Aerospace and Defense Industry Outlook: Growth and Transformation
The aerospace and defense (A&D) sector has rebounded from pandemic-related setbacks, with both segments showing strong performance. Global military spending reached $2.44 trillion in 2023, with the United States contributing approximately 40% of this total.
Meanwhile, the commercial aviation industry experienced robust recovery in 2024, with passenger revenues projected to reach $744 billion—a 15% increase from the previous year—and passenger numbers expected to hit a record 4.96 billion.
The A&D sector is undergoing rapid technological transformation through digitalization of manufacturing and procurement processes. Key technologies reshaping the industry include drones, advanced air mobility systems, hypersonic technologies, electric and autonomous vehicles, and predictive maintenance capabilities. Manufacturing innovations like additive manufacturing, artificial intelligence, and augmented reality are becoming increasingly important.
Supply chain resilience and inventory replenishment are top priorities for defense. The industry is continuing to work through critical challenges including budget constraints and workforce shortages to meet their goals. Though there have been programs put in place to help resolve these issues, they will continue to cause setbacks for the foreseeable future. The Navy alone needs to recruit 140,000 new workers for submarine production and another 110,000 for surface vessels over the next decade.
Though there are persistent challenges in the A&D sector, the industry has a promising future with continued growth opportunities in traditional sectors and emerging areas like commercial space ventures, satellite applications, and the Internet of Military Things.