Arlington, VA – The Aerospace Industries Association (AIA) and Kearneytoday released a joint report that highlights how American aerospace and defense (A&D) companies are rethinking manufacturing to strengthen their supply chains.
Titled Strategic Localization: Balancing Risk, Value, and Technology Sovereignty in Aerospace and Defense Supply Chains, the study lays out a clear path to expand U.S. manufacturing leadership and enhance the resiliency of the A&D supply chain, and recommends federal policies needed to achieve these goals.
“The backbone of American aerospace and defense is our supply chain. When disruptions strike, the impact is immediate,” said Eric Fanning, AIA President & CEO. “AIA’s new report with Kearney makes clear that expanding domestic manufacturing is essential to reducing risk, accelerating innovation, and ensuring we can respond rapidly in times of crisis. By investing in resilient, high-tech production at home, we not only protect our national security but also maintain America’s leadership in the global aerospace marketplace.”
“U.S. leadership in aerospace and defense relies on both innovation and core domestic manufacturing,” said Claudia Galea, Principal, Kearney. “Strengthening technology sovereignty through advanced manufacturing and trusted-ally partnerships secures critical capabilities and boosts resilience and competitiveness.”
The report finds that nearly 60 percent of aerospace and defense companies are exploring ways to bring production back to the United States, with 15 percent already taking action to expand domestic manufacturing. Rather than framing localization as a choice between globalization and domestic production, companies are employing a “continuum of strategies” that includes reshoring, regional sourcing, and working with trusted allies.
Findings at a Glance:
- Resilience first: Localized and hybrid production and sourcing reduces exposure to geopolitical instability, material shortages, and foreign interference. This also creates redundancy and keeps production moving when global networks falter.
- Value beyond cost: Manufacturing closer to home improves quality, speeds delivery, and builds customer trust—especially vital in defense and commercial aerospace. It also means more high-paying jobs for American workers.
- Technology sovereignty: Domestic production safeguards intellectual property, hones our innovation edge, and strengthens America’s advanced manufacturing base.
Policy Recommendations:
- Develop the American workforce: Invest in training, apprenticeships, reskilling, and public-private partnerships to build and maintain a pipeline of American talent.
- Clarify policy: Set transparent, consistent criteria for awarding research and development (R&D) and manufacturing support, and reduce uncertainty tied to export controls and procurement rules.
- Empower small business to compete: Streamline Small Business Administration (SBA) tools and contracting to enable small and mid-tier suppliers to scale capacity and participate in high-value defense programs.
- Invest in advanced manufacturing: Modernize facilities and scale dual-use technologies, such as automation, AI, and additive manufacturing.
- Ensure access to critical minerals: Secure reliable access to rare earths and other essential materials through domestic refining, recycling, and allied sourcing.
- Cost mitigation tools: Use tax incentives and multiyear contracts to stabilize supply, reduce volatility, and encourage investment.
- Government-industry coordination: Align on cybersecurity standards, strategic stockpiles, and dual-use technology pilots.
Click here to access the full report.
About the Report
Based on surveys and interviews with more than 30 industry leaders, the report provides a framework for decision-making, a business case analysis, and a phased roadmap for advancing localization over the short, medium, and long term. The research underscores that a resilient aerospace industrial base requires a balanced mix of domestic capacity, allied foreign partnerships, and innovation-led competitiveness.
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