One in three manufacturers expect profits to fall this year

Ibec report predicts rising cost pressures and global trade uncertainty to take toll

Ibec executive director, membership and sectors, Sharon Higgins. The business representative group released its 2025 Manufacturing in Ireland Report on Tuesday. Picture: Conor McCabe Photography.

One in three Irish manufacturers expect profits to fall this year as rising cost pressures and global trade uncertainty take their toll. 

Business representative group Ibec released its 2025 Manufacturing in Ireland Report on Tuesday, with the report showing trade uncertainties have surged to become the top overall challenge for Irish manufacturers. The report notes that seven in 10 Irish firms are feeling the effects of the US trade tariffs. 

"Trade uncertainties have surged to become the top overall challenge at 59%, up from 30% in 2024, a reality validated by the fact that seven in 10 manufacturers are affected by US tariffs," said Ibec executive director of membership and sectors, Sharon Higgins. 

The report notes that while the manufacturing sector remains a critical engine of Ireland’s economy, contributing €10bn in corporation tax, €14.8bn in wages, and supporting over 240,000 jobs, many manufacturers are delaying investment decisions as they navigate the continuing global uncertainty.

Ibec said geopolitical risk and persistent cost pressures are creating a challenging backdrop for the sector, despite measures announced in Budget 2026 such as the increase in R&D tax credit to 35%. 

Cost inflation is expected to be more intense this year than in 2024, the report found, with wage growth expected to increase for 81% of respondents. Most respondents (64%) also expect an increase in energy costs this year. Ibec called on Government to introduce further measures to mitigate rising costs, including employer PRSI relief. 

"The backdrop to this year's report is defined by escalating geopolitical risk. Yet, our manufacturers are once again demonstrating their proven resilience, adapting, innovating, and investing strategically to control the controllables," said Ms Higgins.

"While the first three quarters of the year have been consumed by trade tensions and the knock-on impact on business planning, we need to use the final months of the year to build upon what we can do to ensure Ireland remains a critical hub for manufacturing and is at the forefront of innovation and new opportunities. While many of the measures in Budget 2026 are welcome, further action will be needed to offset rising costs and protect competitiveness.”

The report also noted that AI is now a priority for 52% of manufacturers, and 97% are planning to adopt AI to improve their efficiency and productivity.

Ibec recommends that the State should expand matched funding for Skillnet Business Networks and increasing funding for schemes like Springboard+ to accelerate AI and digital skills development. Ibec also called for a revision of the National AI Strategy "to strengthen digital competitiveness and innovation".

Ibec also called on the Government to use the 'R&D Compass' - the Government's pathway for innovation - to expand qualifying expenditure definitions and reform rules for R&D tax credits.

The Ibec report was compiled from responses from 99 senior business leaders in Irish manufacturing.