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.
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:
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.
For Texas, reshoring is helping the state become the epicenter of “Made in America” manufacturing.
Perhaps the most dramatic sign of transformation comes from Houston, where technology giants are reshaping the city’s industrial identity.
For a city historically tied to energy and petrochemicals, this shift represents a new chapter.
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.
These technologies not only improve efficiency but also address one of the industry’s most pressing issues: the shortage of skilled labor.
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:
In response, Texas manufacturers are:
Government policy continues to play a major role in shaping manufacturing.
For manufacturers, leveraging these incentives can mean the difference between merely staying afloat and accelerating growth.
Despite strong fundamentals, the economic outlook for 2026 is more cautious.
Texas, however, may weather these headwinds better than other states thanks to its diversified economy, strong energy sector, and emerging high-tech manufacturing base.
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:
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.
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.
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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