By Michael Devereux II, CPA, CMP, partner, Wipfli
While manufacturers have spent much of the past several years responding to disruption, the conversation entering 2027 is shifting. Demand remains relatively steady across many sectors, and growth opportunities continue to emerge. At the same time, plastics manufacturers face mounting pressure from rising material costs, labor shortages, healthcare expenses and an evolving trade environment.
The challenge for manufacturers is no longer simply finding growth. It is finding profitable growth.
For many companies, sales opportunities exist. The question is whether organizations have the visibility, processes and operational discipline necessary to maintain margins while pursuing them. The manufacturers best positioned for success in 2027 will be those that understand their costs, maximize existing capacity and make faster decisions based on timely data rather than assumptions.
What will drive growth for plastics manufacturers in 2027?
Despite ongoing economic concerns, several end markets continue to create growth opportunities for plastics processors. Continued investment in technology infrastructure and data centers also is driving demand for components, equipment and supporting materials throughout the manufacturing supply chain.
For processors, this creates opportunities to expand into high-growth markets, but success will depend on more than simply pursuing new business. Companies that understand their competitive advantages, maintain a strong understanding of their data and invest in the market sector certifications, quality systems and capabilities required by these industries will be best positioned to capture
that growth.
The encouraging news is that demand remains relatively steady across many sectors, with some pockets of hyper-growth, like data centers, but drops in others, like appliances. The challenge is that growing revenue has become more difficult to translate into growing profitability.
Why are profit margins under pressure?
If there is one issue consistently appearing in conversations with manufacturers, it is margin compression.
Raw material costs remain elevated. Tariffs continue to impact imported materials, tooling and production inputs. Labor costs continue to rise as manufacturers compete for skilled talent. Healthcare expenses remain a growing concern. Collectively, these pressures are forcing manufacturers to take a closer look at how they manage profitability.
As a result, margin discipline is becoming one of the most important leadership priorities heading into 2027.
Many manufacturers continue to rely on pricing models, cost assumptions and operating structures developed before years of supply chain disruption and inflationary pressure. Those assumptions may no longer reflect current reality. Companies that fail to reevaluate costs risk watching profitability decline even while sales remain stable.
For plastics manufacturers, the focus should shift from simply asking, “How do we grow?” to asking, “How do we grow profitably?”
How can plastics manufacturers protect margins?
Protecting margins begins with understanding them. Many manufacturers know which products generate the most revenue, but fewer have a precise understanding of which products, customers and production programs create the greatest profitability.
Leaders should start by reexamining product costing and validating whether current pricing accurately reflects today’s material, labor and overhead costs. Rather than waiting for margins to deteriorate, manufacturers proactively can identify where cost increases have occurred and develop pricing strategies that protect profitability while maintaining customer relationships.
Margin protection also requires greater visibility into operational performance. Manufacturers should understand where profits are leaking from the organization, whether through excessive downtime, underutilized equipment, inefficient processes, unnecessary inventory carrying costs or ineffective capacity utilization.
The companies achieving the strongest results are not simply raising prices. They are making more informed decisions about pricing, production planning, inventory strategy and capacity management.
In an environment where costs continue to rise, disciplined margin management may be one of the most important competitive advantages a manufacturer can develop.
How are data and AI improving manufacturing profitability?
One of the biggest changes shaping the manufacturing sector is the growing accessibility of operational data.
Five years ago, many of the technologies capable of providing real-time production visibility were limited to large manufacturers. Today, middle-market plastics processors increasingly can connect machine data, production information and business systems to create a more complete view of their operations.
That visibility enables better decision-making.
Manufacturers can identify unplanned downtime, measure machine utilization, understand capacity constraints and monitor operational performance in ways that previously were difficult or impossible. Rather than relying on assumptions, leaders can make decisions using real-time information.
Artificial intelligence is accelerating this transformation. As manufacturers collect larger volumes of operational data, AI-powered tools can help identify patterns, highlight opportunities and support faster analysis.
The real advantage is not the technology itself. The advantage is what manufacturers do with the information. Companies that can clearly understand capacity, utilization and profitability often are able to improve performance before making costly investments in additional equipment, facilities or labor.
How are leading manufacturers addressing labor challenges?
Labor shortages continue to affect plastics manufacturers, particularly in highly skilled positions such as toolmakers, mold builders, maintenance technicians and process technicians.
However, workforce strategy is evolving.
The most successful manufacturers are not necessarily responding by significantly increasing headcount. Instead, many are using technology, automation and improved processes to increase throughput and revenue while maintaining relatively stable staffing levels.
This approach allows organizations to grow more efficiently while reducing dependence on a labor market that remains highly competitive.
Many manufacturers also are reevaluating organizational structures that expanded during earlier growth periods. As market conditions evolve, leadership teams are taking a closer look at staffing models, productivity metrics and technology investments to ensure resources align with business needs.
The goal is not fewer people. The goal is creating an organization capable of generating more value with the resources it already has.
What should plastics manufacturers do now to prepare for 2027?
The manufacturers best positioned for 2027 are focusing on fundamentals.
They are strengthening internal controls, standard operating procedures and succession plans. They are mapping supply chains, evaluating supplier concentration and preparing contingency plans for potential disruptions. They are investing in systems that connect the shop floor with leadership teams, creating better visibility into operations and financial performance.
Most importantly, they are building stronger balance sheets and creating the operational discipline necessary to withstand future market shifts.
No manufacturer can control tariffs, trade policy, economic cycles or geopolitical events. However, every manufacturer can improve visibility, strengthen processes, enhance profitability and make better-informed decisions.
Those capabilities increasingly separate industry leaders from their competitors.
Looking ahead
The outlook for plastics manufacturing in 2027 remains positive, but success will require greater precision than in previous years.
Growth opportunities exist across a variety of markets, yet rising costs continue to pressure margins. As a result, the manufacturers that thrive will not necessarily be those growing the fastest. They will be the organizations that best understand their profitability, maximize operational performance and use timely information to make better decisions.
Ultimately, 2027 may belong to the manufacturers that turn operational visibility into profitable growth, protecting margins today while building stronger, more resilient businesses for the future.
Mike Devereux currently serves as Wipfli’s manufacturing industry leader. In that role, he oversees a team of professionals nationally who provide audit, tax and consulting services to the manufacturing sector. Devereux’s role is focused primarily on organic growth, increasing Wipfli’s national presence and identifying value for manufacturing clients and prospective clients.
He speaks nationally to various professional and industry trade organizations and associations about opportunities to reduce federal and state tax liabilities and has written dozens of articles for industry trade publications. Topics for his sessions have ranged from taxes, trade and tariffs to ways companies can use technology to get more insights from operations.
More information: www.wipfli.com