The Talent Shortage in the A&D Industry
The Aerospace and Defense (A&D) industry is facing a global shortage of semiconductor engineers, projected to exceed one million by 2030, even as the sector heavily invests in semiconductor production. This shortfall is driven largely by the anticipated growth of the semiconductor market from $550 billion in 2021 to more than $1 trillion by 2030.
This shortage significantly impacts defense projects that rely on advanced chip design, highlighting vulnerabilities in critical technologies. The semiconductor engineer talent crisis is intensified by high retirement and workforce attrition rates across other critical roles, from technicians to mechanics. According to the NAM Manufacturers' Outlook Survey for Q1 2024, over 65% of manufacturers identified the struggle to attract and retain employees as their top challenge. Current educational pipelines are also inadequate. For instance, fewer than 100,000 students graduate annually around the world in fields relevant to semiconductors, such as electrical engineering.
This workforce gap stems from increasing global demand for semiconductors driven by advancements in AI, IoT, 5G and other technologies. The shortage threatens, not only manufacturing capacity, but also innovation, as critical sectors such as automotive, defense and telecommunications rely on these components.
The talent gap is placing considerable strain on employers, hampering their ability to compete with other sectors for top talent, meet hiring demands, accelerate employee proficiency and retain critical staff. According to the Aerospace Industries Association, of the 70,000 engineers graduating annually in the U.S., only 44,000 are qualified to work in aerospace, and U.S. companies face stiff competition for these candidates from major tech firms like Amazon and Apple. Between 2021 and 2031, the U.S. will need 3,800 new aerospace engineers every year, according to the Bureau of Labor Statistics.
And the talent shortage is not the only challenge facing A&D. Other disruptions that are reshaping how the industry operates, innovates and competes include the rise of green technologies that enable increased fuel efficiency, advances in composite manufacturing, automation, generative AI (GenAI) and a heightened demand for wireless communications and avionics systems. Meanwhile, the sector must focus on enhancing cybersecurity to protect sensitive information and systems. Other primary concerns for manufacturers include an unfavorable business environment, rising healthcare and insurance costs and a slowing domestic economy.
The Lack of Digital Skills in Aerospace and Defense
The A&D industry is facing shortages in skills critical to its continued growth and innovation. First is the lack of digital technology skills. This broad category can be divided into key areas such as AI and machine learning, coding and digital analysis. These technologies are essential for modern aerospace systems, especially in improving automation, security and operational efficiency. The skill gap is also apparent in advanced manufacturing processes, such as 3D printing, composite materials manufacturing and robotics.
While systems engineers are in increasing demand as components and subsystems become more and more complex, there are fewer STEM graduates entering the sector. Aerospace engineering, mechanical engineering and material sciences are struggling to find new talent.
In the A&D sector, rapidly evolving technologies are intensifying the need for highly specialized positions, especially in avionics, aerospace electronics and chip design. The global shortage of semiconductor engineers is affecting major enterprises. Both Boeing and Airbus have reported difficulties maintaining production schedules due to a shortage of skilled workers, including machinists, welders and chip engineers. Recently, Boeing experienced further production challenges when machinists in the IAM District 751 union began a strike in September of 2024 over wage and benefit concerns. This disruption highlights the financial vulnerabilities associated with labor shortages. Boeing incurred an estimated $5 billion in losses due to halted production and delays in plane deliveries.
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Proposed Solutions for Mitigating Digital Talent Shortages in A&D
The skills shortage in the A&D industry is a multifaceted challenge that requires coordinated efforts across various stakeholders, including governments, educational institutions, industry leaders and professional associations.
The following are strategies to mitigate skills shortages in this sector:
1. Educational Partnerships
Collaborate with universities: Organizations can develop partnerships with universities to create curricula tailored to industry needs. This can include internships and co-op programs that give students the practical experience they need to join the workforce ready to work. Boeing and the California Institute of Technology, for example, have maintained a long-term research collaboration focused on systems integration and aerospace technologies. This partnership involves workshops, internships and research projects tailored to Boeing’s strategic goals. Boeing benefits by recruiting skilled students, while Caltech aligns its curriculum with industry demands.
Promote STEM: Encourage students to pursue science, technology, engineering and mathematics disciplines through workshops, camps and competitions.
Offer apprenticeship and internship programs: Provide options for students and recent graduates to gain relevant experience in the field and on-the-job training. This is the goal of the University Partnership Program (UPP), in which the Aerospace Corporation works with select universities to sponsor research and provide internships and mentorship. Their focus includes space robotics, AI and machine learning, which address industry-specific challenges while preparing students for impactful careers in space technology.
Seek funding for R&D projects: Encourage educational institutions to engage in research and development projects in collaboration with industry partners to ensure skills are aligned with technological advancements. In one such example, the Florida Applied Research in Engineering (FLARE) program connects the Air Force Research Laboratory with the University of Florida, focusing on developing advanced weapons systems and enhancing data-driven workforce training. This initiative has secured $19 million in funding over five years to support joint projects and K-12 STEM outreach.
2. Workforce Development Programs
Upskill current employees: Invest in training programs for current employees to enhance their skills and adapt to new technologies.
Provide certification programs: Offer specialized programs that align with industry standards and practices to incentivize skill development.
Recruit from diverse backgrounds: Focus on recruiting individuals from underrepresented groups in engineering and technology fields, including women and minorities.
Build an inclusive workplace culture: Create an inclusive environment that supports diversity, which can attract a wider talent pool.
Provide incentives for training: Work with government agencies to create incentives for businesses that invest in training and development.
Seek grant opportunities: Apply for grant funding for educational programs focused on aerospace and defense.
Provide career advancement opportunities: Clear career progression paths and professional development opportunities.
3. Leveraging Technology
Leverage online learning platforms: Online training and continuing education can be accessed by a global talent pool.
Use simulation and virtual reality to enhance training: Employ simulation and VR technologies for training purposes to provide realistic, immersive experiences. In one example, Dassault Systèmes collaborates with the ISAE Group, comprising six aerospace engineering schools in France, to integrate the 3DEXPERIENCE platform into their training programs. This partnership provides 7,000 students with hands-on experience in cutting-edge aerospace technologies like virtual twins and sustainable innovation.
4. Retention Strategies
Offer competitive compensation: Offer competitive salaries and benefits to attract and retain top talent.
Engage with trade associations: Work with professional organizations like the Aerospace Industries Association (AIA) to advocate for policies that support education and workforce development.
Execute public awareness campaigns: Promote awareness of career opportunities in the A&D sector through public campaigns and outreach programs.
Partner with other industries: Collaborate with industries facing similar skills shortages (like MRO and automotive) to share best practices and resources.
By implementing these strategies, A&D enterprises and the industry as a whole can better address skill shortages, creating a more robust, skilled workforce capable of meeting the sector's evolving demands.
The Future of A&D Demands the Right Talent
While increased digitization is anticipated to be the most transformative force for A&D manufacturers, it is also where companies feel least prepared to react. This lack of confidence compounds the hiring crisis as companies continue to prioritize traditional engineering roles over emerging digital roles. A lack of a strategy in this context hampers manufacturers’ ability to adapt to rapid digital advancements and stay competitive.
With the integration of green technologies, advancements in automation and composite manufacturing and an ever-more complex need for cybersecurity, A&D enterprises have no time to wait. The demand for skilled professionals is urgent – and the time to focus on strategic initiatives to attract and retain talent is now.
About the authors
Tim Haney
Anamika Sarkar
Anamika Sarkar works as a Manager in ISG. She has close to 11 years of experience in research across various industries and geographies. At ISG, Anamika helps Manufacturing enterprises understand the latest technology trends, strategy, and innovation.
