In this Industry Insight episode of the On Aon podcast, our experts examine how aerospace and defense organizations are redefining workforce and risk strategy to support sustained growth. As demand accelerates and technology expectations rise, leadership priorities are shifting — from managing talent and risk challenges separately to an integrated competitive advantage.
Drawing on current industry data, the discussion highlights how forward‑looking organizations are aligning workforce strategy, cyber readiness and supply chain resilience to move faster, deploy capital with confidence and stay ahead of evolving demands.
Key Takeaways:
Experts in this episode:
Key moments:
(02:27) The scale of the global aerospace and defense workforce — and why shifting demand is redefining the role of talent in enterprise strategy.
(04:32) Key human capital challenges, including skills gaps, evolving employee preferences and competition for technical talent.
(06:29) How leading organizations are connecting analytics, cyber insights and supply chain visibility to strengthen decision‑making and accelerate growth.
Soundbites:
David Carlson:
“Today's geopolitical volatility is driving governments worldwide to demand innovation at scale and speed, particularly in technology solutions and advanced engineering. Yet many organizations still rely on legacy infrastructure, making the integration of cutting-edge technologies complex, costly and risky for operational stability.”
Randy Ramirez:
“In the US, the defense industrial base supports over 2.2 million direct workers with an additional 3.5 million in indirect supply chains. And because the industry is quickly changing, so are the dynamics around talent.”
Intro
Hello and welcome to another episode of On Aon.
This week we look at how the Aerospace and defense sector is under pressure to move faster, build smarter and stay resilient in a more volatile world. Aon’s Dave Carlson and Randy Ramirez unpack the workforce, risk and rewards trends reshaping the industry — and why a talent strategy is now a critical driver of growth. Stay with us to hear the data, the challenges and the practical moves leaders can make right now.
Dave Carlson
Hello there, I'm Dave Carlson. I'm the global industrials and manufacturing industry leader here at Aon, and I welcome you to this Industry Insight episode of On Aon. And today we're going to dive into the risk and people issues impacting another major global industry. This time it's the aerospace and defense industry. We'll focus on what's current workforce and rewards data is telling aerospace and defense leaders about talent availability, skills gaps and the enterprise workforce challenges shaping growth and resilience.
And forgive the pun, my co-pilot on this episode is Randy Ramirez, who's Human Capital Rewards Solutions associate partner for Aon. Welcome, Randy.
Randy Ramirez
Hi Dave, it's great to be with you today. Really looking forward to discussing recent industry workforce data and enterprise talent insights in the industry. There's so much to talk about.
Dave Carlson
Yeah, for sure. I know you and I've been talking on and off quite a bit lately. And before we take a look at the big issues facing the aerospace and defense industry, it might be helpful to place some context.
The size of the global aerospace and defense industry is about $900 billion in revenue in 2024. And we see over $2 trillion in military and aerospace defense spending between the United States and EMEA alone. Industry is under a process of rapid transition, one driven by long-term shift towards globalization and the deployment of advanced technology in digitization.
Commercial aerospace dominated by companies like Airbus and Boeing, focusing on clearing sizable backlogs and increasing production rates.
Defense is hinging on geopolitical tensions continue to drive higher defense spending, especially in Europe. NATO members plan to invest 5% of their GDP annually on key defense requirements by 2035. Meeting this demand will be a key challenge for the industry.
And finally, the space sector is shifting from government-driven to commercially-led growth, with private and public companies driving constellation development and new space activity.
The U.S. dominates the aerospace and defense market, accounting for approximately 41% of the global output.
So, Randy, based on the workforce data you're seeing, how are these industry dynamics changing the types of skills, roles and talent profiles that aerospace and defense organizations need right now?
Randy Ramirez
So just in 2024 alone, Dave, the global aerospace and defense industry base supported over 8.2 million direct and indirect jobs across more than 120 countries. That's staggering.
In the US, the defense industrial base supports over 2.2 million direct workers with an additional 3.5 million in indirect supply chains. And because the industry is quickly changing, so are the dynamics around talent. And I'm going to get to this more in a moment. But Dave, perhaps we can talk about the big risk issues affecting these companies. What are the risk capital issues, many of which are showing up first and foremost visibly in workforce data that are keeping aerospace and defense leaders up at night?
Dave Carlson
Yeah, today's geopolitical volatility is driving governments worldwide to demand innovation at scale and speed, particularly in technology solutions and advanced engineering. Yet many organizations still rely on legacy infrastructure, making the integration of cutting-edge technologies complex, costly and risky for operational stability.
Large U.S. government contracts are significant part of defense manufacturing, and any disruption from cyber attacks can have severe and longstanding consequences.
Challenges compounded by over-reliance on third-party vendors and legacy infrastructure is also a consideration.
And then with supply chain, restrictive tariffs and fast-changing export control disrupt the flow of equipment and material globally.
Tackling large production backlogs in commercial aviation and increased regulatory scrutiny from the Federal Aviation Administration has also been a core challenge. Regulations such as the International Traffic and Arms Regulation and Export Administration Regulations, mean that alternative sourcing during disruptions is difficult.
And finally, sudden challenges in international regulations, tariffs or embargoes, further deepen risks.
So Randy, how are these risks having an impact on finding, selecting and retaining workers in the aerospace and defense industry? What are the big human capital challenges?
Randy Ramirez
Yeah, that's a big question there, Dave, and there's a lot behind that. But let me quickly touch on a few of the global human capital challenges that come to mind.
The first is closing the workforce skills gap. This is a big unlock in the industry. Companies that can close the skills gap have a greater chance of seeing increased innovation and better contract fulfillment than those that don't close this gap.
The A&D workforce has always been a top strategic risk, but now it's an even bigger risk with talent replacement proving increasingly difficult in the current climate. So there's a big focus on retaining critical talent.
Another is changing employee preferences. Many A &D organizations have set up shop away from traditional urban areas of focus. This makes it challenging to attract and retain new hires. Evolving perceptions of the A &D industry among early career talent.
There are even more competing forces such as commercial AI, high tech, renewable energy, commercial space applications and so on, which make this traditional early recruiting space even more challenging.
We have flexibility versus traditional manufacturing, which depends on in-person attendance. Aging manufacturing workforce is deepening these challenges.
And finally, we have an industry that's competing for the “gray-collar”workforce. So this is a new generation of technically adept highly skilled hands-on talent driving the development of tomorrow's complex systems. And these new systems need talent that have both engineering understanding and real-world execution.
Now we do have toolkits to help companies think through these issues and more, I'll cover that in a minute. But the risk components are also key issues.
So Dave, I'm gonna flip it back to you and perhaps you could tell us how can companies move from risk to resilience and growth?
What in the data surprised you most here?
Dave Carlson
Yeah, it's a great way here. I'm always a big believer in how can we make risk a business-enablement tool. And from a resiliency perspective, as I mentioned earlier, like cyber, the use of AON's analytic and diagnostic tools to identify, quantify, and manage their cyber risks.
Cyber risk analyzers advance analytics to assess and mitigate cyber threats and ransomware attacks and maintaining operational resiliency.
Cyber Quotient Evaluation, or we affectionately call it CyQ, to identify, measure, and manage cyber risk exposure, enhance cyber risk management with the suitable cyber insurance. Develop and test a cyber response plan that includes strategic recovery support, and the use of Aon's client treaty to access pre-secured capacity and a streamlined placement process, which from 2026 now covers the aviation and space industry.
And as I mentioned earlier around supply chain, again, make use of Aon's range of analyzers and diagnostics. We have a new supply chain risk diagnostic and analytics tool to identify and quantify supply chain risk, alternative risk transfer solutions, including parametric insurance to help with insurance buying decisions.
And finally, ensure insurance coverage, reflect new procurement and contract standards.
I know that's a lot, but I know you have some other things you'd like to throw in there.
So, Randy, take us through the human capital strategies that aerospace and defense organizations can use.
And when you look across the workforce data, where do talent decisions most directly influence enterprise resilience and growth in the aerospace and defense sector?
Randy Ramirez
Yeah, thanks Dave. We're focusing on the Workforce Strategy Program. So this is of utmost importance. So, using Aon's talent and rewards solutions, our practice helps A&D organizations build stronger workforces that help drive innovation. So our skills mapping technology and the Radford-McLagan Compensation Database. This helps organizations to harness the detailed skills data needed to support strategic talent development. We also help define and restructure capability frameworks. that includes technical skills and align them with broader business strategies.
And finally, we look at the total reward strategy overall. This helps companies maximize their investment in people through comprehensive talent assessment and rewards.
So if leaders take one message from the workforce data we discussed today, it's that talent strategy is now a core enterprise lever in the A&D and no longer a supporting function.
Dave Carlson
Thank you, Randy. Every time we talk, I learn something new. So I want to thank you for your time.
And that's our show for today. Thank you all for listening. Thanks to Randy for joining us. And in the next month, you'll hear more about industry insight episodes, including the food, agriculture, and beverage industry.
Until next time, be well.
Outro:
Thanks for tuning into the latest episode of On Aon. If you enjoyed this episode, don’t forget to subscribe wherever you get your podcasts and be sure to visit Aon.com to learn more about Aon.
We’ll be back next week with another episode — our Global Insight — when we’ll be taking a deep dive into the latest geopolitical, economic and regulatory news impacting businesses.