Merger & Acquisition Trends in the U.S. Manufacturing Industry

U.S. manufacturers now sit at the center of global trade conversations, with tariff policies, international agreements and supply chain resilience all under the microscope. As U.S. companies reassess their strategies amid these shifting economic and geopolitical conditions, mergers and acquisitions (M&As) remain a key focus.

In fact, the Travelers 2025 Special Report on M&As (which surveyed 800 risk and insurance professionals) highlights the continued appetite for M&As across industries, including manufacturing: 

• Manufacturing M&A activity – Though activity dipped slightly in 2024, it still surpassed $200 billion across 1,667 transactions. 
• Rising M&A deal sizes – The median transaction value in U.S. manufacturing jumped 70% year over year.
• Confidence remains strong – 92% of manufacturing risk managers surveyed in the Travelers 2025 Special Report said their most recent M&A was successful.

This momentum is unfolding alongside sweeping industry changes. Nearshoring strategies, emerging technologies and evolving regulatory and trade dynamics are reshaping U.S. manufacturing. And while challenges persist, M&As remain a critical lever for U.S. manufacturers seeking to strengthen supply chains, diversify operations and stay competitive in a volatile global market.

The deep industry knowledge of Travelers experts plus data and insights from the Travelers 2025 Special Report on M&As reveals keen insights into what may actually be driving current deals. This wealth of fact-based analysis also helps us better understand the risks, and ways to navigate them in this dynamic U.S. manufacturing M&A landscape.

M&As in U.S. manufacturing: the regions, sectors and players 

Regional hot spots for M&As

Geography plays a defining role in manufacturing M&As, shaping where deals happen and why. In the U.S., regional manufacturing hubs continue to drive the bulk of activity.

The Great Lakes region – home to a dense concentration of automotive, chemical and electronics manufacturing – accounted for over 22% of U.S. manufacturing M&A activity over the past five years. With a strong industrial base bolstered by population growth, targeted tax incentives and investments in maritime infrastructure, this region is fertile ground for consolidation.¹

Other regions are gaining momentum. The Mid-Atlantic and West Coast ranked second and third in deal volume in 2024. But it was the South that stood out, recording the only year-over-year growth at 11.4%. Advanced manufacturing clusters like Mississippi’s “Golden Triangle” attract aerospace and metal production firms drawn by skilled labor, transportation access and state-level investment.²

Sector trends driving M&As

Industry dynamics can be just as powerful as geography in shaping M&A strategies. While some manufacturing sectors are consolidating rapidly, others are navigating persistent supply chain disruptions, rising input costs and an evolving regulatory climate.

Enterprise and consumer product manufacturers continue to dominate the M&A landscape. Producers of personal care items, beverages and apparel have attracted a wave of multibillion-dollar deals over the past five years as acquirers seek recognizable brands, loyal customer bases and scalable platforms.

Meanwhile, sectors with high capital expenditures – such as equipment-heavy manufacturing – are under pressure from rising replacement costs and growing exposure to climate-related risks. These trends influence strategic priorities across the industry, including investment in operational resilience and supply chain efficiency.

The players driving the deals

In manufacturing M&As, the players driving the deal often define the outcome.

Most transactions fall into two broad categories: strategic acquisitions and private equity (PE) buyouts. Strategic buyers – typically corporations – acquire companies to achieve operational synergies, supply chain integration or workforce expansion that aligns with long-term business goals. By contrast, PE deals involve firms investing capital to acquire a majority stake, grow the company and eventually exit at a profit.

In manufacturing, strategic buyers continue to lead the charge. That said, PE firms remain a significant force, completing 741 deals in 2024 – down from previous years but still a sizable market share.³ As deal volume slows, many are doubling down on sectors with steady cash flow or scalable growth. And companies producing essential goods, such as food and medical equipment, continue to attract strong interest thanks to their resilience in downturns.

Labor: A top challenge in manufacturing M&As

If there’s one persistent challenge defining the future of U.S. manufacturing, it’s labor.

Even as labor markets loosen, the inability of manufacturers to attract and retain employees is a top challenge. Though the industry has made gains since the pandemic – when approximately 1.4 million jobs were lost – as of 2024, nearly 622,000 manufacturing jobs remain open and unfilled.⁴

What’s fueling the gap? Partly, it’s demographics. Experienced workers are aging out and younger generations aren’t rushing to replace them, especially when second and third shifts clash with modern work-life expectations.

Shifting attitudes toward work – mostly among younger generations – can add to the tension. “A customer in the manufacturing industry summed it up best by saying: ‘My biggest competition is the government and parents,’” said Craig Riegel, Senior Product Safety Specialist at Travelers. “You’ve seen the jokes where the parent drives a kid to the interview. That actually happens.”

There’s also a perception hurdle, explained Brian Gerritsen, Assistant Vice President of IndustryEdge^® at Travelers: “My dad was a machinist. And it was really dirty work back then. Today, manufacturers are increasingly turning to robotics to tackle the more physical demands necessary in the work environment.” Still, outdated views persist, making recruitment more challenging.

Companies eager to expand often hit a hard stop because they can’t find enough qualified workers to scale operations. “It’s not unheard of to have companies say they have 50% or 100% turnover simply because people don’t show up,” Riegel noted.

Managing labor disruption during M&As

66%
of manufacturing professionals reported employee resignations.

54%
saw employee relocations.

49%
experienced layoffs.

As Allen McCalister, Director of Workers Compensation Cost Containment at Travelers, stated, “Organizations can no longer ignore the labor component. There are fewer workers and their demands are greater.”

While M&As can introduce disruption, they also offer opportunities:

• Consolidating facilities can extend geographic reach for staffing.
• Flexible scheduling across multiple plants can ease shift barriers.
• Investments in automation can reduce manual labor demands.

“M&As may give a company more flexibility,” observed Jon Meyer, Director of Underwriting Portfolio Management for IndustryEdge^® at Travelers. “Instead of running 24 hours a day, maybe it’s 15 or 16 hours. It could even help fill gaps in an existing plant if competitors merge.”

However, success hinges on clear communication. “Confusion leads to uncertainty, and uncertainty drives resignations,” warned McCalister. Leadership must be transparent at every level, not just in the boardroom but on the shop floor as well.

“Employees need to see themselves in the new vision,” said Riegel. “If they see that they have a future, they’re more willing to stay. If not, they’re going to look out for number one.”

Manufacturing leaders navigating M&As must think beyond the balance sheet. Labor strategies that prioritize cultural alignment and consistent communication can help build a future-ready workforce.

The top drivers of manufacturing M&As

Manufacturing leaders aren’t just reacting to challenges, they’re planning around them. From labor shortages to shifting supply chains, today’s M&A strategies are often less about expansion and more about adaptability and resilience.

At the center of it all is risk management – controlling exposure, strengthening operations and positioning for long-term stability in a volatile market. One of the most powerful tools in that equation? Technology.

Emerging technologies

Emerging technologies are transforming manufacturers’ operations, and M&As are often the fastest path to gaining those capabilities. It’s not just a strategy for growth, it’s a hedge against uncertainty.

Whether it’s automation or smarter supply chain tools, advanced technologies don’t just improve efficiency. They reduce reliance on scarce labor and offer competitive advantages that are hard to build from scratch. Some companies are making deals to bring additive manufacturing – such as 3D printing – in-house, shortening supply chains by producing components themselves.

And the factory floor is rapidly changing from what it looked like just a decade ago. “We used to talk about robots,” said Riegel. “Now we talk about cobots, or collaborative robots, where a layperson can just show the robot how to do it and it’ll do that task. It’s so advanced now.”

Emerging technologies allow manufacturers to do more with less, reducing operational risk while boosting output.

Supply chain disruption and resilience

Supply chain disruption isn’t new in manufacturing, but it now plays a more decisive role in shaping M&A strategy. 

From ongoing conflict in Eastern Europe to instability in the Middle East and tariff uncertainty, global supply networks are under constant pressure. What’s changed isn’t just the number of disruptions, it’s the pace and the scale.

That volatility is accelerating moves toward nearshoring and onshoring as a faster path to resilience. Instead of building logistics capabilities from scratch, many companies are acquiring them – targeting firms with warehousing infrastructure, freight management tech or regional production assets that bring operations closer to home.

Gerritsen noted, “It doesn’t matter what the disruption is, it comes down to basic supply chain risk management best practices.”

In this environment, M&As remain a powerful lever for building supply chain resilience. But deal timing increasingly depends on a company’s tolerance for uncertainty.

Operational improvements and risks

Supply chain disruption may be top of mind, but it’s only part of the risk equation.

For many acquirers – especially private equity firms – the biggest value drivers come from operational improvements. And as market volatility persists, there’s been a shift from growth through expansion to growth through optimization.

But operational change is never simple, and M&As can bring disruption before they bring efficiency. Cultural integration is one of the biggest hurdles.

When two companies merge, they don’t just blend systems and workflows. Sometimes they collide. As McCalister explained, “Cultures are core to operations. And when you marry different cultures, it’s difficult. You’ve got early adopters on one side and conservative, risk-averse teams on the other.” And that tension can create real conflict on the factory floor.

In fact, 23% of manufacturing professionals cited cultural tension as a top post-M&A risk and 24% reported operational disruptions, according to the Travelers 2025 Special Report on M&As.

And safety concerns often surface when company cultures clash. “When we talk about cultural differences slowing things down, many times that’s safety,” said Meyer. “And it all eventually can lead to risk management problems.”

Still, the disruption can create opportunity. Post-M&A, the challenge – and opportunity – is to build something stronger.

People leaders play a pivotal role. “It’s about getting the managers on board,” said Gerritsen, referencing lessons learned from a recent M&A. “Folks feel threatened by change. That’s why some leave. So how do you keep that morale up? You have to empower your people leaders to lean into the new culture. And therein lies the opportunity.”

Hidden risks of M&As

The benefits of manufacturing M&As are clear: access to new markets, customers, talent and technologies. But beneath the surface, hidden risks can quietly erode that value.

To avoid surprises, companies need to look beyond the balance sheet. As Gerritsen explained, “Understanding who you’re merging with is really important. And then you have to manage the total cost of risk, which isn’t just premiums – it may also include deductibles and the cost to improve processes or facilities.”

Meanwhile, the cost of risk is constantly changing, driven by climate volatility, legal complexity and rising public scrutiny.

For example, a manufacturer used to managing wildfire risk in Southern California may not be prepared for the severe convective storms common in the Midwest. “You haven’t seen anything until you try to buy a business in Minnesota or North Dakota,” warned Gerritsen. “You might not even find insurance without a significant wind or hail deductible, and that’s our new world.”

Legal environments can be just as varied. Workers compensation laws, product liability standards and the likelihood of litigation differ from state to state. As Gerritsen explained, “If you’re in Montana and you buy a company in Cook County, Illinois, it’s a completely different legal climate.” And as companies grow, public scrutiny grows too – making reputational risk another layer worth tracking.

Other risks are even less obvious. Regional trucking laws, auto liability rules and insurance fraud trends may not show up on a spreadsheet, but they can impact your risk exposure and long-term costs. “It’s not always the places you think of,” said Meyer. “So, companies can’t just look at the company they’re acquiring and assume we’re going to have approximately the same insurance cost. These external forces may have a significant impact.”

That’s why it’s critical to involve insurance and risk management professionals early in the M&A process. “The more time your insurer has to evaluate the combined entity and ask the right questions,” said Gerritsen, “the better chance they have to build a program that gives you balanced coverage terms and protects you against risks you might not have seen coming.”

What’s next for manufacturing M&As?

In today’s complex manufacturing landscape, M&As aren’t just a growth strategy – they’re a strategy for resilience. Whether addressing labor shortages, supply chain risks, operational issues or modernization goals, manufacturers use M&As to build stronger, more adaptable businesses.

“If history tells us anything, it’s that manufacturing is resilient and opportunistic,” said Gerritsen. “And manufacturers will keep finding ways to innovate.”

But success requires more than identifying opportunities. It demands understanding both the visible and hidden risks, from cultural integration to regional exposures. That’s where the right partner makes a difference.

2025 Manufacturing M&A Study: A Travelers Special Report

Is your organization prepared for the risks and complexities of manufacturing M&As? Explore the Travelers 2025 Special Report on manufacturing M&As for deeper insights into emerging trends.

Download the report (Opens in a new window)

At Travelers, we bring deep manufacturing insurance and risk expertise to every stage of the M&A journey – from underwriting and claims support to workforce engagement and injury prevention. “Whether it’s legacy business or a new M&A,” said Riegel, “We’ve been through it. We know the pain points.”

Travelers services are flexible, consultative and built around each business’s unique and specific needs. Talk to your insurance agent or a Travelers representative and discover how to tailor risk solutions to support a company’s next move – before, during and after a deal.

Sources
^{1, 2, 3} PitchBook Data, Inc., pitchbook.com
⁴ https://www.uschamber.com/workforce/understanding-americas-labor-shortage-the-most-impacted-industries