Manufacturing executive are having many sleepless nights lately—and for good reason. In just the last five years, they’ve weathered supply chain disruptions from a global pandemic, climate change, and military conflicts. In 2025, tariff volatility has added another layer of complexity.

And manufacturers now face an entirely new cost calculus—one that must balance traditional considerations with qualitative factors such as geopolitical risk, economic stability, and labor availability. To explore how companies are navigating these dynamics, the BCG Henderson Institute conducted a global survey of 1,000 manufacturing executives.

We’ve identified five key insights from the survey which—taken together—reveal a sector learning how to operate in a changed context.

Cost Is Still King, but It’s Complicated

In the past, manufacturers in most industries followed a simple principle: go where production costs are lowest. Today, that decision isn’t as straightforward. In our survey data, manufacturing leaders continue to rank cost as their top challenge, consistent with our results from a similar survey conducted in 2022. (See Exhibit 1.) But the underlying reasons are more complex. Because of geopolitical risk and other factors, manufacturers have to optimize operations to offset the impact of tariffs or to compensate for the increased production costs from localizing their factories (in areas like labor and energy).

Elsewhere in the top five, manufacturing executives’ priorities have fluctuated. Geopolitical risks now rank fourth, just after supply chain disruptions. The latter dropped one spot from 2022, which is somewhat surprising given the events of recent years, including the pandemic, climate-related issues, trade tensions, and wars. One possible explanation is that those disruptions pushed manufacturers to make their supply chains more resilient through dual-sourcing, near-shoring, and other measures.