October 2025
By The FSO INSTITUTE
2026 CapEx Outlook for Consumer Products and Adjacent Industries
FSO’s October 2025 MHRT session reaffirmed that headline projections for 2026 capital spending remain broadly intact. Still, the path into that strong year is uneven, with clear timing shifts and structural changes in how value is created. The discussion facilitated by PMMI’s Jorge Izquierdo, IMMEC’s Greg Flickinger, Rain Engineering’s Don Rahrig and Dan Kubik, and FSO partners’ summary of client insights, highlighted four core themes:
- A resilient 2026 CapEx outlook with pent-up demand building through late 2025.
- A shift in OEM business models toward faster-growing services, especially training and digital/remote support.
- 2025 was hampered by tariff- and election-driven uncertainty, delaying orders and creating timing friction in supply chains.
- Persistent talent constraints in project management and skilled trades that will shape how capital actually gets deployed.
Demand Outlook: A Slower 2025, Stronger 2026
Izquierdo noted that there are no significant changes to PMMI’s industry surveys on projections for machinery demand. The core outlook still calls for healthy growth through 2030, with machinery shipments growing at an average annual rate of about 4.1% between 2025 and 2030, and services outpacing that at 5.1%.
From a timing standpoint, the year has unfolded in distinct phases:
- Q1–Q2 2025: Slower than expected. Both Izquierdo and Flickinger linked this softness to the overhang from the 2024 economy and tariff-related uncertainty, compounded by election-year hesitation.
- Q3 2025: Activity begins to pick up. Flickinger shows an increase in plants using quarterly downtime to bring equipment back to base conditions while bid volume for future projects increases.
- Q4 2025: Projected to strengthen. PMMI members see more proposals translating into serious evaluations, even if orders are still lagging.
- 2026: Expected to be a strong CapEx year, particularly in the first half, as delayed 2025 projects move forward. Both Kubik and Flickinger described a “dam” of pent-up capital that is likely to break once uncertainty recedes.
- Looking beyond 2026, reshoring/onshoring and reinvestment from international producers are expected to further fuel project activity into 2027–2028, particularly as large construction and infrastructure projects reach the execution phase.
OEM Business Mix: Services Gaining Share
PMMI’s survey data shows a meaningful shift in how OEMs serving consumer products companies generate revenue:
- Parts remain consistent and resilient. In years with lower new-equipment investment, parts spending tends to tick up slightly as end users stretch existing assets. Overall, though, parts are steady rather than a growth driver.
- Services are growing faster and have a larger share of the business. Members report:
- Increased reliance on OEMs for on-site and remote service as plants operate with leaner internal maintenance staffs.
- Rising demand for training, driven by workforce turnover, difficulty recruiting, and the need to keep less-experienced teams productive.
- Expanding digital services such as remote diagnostics, connected support, and predictive maintenance.
This shift toward services dovetails with the broader CapEx environment: even as some equipment purchases are delayed, manufacturers are investing in uptime, reliability, and skills—often via OEM-led offerings.
Proposals vs. Orders: Confidence Gap, Not Demand Gap
PMMI’s Q3 2025 survey, collected in September, helps explain the tension between strong long-term interest and muted near-term orders:
- The proposal activity index remains comfortably above 60. Anything over 50 signals increasing activity, and above 60 indicates a very healthy flow of opportunities. Members are seeing strong demand for ideas, quotes, and conceptual designs.
Members attribute the order activity’s cooling to uncertainty rather than a lack of underlying need. Companies know they must invest—especially in areas such as automation, capacity, compliance, and modernization—but are making timing decisions cautiously.
Rahrig summed it up concisely: if customers don’t have to spend capital right now, many won’t. Kubik reinforced this point with a real-world example: some clients rushed to implement solutions to meet a compliance deadline (FSMA 204) and are now revisiting those decisions because regulatory timelines have been extended by 18–24 months. With more time, they’re evaluating whether a more strategic, potentially capital-intensive approach to their digital transformation journey would better serve their long-term goals.
Sector Lens: Food & Beverage, CPG, Industrial & Technology
Flickinger’s perspective adds nuance by sector:
- Food & Beverage, CPG:
- Saw a decline into 2024 and flat-to-slightly-declining conditions into early 2025, driven by macroeconomic stress and tariff uncertainty.
- Q3 2025: Focus on downtime work and base-condition maintenance, with early signs of investment picking up.
- Q4 2025 and into 2026: Clear increase in bids for line expansions, new equipment, and building expansions, a higher volume of bids that support the narrative of pent-up demand.
- Industrial Manufacturing:
- Did not tail off as sharply as food & bev in 2024.
- Has been on a steady incline post-2024, with growth expected to continue through 2026.
- Technology and Aviation:
- Data center and technology expansions are widely reported as enormous investments being made now and in the coming years.
- The significant expansions at airports create a notable spike in past data, with the pipeline suggesting more such projects are coming.
- Growing demand for jet engine test cells, where engines are removed from aircraft, tested post-maintenance, and then reinstalled, reflects ongoing investment in aviation infrastructure.
- This segment is projected to continue growing beyond 2026.
Across all these sectors, Flickinger’s conclusion mirrors Izquierdo’s: there is significant capital “wanting to be spent,” but its release is staged and heavily influenced by external signals around economic policy.
Supply Chain and Labor: Frictions to Watch
On the supply chain side, Izquierdo reported modestly elevated disruption over the last three quarters, with Q3 showing neither significant improvement nor deterioration. Tariffs are a key driver. When tariff levels are high but potentially in flux, companies hesitate to import components today that might be cheaper tomorrow, creating timing issues and intermittent shortages.
Rahrig and Kubik commented that the current opportunities and projects they are working on have been focused on upgrades in Q3 – Q4, 2025. Many clients who were supposed to implement or expand their automation have been heavily impacted by the 2025 pause, but are planning for a strong 2026.
On the labor side, talent remains a structural constraint on capital deployment:
- Project managers and technical experts: retirements are accelerating, and there is no robust replacement pipeline.
- Skilled trades—especially millwrights, welders, and electricians—remain in short supply. Internal development programs are increasingly important just to support the volume and complexity of upcoming projects.
- Data center construction is pulling electrical talent away from traditional industrial sectors, increasing competition and wage pressure.
These constraints don’t reduce the need for CapEx, but they will influence the pace, sequencing, and execution risk of 2026–2028 projects.
From Reactive to Strategic CapEx
In closing, FSO partners highlighted a shift underway at many clients: moving from reactive, one-year-at-a-time spending toward strategic capital planning over a longer horizon. One example involved helping a client build a multi-year plan that treated CapEx as part of a structured risk management process—addressing regulatory risk (e.g., FSMA), business risk, and competitive pressures from international players.
The consensus from October’s MHRT:
- 2026 is shaping up as a strong CapEx year, especially for consumer products, food & beverage, industrial manufacturing, and aviation.
- As 2025 comes to a close, the story is one of delay, not the disappearance of demand.
- Success will hinge on how well companies navigate their customer requirements, market implications, talent shortages, supply chain efficiencies, and the capacity to execute the CapEx projects.
- Risk-informed capital planning for 2026 and beyond is encouraged.
