Key Takeaways
- The U.S. aerospace and defense industry needs a skilled workforce, supply chain resilience and continual innovation to remain competitive on the global stage.
- A new white paper from the Washington Post Creative Group and the Michigan Economic Development Corporation (MEDC) examined four key pillars of today's defense and aerospace sector: workforce development, infrastructure, advanced manufacturing and innovation.
- States are taking on a bigger role in U.S. defense and national security in 2026.
- Michigan leads the way, modeling a robust workforce, solid manufacturing infrastructure, top research institutions and a legacy of innovation.
The U.S. aerospace and defense industry is undergoing massive growth and change in 2026. The industry's goals, needs and challenges are shifting. A new white paper from the Washington Post Creative Group in collaboration with the Michigan Economic Development Corporation (MEDC) surveyed 150 senior U.S. leaders in defense and aerospace, manufacturing and industrial products and engineering or supply chain logistics.
The biggest industry concerns are contained in these four pillars: workforce development, infrastructure, advanced manufacturing and innovation.
"Across all four pillars, ecosystem-level readiness matters as much as any individual advantage," said Col. John T. Gutierrez, U.S. Marine Corps (Ret.), executive director of Michigan's Office of Defense and Aerospace Innovation (ODAI). "Weaknesses in one area can undermine strength in another."
At a time when the U.S. aerospace and defense industry relies on states more than ever, these pillars also define regional competitiveness.
Top factors shaping the future of defense and aerospace
The white paper revealed the main factors shaping the competitiveness of the defense and aerospace sector, and how they impact decisions on where to invest and scale operations.
1. Workforce development
Survey respondents cite workforce availability as a crucial factor in new location decisions. An overwhelming 9 in 10 executives (90%) report difficulty recruiting employees for today's defense needs. The survey also finds 51% of AI roles and 50% of advanced manufacturing roles are hard to fill across the sector. Cybersecurity recruiting difficulty is twice as high in defense as in other sectors, due to regulatory and security requirements.
"A defense-ready workforce is technically skilled, security-cleared or clearable, digitally fluent and trained in manufacturing and engineering disciplines underpinning many modern systems," said Gutierrez.
2. Infrastructure
Over half the survey respondents (52%) state the importance of a modern regional infrastructure to the aerospace and defense industry, while 45% cite access to research institutions. Access to AI-enabled testing ranges was also cited by 57% of respondents.
Infrastructure at the state level is crucial for growth: Nearly one-third (31%) say infrastructure and connectivity constraints are factors influencing defense manufacturers' new-location choices.
Defense readiness is a system-level challenge, and states are the connective tissue that binds together suppliers, infrastructure, workforce, research institutions and testing environments.
3. Advanced manufacturing
The defense and aerospace industry relies on advanced manufacturing, including automation, computer numerical control (CNC) and robotics. It's key for these manufacturing capabilities to be localized to help reduce supply chain strain and weak spots during unpredictable times.
Nearly all executives (98%) say they're actively preparing for supply chain localization or reshoring during today's near-unanimous call to reshore American defense production. In the survey, 73% identify advanced manufacturing as a strategic asset, and 53% are actively investing in supply chain technology.
Today's U.S. defense industry widely prioritizes supply chain resilience — over cost and production output — as the workforce crisis deepens. This reflects a fundamental shift in how defense and aerospace leaders define competitiveness.
For years, manufacturers optimized supply chains around cost, speed and efficiency. In a sector where disruption can affect mission readiness, that model is no longer enough. Defense leaders seek localized supply chains to help them shorten development cycles while reducing risks like geopolitical uncertainty, material shortages, cyberattacks and demand spikes.
4. Innovation
Innovation has always been a hallmark of defense and aerospace, but innovation itself is changing, with a new emphasis on applied research and development. Innovation is increasingly judged by its ability to move from concept to capability.
Survey respondents consistently value modern regional infrastructure (52%) and access to research institutions (45%) as the strongest contributors to innovation environments, indicating the importance of coordinated partnerships and infrastructure. Access to R&D and university or industry research partnerships is ranked as important by 82% of respondents.
What role do states play in defense and national security?
The U.S. is in the midst of a localization and reshoring drive. But defense and aerospace supply chains face unique constraints, requirements and challenges that are crucial for states to understand if they want to contribute to the industry.
The Department of Defense (DoD) increasingly looks to states as proactive strategic partners in national security, evaluating regions by their individual assets and how effectively their systems work together. A defense-ready state offers something no single company can: a coherent, integrated industrial ecosystem capable of supporting missions from ideation through production.
"Defense readiness is a system-level challenge, and states are the connective tissue that binds together suppliers, infrastructure, workforce, research institutions and testing environments," added Gutierrez.
Michigan offers a practical example of what today's model requires: a region where commercial manufacturing strength, defense suppliers, research institutions and testing infrastructure are part of one coordinated industrial system.
Michigan is home to over 4,000 defense-aligned companies, over 900 aerospace suppliers and two of the U.S. Army's critical commands: Tank-automotive and Armaments Command (TACOM) and Combat Capabilities Development Command (DEVCOM) Ground Vehicle System Center (GVSC), placing the state at the center of ground vehicle design, engineering and procurement.
Major defense manufacturers include General Dynamics Land Systems, BAE Systems and American Rheinmetall, while a 12-university National Security Consortium aligns academic research directly to DoD priorities.
The state also supports multi-domain testing — land, air, maritime, space and cyber — in a single state through the National All-Domain Warfighting Center (NADWC), Camp Grayling and Selfridge Air National Guard Base. This is critical, as 88% of defense leaders say regional innovation corridors where R&D, manufacturing and testing are co-located are vital to their strategy.
The Michigan ODAI connects this ecosystem by guiding defense businesses through certification, funding access and DoD market entry.
For defense and aerospace companies aiming to invest or expand, Michigan offers a skilled workforce, a strong academic base and assets that are increasingly organized around resilient, integrated readiness.
Download the white paper, and learn more about Michigan's aerospace and defense readiness at MichiganBusiness.org.
