Major aerospace OEMs are shedding noncore divisions to stabilize supply chains and lift margins.
Key takeaways
Middle market aerospace firms are emerging as the strategic beneficiaries of this shift.
Aerospace firms should be strategic about how to integrate AI and robotics into operations.
Aerospace manufacturers find themselves at a critical inflection point that may give middle market companies in this sector a boost. The post-pandemic rebound is accelerating, fueled by surging demand for commercial jets, renewed defense spending, and sweeping sustainability and cybersecurity mandates. Yet persistent labor shortages, regulatory friction and global supply chain constraints are forcing companies to reinvent their operating models.
Data indicates that, amid these factors, middle market aerospace manufacturers that are small enough to leverage localized sourcing and not rely on global scale may have an edge over their larger counterparts. But sector leaders at midsize companies will still need to be strategic about tapping into this opportunity, which will require embracing digital transformation, diversifying sourcing and investing in innovation.
Supply chain turbulence meets production pressure
The aerospace rebound is unmistakable, yet uneven; while aerospace sales are recovering, production and deliveries are lower than usual. In June, the two largest aircraft manufacturers fell short of midyear historical averages for deliveries, according to Flight Plan, which reports on the civil aerospace industry.
The U.S. Government Accountability Office underscores the challenge: 15 of 17 manufacturers reported difficulty sourcing essential materials—nickel, titanium, semiconductors and aluminum, all used for engines—creating cascading delays across original equipment manufacturer production lines. Suppliers are responding by expanding oversight and supplier networks, while airlines facing delivery delays are reducing flight schedules and prolonging part lifecycles. Carriers reported over $15 billion in collective losses due to delayed jet deliveries, according to International Finance, and that led to widespread cancellations and operational disruptions.
The RSM Supply Chain Special Report 2025: U.S. and Canada confirms the broader impact:
- Fifty-six percent of middle market leaders surveyed said supply chain sustainability (broadly referring to supply chain resilience) and keeping up with compliance were top priorities.
- Fifty-one percent ranked risk management and inventory management as strategic imperatives.
These shifts reflect a decisive pivot toward operational agility and long-term sourcing stability—hallmarks of tomorrow’s aerospace ecosystem. This decision is paying dividends as middle market aerospace companies see a pickup in margins amid continued supply chain restraints.
Major aerospace OEMs are shedding noncore divisions to stabilize supply chains, capitalize on AI-powered solutions and improve margins. Middle market aerospace firms are emerging as the strategic beneficiaries of this shift, leveraging their operational flexibility, regional sourcing networks and faster adoption of AI to fill critical gaps left by divested OEM assets.
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Regulation and the digital mandate
Regulatory headwinds are reshaping how aerospace manufacturers operate. California’s climate disclosure laws, Senate Bills 253 and 261, are accelerating the transition to transparent emissions reporting and sustainable manufacturing, with deadlines looming in January 2026. Companies are embracing lifecycle emissions tracking, electrification and sustainable material innovation.
Cybersecurity mandates add another layer of complexity. The Cybersecurity Maturity Model Certification (CMMC)—rolling out through 2025—requires contractors to secure controlled unclassified information (CUI), driving early compliance investments in digital infrastructure to meet CMMC requirements. Defense contractors and suppliers across the aerospace supply chain are facing increasingly complex cybersecurity expectations due to rising threats targeting CUI, and some organizations are investing in system security plans, segmentation testing and other assessments as a result.
Companies are investing heavily in AI-powered audit platforms, product lifecycle management systems and dedicated compliance teams to meet new standards like the CMMC, the Defense Federal Acquisition Regulation Supplement and international export controls. The AS9100, which addresses aerospace-specific requirements, is undergoing major transformation with expanded requirements related to stronger quality controls, cybersecurity and sustainability. Combined with sustainability reporting, these regulations are transforming enterprise risk into a competitive advantage.
Data indicates that middle market aerospace manufacturers that are small enough to leverage localized sourcing and not rely on global scale may have an edge over their larger counterparts.
Kendra Blacksher, Industrials Senior Analyst, RSM US
Defense innovation surges forward
Defense-driven innovation is reshaping aerospace sector dynamics. One company’s plans to begin C-130 operations this year in Greensboro, North Carolina, for instance, demonstrates strategic investment in fleet readiness. Another example: The initial public offering boom led by Firefly Aerospace, VisionWave Holdings and Voyager Technologies in 2025 has unlocked more than $100 billion in venture capital—40% more than in the previous seven years combined, according to Forbes.
Aerospace firms should also be strategic about how to integrate AI, robotics and next-gen sensing technologies into manufacturing operations. This will help them better compete for contracts as global defense budgets rise.
J.P. Morgan’s 2025 Applied Tech Report highlights a related trend: Capital investment in aerospace-aligned robotics rose from $7 billion in 2020 to $12 billion in 2024, signaling that automation is no longer optional—it's a strategic imperative.
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Outlook: Scaling toward resilience
From sustainability compliance to tech disruption in the defense sector, aerospace manufacturing leaders are navigating complexity while positioning for growth. Those who embrace AI-driven forecasting and agile production models will be best positioned to scale with OEM demand.
The next chapter will be defined by three imperatives:
- Improving operational agility across supply chains
- Embracing digital transformation for compliance and innovation
- Prioritizing strategic investment to meet accelerating demand
For forward-looking aerospace executives, now is the time to recalibrate—before the runway clears and the next wave of transformation takes flight.
RSM contributors
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