Industrial output has fallen three months in a row, exports to the US are down 13%, energy and labour costs are climbing, and only 11.5% of Portuguese SMEs use AI. Yet metalworking just posted a record €24bn in exports and Portugal ranks third in Europe for nearshoring. A cite-verified read of where the 70,000 companies that manufacture in Portugal stand, and the three moves that separate the ones growing from the ones closing.
On 1 September 2026 the Portuguese statistics office reported that industrial production had fallen for the third month in a row. A few days later Maria de Lurdes Fonseca, who runs the Studies and Strategy department at AEP, the country's oldest business association, published a short piece with a title that reads like a plea: never forget who produces [1]. Her argument is simple. Income tax is only collected if there is employment, employment is only sustained if companies are viable, and the energy transition every government wants "requires investment, which requires financially solid companies" [1]. This article takes that argument seriously and puts numbers next to it. It is written for the people it is about: the roughly 70,000 companies that make things in Portugal, whether the owner is in Guimarães, Marinha Grande, Stuttgart or Shanghai.
Key facts
Who produces in Portugal
Manufacturing is a larger share of the Portuguese economy than the daily news suggests. There were 69,898 manufacturing companies in 2024: 12,391 in metal products, 9,582 in food, 8,290 in clothing, 4,545 in furniture and 3,675 in textiles [5]. Industry accounts for 13.6% of gross value added [6]. Banco de Portugal's sector note gives the structural picture: manufacturing is about 5% of companies but 18% of employment, 24% of turnover, 23% of value added and 53% of goods and services exports [7]. Manufacturing employed about 732,000 people in 2025 [7].
Almost all of these are small. SMEs are 99.9% of Portuguese companies and 77.9% of employment [8]. The Norte region alone has more than 500,000 SMEs, far more than Greater Lisbon [8], and the textile and clothing cluster around the Ave valley alone counts 11,965 companies, 118,000 jobs and €8.2bn in turnover [36].
The word "Portuguese" in "Portuguese manufacturing" is misleading. A great deal of what is produced here is produced by foreign-owned plants. Continental Mabor in Lousado employs 3,200 people and is adding 100 more in a €100m expansion [32]. Bosch has more than 6,000 staff in the country. Airbus Atlantic is enlarging its Santo Tirso plant by 30%. Hennig, a German-American maker of data-centre components, is building a 450-job plant in Figueira da Foz [31]. Inditex treats Portugal as one of its ten global production clusters. These companies face the same electricity bill, the same labour market and the same paperwork as a 30-person mould shop in Leiria. When this article says "manufacturers in Portugal", it means all of them.
The 2026 picture: volume down, prices up, margins squeezed
The July data that prompted the AEP piece is worth reading in full, because the headline hides a more uncomfortable pattern.
Indicator, July 2026, year on year
Change
Industrial production index
-1.4% [2]
Manufacturing production
-2.7% [1]
Investment goods production
-3.1% [2]
Consumer goods production
-2.5% [2]
Industrial turnover, nominal
+5.6% [3]
Employment in industry
-1.3% [3]
Hours worked in industry
-1.7% [3]
Remunerations in industry
+3.9% [3]
Industrial producer prices, August
Turnover is growing while output and hours shrink. That is a price effect, not a demand effect: producer prices are up 7.2% and the energy component up 22.8% [4]. Companies are invoicing more euros for fewer units, paying 3.9% more per hour worked [3], and doing it with fewer people. That is exactly the squeeze Fonseca describes when she says a company cannot at the same time absorb cost increases, accelerate decarbonisation, invest in new technology and stay competitive without support [1].
The OECD's January 2026 survey frames the long-run version of the same problem: Portugal's productivity growth is "historically slow" and the gap in output per hour against the euro area persists even as GDP grows around 2% a year [37].
Exports: a flat total that hides a reshuffle
Goods exports were €79.3bn in 2025, up just 0.5%, while imports grew 3.9% and the trade deficit widened to €32.1bn [9]. Within that flat total, the map moved.
The United States fell hard. Exports to the US dropped 13.4% in 2025 and the US share fell to 5.8%; Portugal recorded the seventh-largest fall in the EU [10]. The EU-US deal set a 15% baseline tariff and 50% on steel and aluminium, and the European Commission estimates the tariffs shaved about 0.1 points off Portuguese growth [18].
Germany rose. Germany became the second destination with a 13.9% share, up 14.5% [9], driven largely by pharmaceuticals.
Pharma carried the year. Pharmaceutical exports grew 41% to €4.95bn; without them, total exports would have fallen [11].
Metalworking set a record. The metallurgy and metalworking sector exported €24.2bn, up 3%, a third of all manufacturing exports, three quarters of it to the EU [12].
Automotive components slipped. AFIA expects exports just under €12bn, with January to September down 3.7%; Spain, Germany and France take 60% of the total [13].
Textiles and clothing held. €5.5bn, down 0.8%, with Spain at €1.3bn and France at €834m [14].
Footwear grew on technical products. €1.72bn, up 0.8%, with technical footwear up 14.5% [15].
Moulds stayed on top of Europe. About €630m exported, roughly 80% of production, third in Europe [16].
The first seven months of 2026 look better: goods exports up 2.5%, and up 6.3% once contract manufacturing is excluded, with July alone up 6.5% [17]. The lesson from 2025 is not that demand disappeared. It is that demand moved, mostly towards Germany and towards higher-value products, and the companies that could redirect quickly did well.
Costs: cheaper than Europe, dearer than last year
Portugal's cost position is still favourable in relative terms, and worsening in absolute terms.
Cost line
Portugal
Comparison
Industrial electricity, H2 2025
€0.146 per kWh
EU-27 €0.190, about 30% higher [19]
Hourly labour cost, 2025
€19.4, up 6.6%
EU €34.9, euro area €38.2 [20]
Minimum wage, 2026
€920
up from €870 in 2025 [21]
Corporate tax (IRC), 2026
19% general, 15% on first €50k for SMEs
down from 20% and 16%; path to 17% by 2028 [22]
Two regulatory costs arrived this year. The EU carbon border adjustment mechanism entered its definitive phase on 1 January 2026 for cement, aluminium, fertilisers, iron and steel, hydrogen and electricity [23]. And the phase-out of free emissions allowances is under way: 145 Portuguese installations sit in the emissions trading system, auctions raised €535m in 2025, and only €25m of that went back to direct industrial support [24]. CIP, the employers' confederation, has asked for a deferral if the border mechanism proves ineffective by 2027 [24].
Labour is the constraint that no incentive fixes quickly. Employment is at a record 5.3 million and unemployment at 5.8%, yet departures of foreign workers rose 40% in 2024 and net migration fell 59% [34]. Foreign workers are already 17.6% of dependent employment [35]. The AEP president has said plainly that growth is "limited by lack of labour" [34]. For a manufacturer, this means that any hour of skilled time spent on quotations, data entry or chasing suppliers is an hour that cannot be hired back.
The digital gap is the lever most companies have not pulled
Here is the number that should worry manufacturers more than the tariff news. In 2025, 63.9% of Portuguese SMEs reached basic digital intensity, against 71.4% in the EU and a Digital Decade target of 90%. Cloud adoption was 34.1% against 46.7%. AI adoption was 11.5% against 20% [25]. The European Commission's verdict was two words: "low business digitalisation" [25].
The gap is not about infrastructure. Portugal's fibre coverage is 95.5% and 5G coverage 99.1%, both far above the EU [25]. The gap is inside the factory: quotations built by hand from drawings, capability data that lives in the head of one engineer, supplier records in spreadsheets, and certification documents that have to be found again for every new customer audit.
The money to close it is unusually available right now, and unusually time-limited.
The PRR Agendas Mobilizadoras channel more than €7bn of investment through 51 consortia and 874 companies; financial execution must close by 31 December 2026 [26].
Portugal 2030 opened 220 calls worth €3.9bn for SMEs in 2026. SI Inovação Produtiva alone carries €182.5m and closes on 30 September 2026 [27].
Vale Digitalização covers up to €20,000 of digitalisation spend at a 75% rate [28].
Foreign-owned plants in Portugal are eligible for most of these instruments on the same terms as Portuguese-owned ones. The AEP piece asks policymakers to support the companies that produce [1]. The instruments largely exist. What is scarce is the internal capacity to apply, implement and show results, and that capacity is exactly what a 40-person plant with a two-person office does not have.
Nearshoring is real, and it rewards the visible
The demand side is moving in Portugal's favour. The Savills Nearshoring Index 2026 places Portugal 6th in the world and 3rd in Europe of 54 countries [29]. AICEP contracted a record €3.58bn of investment in 2025 with €2.58bn in projected annual exports [30]. Hennig, Continental, Airbus Atlantic, Amkor and Alstom are all expanding here [31] [32].
But nearshoring does not distribute itself evenly. A European buyer moving a component out of Asia does not visit 70,000 websites. They search, they ask associations, and increasingly they ask an AI assistant to shortlist suppliers who can machine a given alloy to a given tolerance with a given certification. A manufacturer whose capabilities are not published in a structured, verifiable form is invisible to that search, however good the shop floor is. Meanwhile, the companies closing in 2026 are mostly small plants in traditional sectors, such as the two footwear factories in Guimarães and Gaia that shut this summer with 106 jobs between them [33], where the order book depended on one or two intermediaries.
What manufacturers in Portugal should do next
Three moves follow from the numbers. None requires buying a machine.
Put your capabilities where buyers and their agents can read them. Processes, materials, tolerances, certifications, lead times, minimum quantities, and evidence for each. This is the cheapest export investment available and it compounds: every RFQ that finds you because your profile was verifiable is an RFQ your competitor in Poland did not get.
Take the quotation off the engineer's desk. Quoting is where the labour shortage bites first and where AI already works reliably: reading a drawing or a bill of materials, checking it against what you can make, flagging what you cannot, and drafting a response in hours rather than days. Faster, structured answers win RFQs from German and French OEMs, which is where the demand went in 2025.
Use the 2026 money before it expires. Match one concrete digitalisation project to one open instrument, apply before the autumn deadlines, and measure it in hours saved and RFQs answered, not in software licences bought.
This is what GETMILK is built for. It maps the manufacturers producing in Portugal into a cite-verified atlas, turns a buyer's specification into a ranked shortlist, and connects both sides through the same Model Context Protocol that AI assistants now use to query data directly. If you make things in Portugal, your profile in that atlas is free, and the first digitalisation audit is a conversation, not a contract.
Fonseca's title is a reminder to policymakers. It is also a decent instruction to the rest of us who build tools for industry: never forget who produces. They are the customer, they are short of hands, and they are being asked to do more with less. The tools have to meet them there.
References
AEP – Associação Empresarial de Portugal, Maria de Lurdes Fonseca. Nunca esquecer quem produz… (September 2026)
Portugal has about 69,900 manufacturing companies (2024), industry accounts for 13.6% of gross value added, and manufacturing employs roughly 732,000 people. Manufacturing generates more than half of Portugal's goods and services exports.
Is Portuguese manufacturing growing or shrinking in 2026?
Output is contracting while sales are rising. The industrial production index fell 1.4% year on year in July 2026, the third consecutive monthly decline, and manufacturing fell 2.7%. Industrial turnover still grew 5.6% in nominal terms because producer prices rose 7.2%.
What are Portugal's biggest manufacturing exports?
Metalworking and metallurgy (a record €24.2bn in 2025, a third of manufacturing exports), automotive components (just under €12bn), textiles and clothing (€5.5bn), pharmaceuticals (€4.95bn, up 41%), footwear (€1.7bn), cork (€1.1bn) and moulds (about €630m).
Is Portugal a good country for nearshoring manufacturing?
Portugal ranks 6th globally and 3rd in Europe in the Savills Nearshoring Index 2026. Hourly labour cost is €19.4 against an EU average of €34.9, and industrial electricity is about 30% below the EU average. The constraints are a structural labour shortage and a low rate of business digitalisation.
What funding exists for digitalising a factory in Portugal in 2026?
Portugal 2030 opened 220 calls worth €3.9bn for SMEs in 2026, including SI Inovação Produtiva (€182.5m, closing 30 September 2026). Vale Digitalização covers up to €20,000 at a 75% rate. PRR Agendas Mobilizadoras must close financial execution by 31 December 2026.
How many Portuguese manufacturers use AI?
Only 11.5% of Portuguese SMEs used AI in 2025, against an EU average of 20%. Just 63.9% reach basic digital intensity, against 71.4% across the EU and a Digital Decade target of 90%.
How can a manufacturer producing in Portugal get found by European buyers?
Publish a verified capability profile: processes, materials, tolerances, certifications, lead times and minimum order sizes. GETMILK lists manufacturers producing in Portugal in a cite-verified atlas that buyers query directly when they turn a specification into a supplier shortlist. Listing is free.
Put your factory on the map
A GETMILK atlas listing is free: capabilities, certifications and lead times, seen by European buyers.
