Manufacturing Trends for 2026: Texas at the Center of Change

The manufacturing industry is heading into 2026 with both opportunities and challenges on the horizon. While global supply chain pressures, labor shortages, and shifting trade policies remain part of the landscape, Texas stands out as a focal point for growth and innovation. 

From high-tech investments in Houston to industrial real estate demand across the state, Texas manufacturers are shaping the future of U.S. production.

“For a record 13th year in a row, Texas has earned the Governor’s Cup award for leading the U.S. in job-creating relocation and expansion projects,” reported the Texas Economic Development Corporation in March 2025. “Despite national uncertainties, Texas’ economy remains one of the most resilient and high-performing in the U.S., with a GDP now exceeding $2.6 trillion, making it the eighth-largest economy in the world if it were a country.”

Here’s a closer look at the trends influencing manufacturing in 2026—through the lens of the Lone Star State.

Texas Manufacturing Momentum

The latest Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas showed factory activity at some of its strongest levels in more than three years during mid-2025. Even with a slight cooling in late summer, the state continues to outpace the national average in production growth.

“Expectations for manufacturing activity six months from now improved. The future production index rose eight points to 30.3, while the future general business activity index rose five points to 19.0,” said the report.

This momentum reflects Texas’s competitive advantages: abundant land for industrial expansion, access to ports and logistics networks, and a pro-business regulatory environment. Combined with federal incentives like the CHIPS and Science Act, the state is attracting both traditional and high-tech manufacturers at an impressive rate.

Here’s a closer look at 8 manufacturing trends to watch in Texas in 2026:

Trend 1: Reshoring and the “Made in Texas” Surge

Across the country, manufacturers are bringing operations closer to home to reduce reliance on global supply chains. This reshoring trend is especially visible in Texas.

• Industrial space demand is booming. Roughly one-quarter of all industrial space absorption in Texas is tied to manufacturing, according to Texas A&M’s Real Estate Research Center. 
• Major projects are in the pipeline. A $365 million cable manufacturing facility near Houston is slated to begin operations in 2026, highlighting the state’s draw for large-scale, capital-intensive projects.
• Nearshoring from Mexico complements the trend. Texas manufacturers benefit from cross-border supply chain efficiencies, making the state a natural hub for companies balancing domestic and near-Mexico operations.

For Texas, reshoring is helping the state become the epicenter of “Made in America” manufacturing.

Trend 2: High-Tech Manufacturing in Houston

Perhaps the most dramatic sign of transformation comes from Houston, where technology giants are reshaping the city’s industrial identity.

• Apple has announced a 250,000-square-foot AI server manufacturing plant set to open by 2026. 
• Nvidia is investing in a new AI supercomputer facility nearby (as well as another in the Dallas area), further cementing Houston as a hub for advanced technology production.

For a city historically tied to energy and petrochemicals, this shift represents a new chapter.

Trend 3: Smart Factories, AI, and Robotics

The future of manufacturing is increasingly digital, and Texas is no exception. Smart factories—facilities that integrate IoT sensors, AI-driven analytics, and automation—are becoming mainstream.

• Robotics adoption is accelerating, particularly collaborative robots (“cobots”) that can work safely alongside human employees.
• IoT integration is delivering tangible results, such as reduced downtime, improved resource utilization, and double-digit energy savings.
• Digital twins and simulation technologies help Texas manufacturers model production processes, identify inefficiencies, and respond quickly to disruptions.

These technologies not only improve efficiency but also address one of the industry’s most pressing issues: the shortage of skilled labor.

Trend 4: Workforce Challenges and Opportunities

Labor shortages remain a top concern for Texas manufacturers heading into 2026. The National Association of Manufacturers projects millions of unfilled roles nationwide over the next decade, and Texas is not immune.

“If we don’t act boldly, the U.S. faces a shortfall of 1.9 million manufacturing workers by 2033; 3.8 million positions will open up, but nearly half could go unfilled,” said Carolyn Lee, President of the Manufacturing Institute.

Challenges include:

• Retirements of experienced workers. 
• Competition from other industries like energy and technology. 
• Skills gaps in areas such as robotics programming and AI oversight. 

In response, Texas manufacturers are:

• Partnering with community colleges and technical schools to expand apprenticeships.
• Investing in reskilling initiatives to help current employees adapt to new technologies.
• Offering competitive pay and benefits to attract younger workers. 
• Launching outreach programs to improve perceptions of manufacturing careers. 

Trend 5: Policy, Incentives, and Investment

Government policy continues to play a major role in shaping manufacturing.

• The CHIPS and Science Act is driving billions in semiconductor investment, with Texas emerging as a key beneficiary. 
• Federal and state tax incentives are helping manufacturers offset costs for new facilities, equipment upgrades, and workforce training.
• Local governments in Texas are aggressively courting projects with infrastructure support and property tax abatements.

For manufacturers, leveraging these incentives can mean the difference between merely staying afloat and accelerating growth.

Trend 6: Economic Headwinds and Spending Outlook

Despite strong fundamentals, the economic outlook for 2026 is more cautious.

• Facility construction spending surged past $230 billion nationally in 2024 but is expected to dip by roughly 2–3 percent in 2026.
• Tariff pressures and global trade uncertainty could impact Texas manufacturers with international supply chains.
• Growth in U.S. manufacturing output is projected to be slow but positive in 2026.

Texas, however, may weather these headwinds better than other states thanks to its diversified economy, strong energy sector, and emerging high-tech manufacturing base.

Trend 7: Cybersecurity and Risk Mitigation

As manufacturers in Texas adopt digital technologies, cybersecurity is becoming a frontline issue. Risks include ransomware attacks, phishing attempts, and supply chain vulnerabilities that can halt production.

By 2026, best practices in Texas manufacturing include:

• Proactive monitoring and segmented networks. 
• Employee training programs focused on digital threats. 
• Cyber insurance policies to provide financial protection. 
• Compliance with emerging federal reporting requirements. 

Cybersecurity is quickly becoming a boardroom priority for Texas manufacturers, especially with SB 2610 taking effect Sept. 1, 2025, a new law that fundamentally changes the liability landscape for small and medium-sized businesses that experience data breaches, according to Bridgepoint Consulting. 

Trend 8: Sustainability and Net-Zero Goals

Sustainability remains a core focus for manufacturers in Texas. Many companies are pursuing net-zero emissions targets or integrating renewable energy solutions into their operations.

• Solar installations and battery storage projects are increasingly common in industrial facilities.
• LED lighting and energy-efficient systems help reduce operating costs while supporting ESG goals.
• Circular economy practices—such as extending product life cycles and recycling raw materials—are gaining traction.

Strategic Takeaways for Texas Manufacturers

From Houston’s high-tech factories to statewide initiatives supporting reshoring, Texas is proving that resilience, innovation, and adaptability are the cornerstones of its manufacturing industry.

For Texas manufacturers, the challenge in 2026 is clear: balance the risks of labor shortages, economic pressures, and cyber threats with the opportunities of advanced technology, federal incentives, and sustainable growth.

At Dean & Draper, we understand the evolving risks facing Texas manufacturers. From cybersecurity exposures to supply chain disruptions, we help businesses safeguard their operations with tailored insurance solutions.

Contact us today to learn how we can protect your manufacturing future in 2026 and beyond.

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