Manufacturing investment decisions in 2026: Where to spend, save and scale

When it comes to the Manufacturing Industry, the leading concern I’m hearing from my clients in the current climate is that they know they need to invest but just don’t know where.

These decisions are now harder than ever in 2026 with businesses facing rising costs, labour shortages, global uncertainty and ongoing pressures to become more sustainable.

Across the Manufacturing Industry, margins have tightened and being able to make nimble, well-timed decisions has become more important than ever.

I’ve seen a real shift in how decisions are being made by Directors. As a Senior Manager at RSM Gosford with over 20 years’ experience working with manufacturing businesses.

A few years ago, the conversation around manufacturing investment might have been about growth.

Now it’s much more practical.

My clients at RSM are wanting to know how quickly an investment will pay for itself, how soon it will be cashflow positive and what happens if conditions change.

One of the biggest challenges I have seen is how businesses balance growth and resilience.

Recently, I had a client deciding whether to invest in automation or employing more people. The case for automation looked strong bringing improved efficiency, less reliance on hard-to-find staff and better consistency of production.

But the upfront cost was significant and it would take time and effort to implement properly. 

The business was struggling to recruit and retain skilled workers.

In the end, the client took a staged approach by introducing automation in one part of the process while continuing to invest in their team.

It wasn’t the perfect solution but it was the right decision at the right time based on the challenges the business was facing.

This is the pattern I’m now seeing more often. Businesses are investing in technology and labour. This seems to strike a fair balance the between growth and resilience.

In terms of where the money is actually going, there are a few clear areas.

Automation continues to be a firm focus, particularly where it can genuinely reduce costs or improve speed and quality of output.  

Better systems, especially ERP (Enterprise Resource Planning), are also high on the list as businesses look for more visibility over what’s happening in real time. That sort of visibility is proving to be invaluable, particularly when things change quickly. 

Increasingly I’m seeing AI layered over the top to help forecast demand, identify inefficiencies and support faster, more informed decision-making as a compliment to manual analysis.

Energy efficiency is another key area for thought. Some clients are driven by the sustainability aspect. For others, it’s simply a matter of cost. When energy is a major input, even small improvements can have a big impact over time. 
And then there’s workforce capability and safety to consider because even the best systems or automation won’t deliver value if they can’t be used effectively and keep your people safe.

I’ve seen some clients take a practical approach by setting up in-house TAFE-style training for trainee staff members. It reduces the time lost travelling to and from campus, allows training to be tailored more closely to real-life operations and helps retain staff.

But no solution is a one-size fits all and I’ve seen some common mistakes.

The biggest misjudgement is jumping into technology too quickly. It’s easy to get excited about new systems, automation or AI but if the underlying processes aren’t there, or the team isn’t ready, it can create more problems than it solves. 
Another is overestimating returns. Forecasts can look strong on paper but don’t always fully consider timing, cashflow or working capital.

A project might technically “stack up” but still put tremendous pressure on the business in the short term.

Lastly, there’s the time spent on planning. The businesses getting the best outcomes are the ones that step back, model different scenarios and energetically test their assumptions.

Before approving any major spend, I would encourage clients to ask themselves a few simple questions:

• Does this investment improve both productivity and resilience? 
• What assumptions is the business relying on? 
• What will happen if things don’t go to plan? 
• How will this affect cashflow over the next 12 to 24 months?

They’re not complicated questions but they tend to reveal the real risks.

The key takeaway for making decisions around manufacturing investments in these times is to be more deliberate, rather than spending less.

The most successful manufacturers aren’t necessarily the ones investing the most but the ones making clear, considered decisions that align with where they want to go.

The environment is uncertain and that’s not likely to change. The businesses that take a balanced approach by investing in growth to strengthen their resilience are the ones who will be the winners in the Manufacturing Industry.

And in a year like this, that confidence is worth a lot.