Rising bankruptcies in U.S. manufacturing are not a footnote to the 2025 economy. They sit at the center of a broader wave of corporate failures that has pushed insolvencies to their highest level since the aftermath of the financial crisis. This story is less about a few weak firms and more about how higher borrowing costs, softer demand, and tariffs that are reshaping one of the country’s core sectors.
Corporate failures across the U.S. picked up sharply in 2025, and manufacturing heavy industrial businesses were at the heart of that trend. By November, at least 717 larger corporate filers tracked by S&P Global Market Intelligence had entered Chapter 7 or Chapter 11, a 14% increase compared with the same period in 2024 and the highest annual count since around 2010. That figure covers sizeable companies that meet S&P’s criteria for inclusion in its bankruptcy dataset, so it likely understates the strain facing the many smaller manufacturers that do not appear in those tallies.
The industrial sector, which includes a large share of manufacturers alongside construction and transportation firms, emerged as the most distressed corner of corporate America in 2025. S&P sector data show that industrial companies accounted for about 110 of the bankruptcy filings through November, more than any other sector and ahead of consumer discretionary and healthcare. Analysts tracking those numbers note that the jump in filings is especially notable among businesses tied to construction, manufacturing, and freight, which means that factory linked firms are over represented in this latest wave of failures.
The broader backdrop is a clear break from the unusually low bankruptcy environment of the immediate post pandemic years. Overall U.S. business insolvencies across all sectors reached 6,574 cases in the third quarter of 2025, about 15% above the 2019 pre pandemic average and the highest level since 2014. That move above pre-pandemic “normal” levels has now persisted for at least two consecutive quarters, which suggests that this is not a temporary spike driven by one or two troubled industries. For manufacturers, it means the sector is being hit at the same time as the rest of the business landscape, rather than being insulated by recent talk of reshoring and new plant investment.
Compared with 2024, the direction of travel is unambiguous. Large corporate bankruptcies are up in absolute terms, and industrial names make up a larger share of that higher total. S&P data indicate that 2025 is on track to record more big corporate failures than any year since 2010, with industrial companies described as “dominant” among those filings, which is a shift from the more balanced sector mix seen in some prior years. Insolvency specialists also point out that it would be hard to reach these aggregate bankruptcy levels if manufacturing heavy segments of the economy were seeing fewer filings, given the sheer size and capital intensity of the sector.
Several pressures help explain why manufacturing and related industrial firms are feeling the strain so acutely. Higher interest rates have raised the cost of servicing existing debt, which is particularly painful for capital intensive businesses that borrowed heavily in the era of cheap money and are now refinancing at much higher yields. At the same time, inflation has moderated but remains high enough to keep input costs elevated, while import tariffs have added further charges to key materials and complicated supply chains for globally integrated manufacturers. When slower demand meets higher financing and input costs, weaker balance sheets have little room for error, and bankruptcy becomes a more common outcome rather than a rare event.
Labor market signals are consistent with that financial stress. Federal data and related reporting around the same S&P dataset point to a loss of roughly 70,000 manufacturing jobs in the year to November 2025, which is significant in a sector that was widely expected to benefit from new investment and onshoring initiatives. Industry research notes that while some regions, particularly in parts of the Southeast and Midwest, are seeing new plants and expansions, that fresh capacity coexists with closures and restructurings elsewhere. The result is a mixed picture in which headlines about factory construction sit alongside a quieter but important rise in manufacturing related insolvencies.
For those trying to interpret these figures, the key point is that rising industrial bankruptcies are a signal about the structure of risk in the current U.S. economy, not just a cyclical blip. Elevated insolvencies after a long period of unusually low failures suggest that cost pressures, financing conditions, and trade policy are now testing which manufacturers can adapt and which cannot. How companies manage leverage, supply chains, and pricing power in 2026 and beyond will determine whether 2025 marks the peak of this bankruptcy cycle or the start of a new baseline for financial stress in U.S. manufacturing.
