Rising Input Costs Make Plant Reliability a Competitive Edge for Manufacturers

Manufacturers expect to pay more for materials, energy and freight over the next year, according to the National Association of Manufacturers (NAM). At the same time, estimates of what an unplanned stoppage costs have grown large enough that analysts increasingly treat plant reliability as a competitive issue, not just a maintenance one. The evidence for that claim is real but uneven.

Costs keep climbing

NAM's third-quarter 2026 Manufacturers' Outlook Survey, conducted from 11 to 27 August, found respondents expect raw material and other input costs to rise 5.0% over the next year. Increased raw material costs were the top business challenge for a second straight quarter, followed by rising healthcare costs and trade uncertainty, DC Velocity reported.

Energy and logistics are part of the pressure. In NAM's second-quarter survey, 72.0% of respondents said they faced rising energy input costs because of the conflict in the Middle East, and 83.1% cited raw material costs as a top challenge, up from 57.5% in the first quarter. In the third-quarter survey, 77.3% cited freight rates and 74.1% cited fuel costs as challenges.

Demand remains firm. NAM chief economist Victoria Bloom said expected sales growth of 4.3% and production growth of 3.8% were the highest for both measures since the second quarter of 2022, adding that growth would likely be stronger if cost pressures eased.

What a stoppage costs

Estimates of downtime costs vary widely by method and sector. A 2024 report by Siemens, based partly on its own survey of 181 industrial professionals, estimated that unplanned downtime costs the world's 500 largest companies $1.4 trillion a year, about 11% of revenue. Trade summaries say that is up 62% from 2019.

Hourly figures differ. ABB's 2023 survey of 3,215 industrial respondents, which ABB commissioned, found a median of about $124,700 an hour. Aberdeen Research puts the manufacturing average near $260,000, according to maintenance-software vendors. A 2025 Fluke survey of 600 respondents in Germany, the UK and the US found 61% of manufacturers had suffered unplanned downtime in the past year, with an average cost of $1.7 million an hour. Siemens figures place automotive at about $2.3 million an hour, and food and consumer goods far lower.

The gaps reflect different sectors, definitions and samples. Several of these studies come from firms that sell maintenance or monitoring products. A plant's own hourly cost is the number that matters, and published averages should not be applied directly to it.

Verdantis, a research firm, noted that downtime costs have risen even as incidents have fallen, because more of the cost now lies in the response, such as parts and repair time.

Why reliability might become an advantage

The argument runs as follows. When materials and energy cost more, wasted hours and idle capacity cost more as well. Plants that fix machines before they fail avoid both the stoppage and the emergency repair.

Maintenance approach matters. A downtime-statistics roundup by manufacturing consultancy Godlan, citing industry data, puts reactive "run to failure" maintenance at about $18 per horsepower per year, versus $13 for time-based preventive and $6 for reliability-centred programmes. It says reactive approaches still account for more than 55% of the average US maintenance programme. These are secondary figures.

Documented gains from predictive maintenance are more modest than vendor marketing suggests. Deloitte reports it can raise equipment uptime by 10% to 20%, cut maintenance costs by 5% to 10% and reduce maintenance planning time by 20% to 50%, according to a summary by Fabrico. Deloitte also documented one extruder pilot with an 80% drop in unplanned downtime and savings of about $300,000 per asset. Software vendors often cite 30% to 50% downtime reductions, attributing them to McKinsey and Deloitte, but those claims could not be traced to primary reports.

What is not established

None of the sources reviewed shows that plants with better reliability earn higher margins or win market share from rivals. NAM's survey does not ask about reliability or maintenance, and the downtime studies measure losses, not competitive outcomes. The "advantage" is an inference from cost data and vendor case studies. Results from individual plants may not carry over to others, and implementation costs are rarely itemised.

What to watch next

The next NAM quarterly survey will show whether cost expectations ease and whether energy and freight remain top concerns. NAM found most respondents said conditions linked to the Middle East conflict had not improved since the prior quarter, while a third said they had worsened. Manufacturers' sales and production forecasts will test whether stronger demand outweighs cost pressure. Independent, plant-level studies linking reliability investment to margins would give the claim firmer support than vendor surveys do.