MANUFACTURING
JUST IN: Defense Firms Plan Big AI Investments Amid Labor Challenges, Report Says
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Aerospace and defense manufacturers are looking to make sizable investments in artificial intelligence in 2027 despite persistent struggles to find skilled operators for automation and AI-enabled technology, a report released Oct. 1 found.
Half of aerospace and defense manufacturers said AI and automation operators were difficult to hire, and manufacturers across industries ranked them as the hardest-to-fill positions, beating out jobs such as engineers, maintenance technicians and machinists, according to the report, “2027 Manufacturing Outlook,” published by Xometry, a Maryland-based technology company that runs an online marketplace connecting buyers and suppliers for custom manufacturing.
“There’s a notion that AI replaces expertise,” Vaidy Raghavan, chief technology officer at Xometry, said in an interview. “What we’ve observed internally as well as broadly is that … it’s changing the expertise that the companies need.”
The manufacturing workforce of the future must be “bilingual, where they’re both fluent in shop floor as well as in the software,” Raghavan said.
Aerospace and defense companies have the most significant hiring goals among industries, with nearly 80 percent intending to add workers in 2027, according to the report.
Even while facing associated hiring challenges, the defense industrial base is pouring money into AI technology, the report said.
Eighty-two percent of aerospace and defense manufacturers plan to allocate more than $500,000 for AI in 2027, leading other sectors by a wide margin, with the robotics and automation industry trailing at 68 percent and the automotive industry at 64 percent, the report said.
Additionally, 29 percent of aerospace and defense companies are looking to invest more than $2 million into AI — again leading among industries, the report said.
One likely reason the aerospace and defense sector is first in its automation allocations is profit expectation, the report said. Only 3 percent of aerospace and defense companies expect to fall short of last year’s profits, indicating that many have the ability to invest in select emerging technologies.
The leading applications for AI in manufacturing include optimizing designs for easier, faster and cheaper production, as well as pricing analysis and suggestions, the report said. However, the technology’s role often depends on the size of the company, with larger manufacturers expecting AI’s greatest short-term impact to be related to supplier selection and qualification.
Raghavan said the use cases for AI are expanding, with companies that previously piloted the software for tasks such as budget reductions and cost optimizations now moving into a sustained, deeper engagement in the coming year.
The types of AI technology that companies are pursuing are wide-ranging, including computer-aided design solutions and large language models for tasks like automating documentation and inspecting parts digitally, he said.
“We’re going to continue to see the gap between what was stated as the ‘AI promise,’ and the reality of AI in manufacturing is going to start shrinking more and more,” Raghavan said. “The gap, as it shrinks, does not discriminate by industry or company size.”
That promise is that AI can bolster accessibility and cost economics, he added.
As intentions to employ automated systems rise and companies look to fill complementary oversight and upkeep roles, production demand is outpacing hiring, the report said.
“The skills shortage is getting harder to manage because the work isn’t slowing down,” the report said.
“The ability to do more work is only driving up more demand for the work,” Raghavan added.
Seventy-seven percent of manufacturers across sectors reported greater production backlogs than a year prior, the report said.
The United States possesses the physical production capacity to meet its defense needs, but a lot of the space is sitting idle in small businesses, Raghavan said. Forty-four percent of manufacturers generating under $50 million in annual revenue are running below 70 percent capacity.
“The capacity is there,” he said. “It’s about findability and enabling the partner community to be able to adapt to this evolving demand.”
Compliance with U.S. government requirements such as the International Traffic in Arms Regulations is intimidating for prospective suppliers, but becoming ITAR-eligible and acquiring other needed certifications gives suppliers access to more jobs, and the buyer access to more production capacity, he said.
Xometry helps guide suppliers through the processes to obtain the qualifications they do not yet possess, and its marketplace can swiftly connect buyers with certified sellers, he added.
“The bottleneck for [aerospace and defense] is qualifications, not machines,” he said.
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