater outreach and education on available funding resources.
Maximizing Momentum Through Grant Programs
Has your business been able to utilize grants available via various federal or state programs?
We have not explored grant opportunities
Manufacturing specifically has been a benefactor of significant grant programs in recent years. Business owners and their key management should carve out time or collaborate with specialists in this field to get ahead of these initiatives. The clients we have helped to find grant opportunities are also those that are continuing to invest, build, grow and expand their businesses via these funding opportunities.
Mark Henry Partner and Co-Leader, Manufacturing and Distribution Industry Practice
FULL METHODOLOGY AND DEMOGRAPHICS
Methodology & Demographics
This survey was conducted online in conjunction with the research arm of FINN Partners between February 12, 2025, and February 19, 2025. There were a total of 500 surveys completed. Respondents were screened for working at a company involved with manufacturing and/or distribution and working at a company with a $10M+ revenue size. Some numbers throughout the report do not equal 100% due to rounding.
Position/Job Title
C-Level (i.e. CEO, CFO, COO, etc.)
Inside Citrin Cooperman’s Manufacturing and Distribution Industry Practice
Citrin Cooperman is proud to be home to one of the leading Manufacturing and Distribution Industry Practices in the country. Our dedicated team leverages our deep industry expertise to provide a full range of professional services and industry insights to assist our clients with achieving their business goals.
We strive to deliver value to manufacturing and distribution companies by helping leadership make informed decisions that improve efficiencies, reduce costs, and ultimately improve the bottom line.
About Citrin Cooperman
Citrin Cooperman is one of the nation’s largest and fastest-growing professional services firms. Since 1979 our daily mission has been to help middle-market companies and high net worth individuals find success in their business and personal financial lives through our proactive guidance, specialized services, and passion for excellence. Rooted in our core values, we deliver a comprehensive, integrated business approach, including tailored insights throughout the lifecycle of our clients. Whether your operations and assets are located around the corner or across the globe, we provide new perspectives on strategies that help you achieve your short- and long-term goals. With over 30 offices and more than 3,500 professionals, Citrin Cooperman is included in the Top 20 Firms by Accounting Today. Learn more about Citrin Cooperman at citrincooperman.com.
Consumer Products and Retail
Distribution and Logistics
Food and Beverage
Industrial Products
Manufacturing
John Giordano, Partner and Co-Leader |
Manufacturing and Distribution Industry Practice
John has nearly two decades of experience providing accounting and assurance services for middlemarket businesses and their owners. His clients span the manufacturing, wholesale distribution, retail, e-commerce, and service industries.
Mark Henry, Partner and Co-Leader |
Manufacturing and Distribution Industry Practice
Mark has over 15 years of experience in public accounting, and has significant experience providing audit, financial reporting, and business consulting services to clients in various industries, including but not limited to manufacturing and distribution.
Brian Ciszczon, Partner | National Tax Office
Brian has over 25 years of experience as a tax advisor in public accounting. He offers guidance to clients across industries on compliance, information reporting, accounting methods, controversy, and policy formulation.
Harper Garrett, Director | Transaction Advisory Services Practice
Harper has 15 years of accounting, auditing, and consulting experience with a focus on manufacturing and distribution clients. As a member of this practice, Harper acts as a lead on various financial due diligence projects for both buy-side and sell-side clients, including quality of earnings, net working capital analysis, and additional special projects.
Anthony Harrypersad, Partner | Manufacturing and Distribution Industry Practice
Anthony has over 11 years of experience providing audit and business consulting services to his clients. His clients consist of family owned, middle-market businesses to large businesses with global operations in a variety of industries, including manufacturing and distribution.
Alyssa Kaye, Partner | Manufacturing and Distribution Industry Practice
Alyssa has over 10 years of experience providing audit, assurance, and consulting services to a variety of industries including manufacturing and distribution. Additionally, she serves as the Moore Global Manufacturing and Distribution Global Sector Leader.
Jaime Reichardt, Partner | State and Local Tax Practice
Jaime provides consulting to different types of businesses and individuals on income tax, sales tax, gross receipts tax, property tax, realty transfer tax, and credits and incentives issues. He helps companies not only identify potential compliance issues and tax reporting exposures, but also assists with identifying and securing pro-active refunds, tax credits or abatements, and other incentive opportunities.
Kevin Ricci, Partner | Risk Advisory and Compliance Practice | Cybersecurity Practice
Kevin has over 25 years of extensive experience in technology services including consulting, security assessments, cybersecurity awareness training, social engineering simulations, IT auditing, fractional CISO, project management, database development, data analysis, and compliance services including PCI DSS, for which he is a Qualified Security Assessor (QSA).
Emily Richi, Partner | Manufacturing and Distribution Industry Practice
Emily is an audit partner with 10 years of public accounting experience. Her client responsibilities include performing financial statements audits, including testing and evaluation of internal controls, financial and compliance reporting, and preparation of tax returns.
Jory Weissman, Partner | Digital Services Practice
Jory is an experienced professional with over 25 years in the technology industry, consulting, designing, selling, supporting, and implementing solutions across a variety of technology platforms and applications.
“Citrin Cooperman” is the brand under which Citrin Cooperman & Company, LLP, a licensed independent CPA firm, and Citrin Cooperman Advisors LLC serve clients’ business needs. The two firms operate as separate legal entities in an alternative practice structure. The entities of Citrin Cooperman & Company, LLP and Citrin Cooperman Advisors LLC are independent member firms of the Moore North America, Inc. (MNA) Association, which is itself a regional member of Moore Global Network Limited (MGNL). All the firms associated with MNA are independently owned and managed entities. Their membership in, or association with, MNA should not be construed as constituting or implying any partnership between them. Published 2025.