the industries driving manufacturing growth

What industries have actually been driving manufacturing growth over the first half of this decade and where is that growth expected to continue?

Since 2020, manufacturing has experienced one of the most dynamic periods in recent history. The industry has navigated a global pandemic, supply chain disruptions, inflation, reshoring efforts, and rapid advances in technology. But those forces haven’t affected every sector equally.

One report from Kentley Insights analyzed manufacturing growth across the United States between 2020 and 2025. Looking at compound annual growth rates, the fastest-growing manufacturing industries over the first half of the decade were:

• Aerospace Product and Parts Manufacturing at 17.9%
• Petroleum and Coal Products Manufacturing at 14.1%
• Iron and Steel Mills and Ferroalloy Manufacturing at 12.9%
• Basic Chemical Manufacturing at 10.8%
• Primary Metal Manufacturing at 9.6%.

While these industries may seem very different, they share several common themes.

Aerospace has benefited from recovering commercial air travel, increased defense spending, and growing demand for new aircraft. Steel, metals, and chemicals have been fueled by infrastructure investment, reshoring initiatives, and increased domestic manufacturing capacity. Petroleum and coal products have seen continued demand from transportation, industrial production, and energy markets.

Taken together, these rankings tell us that much of manufacturing’s growth during the first half of the 2020s has been driven by industries producing the materials, components, and equipment that support the broader economy, not just consumer products.

But looking ahead, the picture begins to evolve.

Many analysts expect the next phase of manufacturing growth to be shaped by investments in advanced technology, automation, and domestic production.

According to the U.S. Bureau of Labor Statistics, industries such as aerospace products and parts, semiconductor manufacturing, pharmaceutical manufacturing, and electrical equipment are expected to remain among the strongest manufacturing sectors over the coming decade as demand increases for advanced products and highly skilled production.

Similarly, Deloitte’s 2025 Manufacturing Industry Outlook points to continued investment in aerospace, defense, electronics, automation, and advanced manufacturing technologies, supported by reshoring efforts, AI infrastructure, and ongoing federal investments in domestic manufacturing.

When you compare the first half of the decade with expectations for the second half, one trend becomes clear. Manufacturing growth isn’t simply shifting toward more production, it’s shifting toward more advanced production.

The industries expected to lead over the next several years are producing increasingly complex products that require higher levels of precision, quality, traceability, and operational control.

One of the interesting takeaways from this trend is that many smaller manufacturers don’t have to build airplanes or manufacture semiconductors to benefit from these industries. Instead, they often supply them. Machine shops, wire harness manufacturers, fabricated metal companies, electronics manufacturers, plastics processors, and countless other suppliers play an important role throughout these supply chains.

As these industries continue to grow, so do expectations around delivery performance, documentation, quality management, traceability, and production visibility. Manufacturers that can consistently meet those expectations will be well positioned to grow alongside their customers.

It’s also a reminder that understanding where investment is flowing can help manufacturers make smarter long-term decisions about the markets they serve.

trade policy update

August brought a few notable developments, particularly around tariffs and the administration’s continued use of trade policy to influence domestic manufacturing.

The biggest development this month was continued escalation with Canada.

The Trump administration imposed additional 50% tariffs on certain Canadian products, using Section 338 of the Tariff Act. The duties were originally scheduled to take effect August 19, although the administration briefly suspended them while negotiations continued. They ultimately took effect August 22. The measures specifically target products that the administration says are subject to discriminatory treatment of U.S. commerce.

The U.S.-Canada relationship remains particularly important for manufacturing because of the integration between the two countries, especially in automotive and parts manufacturing. The administration has also announced a 50% tariff on certain Canadian automotive imports beginning in January 2027, adding another potential disruption to North American automotive supply chains.

We also saw trade policy increasingly tied to strategic manufacturing this month.

On August 6, the administration announced new measures targeting polysilicon and polysilicon derivatives, citing national security and the importance of strengthening domestic semiconductor and solar supply chains. The policy includes a 15% tariff on certain downstream polysilicon products and an incentive program intended to encourage investment in U.S. production. Polysilicon is used mainly in the production of solar panels, semiconductors found in consumer devices, and EVs.

So, the quick snapshot heading into September is: Manufacturing activity is expanding, production is growing, and orders are improving, but trade policy continues to be highly active, particularly with Canada, and new tariff actions targeting strategic industries remain possible.