KEY POINTS:
- Manufacturers Hit Pause: Economic uncertainty and tariff pressures are prompting companies—especially in California and Wisconsin—to delay hiring, cancel investments, and reassess expansion plans.
- Rising Costs & Trade Concerns: 77% of manufacturers cite trade instability as a top concern; nearly 90% face rising costs from tariffs, with 62% seeing weakened global competitiveness.
- Localized Impacts, Strategic Shifts: California faces job losses and slowed growth, while Wisconsin maintains cautious optimism and focuses on talent strategy—underscoring the need for agile staffing support.
The hum of machinery in California and Wisconsin’s equipment manufacturing plants is still present, but the rhythm has changed. It’s a more cautious, measured beat.
In 2025, a potent mix of economic uncertainties and the ever-looming threat of tariffs is compelling manufacturers from all industries to hit the brakes on aggressive spending, expansion, and hiring.
New data from the National Association of Manufacturers (NAM)’s Q2 Survey highlights rising challenges for manufacturers, including trade instability, rising costs, and slowed global competitiveness:
- 77.2% of manufacturers now rank trade unpredictability as their top concern—up 20 points from late 2024.
- Nearly 90% report rising operational costs due to tariffs, averaging a 7.7% increase.
- 62% say tariff impacts are limiting their ability to compete globally, contributing to the first expected drop in export sales since Q2 2020.
- 36.4% are delaying or canceling investments in new facilities, R&D, or capital equipment.
- 33.7% are pausing hiring, reducing staff, or cutting hours/pay.
Meanwhile, The May 2025 ISM Manufacturing PMI remained below market levels for the third month at 48.5%, reflecting continued subdued sector performance:
- Production remains low at 45.4%, despite a slight monthly increase.
- New Orders rose to 47.6%.
- Employment improved marginally to 46.8%, still below growth levels.
These national trends are beginning to play out in key regional markets—especially in California and Wisconsin, where our firm primarily serves engineering and technical employers. Both states are seeing localized impacts of the broader slowdown, with manufacturing clients adapting their workforce and investment strategies in response to rising costs, policy uncertainty, and softened demand.
CALIFORNIA:
California’s labor market growth is currently slowing and lags behind the rest of the U.S. The state experienced a loss of 33,000 jobs since January 2025, with manufacturing identified as one of the sectors that has contracted. Specifically, manufacturing jobs in California were down by 3,000 in March 2025, reflecting a significant year-over-year decline of 35,300 jobs. The state’s unemployment rate has also ticked up to 5.3% in March 2025.
While not explicitly stated as new initiatives in response to the recent slowdown, ongoing programs like the California Competes Tax Credit (CalCompetes) are in place to foster growth and job creation.
As of June 13, 2025, CalCompetes awarded $86.8 million in Tax Credits to benefit the following companies:
- Nextracker is investing $33 million to expand solar power and software solutions in Fremont.
- A.S. Aerospace is putting $19 million toward precision aerospace manufacturing.
- EVO Power USA is investing over $1 million in battery energy storage systems in Rancho Santa Margarita.
- RIS Rx is growing its personalized healthcare software in Newport Beach with a $4 million investment.
- Le Vecke Corporation is expanding its adult beverage production in Jurupa Valley with a $30 million investment.
WISCONSIN
In Wisconsin, manufacturers are taking a cautious yet steady approach in 2025, scaling back hiring and capital investment in response to broader economic uncertainty, according to the Wisconsin Manufacturers & Commerce (WMC). Still, business sentiment remains largely optimistic.86% of surveyed companies reported profitability over the past six months, and 92% expect to stay profitable through the end of the year. Most executives rate both the state and national economies as either “moderate” or “strong,” with 68% describing Wisconsin’s economy as moderate and 20% as strong. When asked about their top concerns, business leaders pointed to the national economy (36%), global conditions (13%), healthcare costs (11%), and labor availability (10%).
Wisconsin is proactively addressing its employment landscape with a strategic focus on talent development, retention, and attraction. This approach is particularly critical given the state’s exceptionally low unemployment rate, which stands at 3.3% as of April 2025, significantly below the national average.
Industry groups like the WMC are actively lobbying for policies that can help ease the tight labor market and encourage growth through:
- Pushing for tax breaks: Lobbying for federal R&D and startup tax deductions to boost investment and job creation.
- Streamlining talent visas: Advocating for H-1B visa reforms to attract global skilled workers.
- Improving business climate: Seeking broader tax relief and reduced regulations to encourage investment and hiring.
In this climate of economic uncertainty and fluctuating market demands, specialized manufacturing, equipment, and engineering firms in California and Wisconsin need agile staffing solutions. Maintaining a lean permanent workforce while still addressing project demands and operational needs is paramount.
This is where specialized staffing firms like SoloPoint become invaluable partners. Add Flexible Talent! Quickly scale your team up or down to match project needs and market shifts, staying agile while minimizing risk and fixed hiring costs.
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