TTI Executive Report: 2026 Industry Outlook

Question:
2026 appears to be a year of uncertainty but, the problem is knowing what direction that uncertainty is going to come from, is it going be price / inflation, conflict, employment and staffing, allocation, AI, cyber threats or something else?  Where do you see the greatest uncertainty and how are you going to protect your clients from this?

Entering 2025 we were experiencing an inconsistent business environment.  Inconsistent by end markets with some very strong Customer segments such as AI and Defense / Space, while others such as Transportation and Industrial were still struggling to grow and / or build momentum.  As we progressed through 2025, we have seen growth across a much broader range of Customer Segments and product categories.  Coupled with positive book:bill ratios almost across the board, there is a bit of optimism looking forward to 2026. 

Having said that, the inconsistency we were experiencing still exists.  We have seen swings in booking activity from segment to segment, from month to month, and among our product categories.  As your question points out, these swings are now largely driven by the many uncertainties we are all facing. 

In my opinion, the biggest uncertainty is related to costs, and associated relationship to profitability.  Yes, tariffs are clearly the source of uncertainty due to the magnitude and many changes that have taken place, and a huge contribution to the cost concerns.   However, they are not the only contributor.  Gold, Copper, aluminum, rare earth metals, etc. are all contributing to cost increases for electronic components.  Labor, transportation / logistics, and cost of capital are all increasing.  Productivity and efficiencies are not optimized, with many Supplier operations being either underutilized or on the flip side, over capacity and working overtime. 

Our focus on optimizing “Available-to-sell” inventory and taking a long-term view of the business allows us to help our Customers and Suppliers work through the various uncertainties that exist in today’s business environment.  We continue to make investments in People, Parts, and Places that are focused on minimizing supply chain risks for our customers.