A view of the skies ahead


Cajero’s managing director, Alex Harding takes a holistic view to provide an aerospace industry manufacturing outlook.

Before 2020, the aerospace industry was thriving, led by Boeing's 737 MAX and Airbus' A320-family. However, the pandemic changed all that, wreaking financial devastation across the aviation value chain, most notably for commercial aircraft manufacturers.

As a result of the pandemic plunge in air travel, manufacturers had to aggressively decelerate, or even halt deliveries of new aircraft. Demand and production plummeted across the entire supply chain.

Cajero’s managing director, Alex Harding
Cajero’s managing director, Alex Harding

Two years later, in 2022, the aerospace manufacturing industry continued to recover and surpass expectations from the previous two years, having successfully rebounded from the effects of the pandemic.

While some areas of the aerospace industry have struggled, defence aircraft programs have remained relatively unscathed, such as Lockheed Martin's F-35 Lightning II fifth generation military jet. With a significant number of aircraft on order (>3,000), and a long-term production and support schedule, the programme is expected to continue for many decades.

Despite the resurgence of the aerospace manufacturing industry, concerns have emerged regarding high inflation, economic uncertainty, difficulty in recruiting and retaining talent, supply chain and logistics challenges, and increasing costs.

These factors have led to growing debates about a recession. But should the industry be concerned if we do enter one? During the pandemic, many airline carriers mothballed older aircraft to reduce expenses, resulting in a shortage of capacity to meet the returning pent-up demand. Additionally, significant investments in new technology for sustainable air transportation, reducing high fuel costs, and meeting regional environmental initiatives are needed. Due to the industry's long-term cycles, which are longer than a typical recession, it is widely thought the near-term outlook for the aerospace industry remains positive.

Emerging opportunities

A closer examination of the industry reveals additional resilience, potential vulnerabilities, and emerging opportunities:

Strengths - Advanced engineering, technology, and automation; Exceptionally long-term manufacturing horizon; Vast global capacity.

Weaknesses - Economic and political instability; High labour costs; Aging workforce.

Opportunities - Space transportation and tourism (SpaceX, Blue Origin, Virgin Galactic); Enormous fleet replacements; eVTOL.

Threats - Aging workforce; Skills shortages; Pandemics.

Although overall demand and production capacity have not yet hit pre-pandemic highs, manufacturers should be aware of important trends to consider in 2023.


Aerospace manufacturers have been boosting their investments in digital technology and hastening the implementation of emerging technologies to reduce risk. Studies have shown that companies with a higher degree of digital proficiency are more resilient, and those that accelerated their digitalisation during the pandemic were able to adapt more swiftly than those with limited digital capabilities.

In order to maintain and enhance their agility, aerospace manufacturers should continue to invest in advanced manufacturing technologies. In the next 12-18 months, manufacturers should focus on investments that enable swift adaptation to safeguard long-term profitability across the value chain. In addition, expanding advanced manufacturing capabilities such as robotics and automation to boost efficiency, and artificial intelligence and machine learning to gain a competitive advantage. This increased automation will drive productivity but also bring about workforce changes in the industry.

Supply chain

Aerospace manufacturers are facing a significant impact on their supply chains due to disruptions in the past 18 to 24 months. The persistent shortage of critical materials and ongoing supply chain disruptions are seen as the biggest uncertainty for the industry in the coming year. To mitigate these risks, manufacturers are utilising both digital technology and traditional approaches.

One approach is to strengthen relationships with suppliers and work with them as partners to navigate disruptions. Manufacturers are also diversifying their supplier base and adding redundancy to increase agility and reduce risk. Some companies may also take equity stakes in suppliers or acquire them completely to gain more control over the supply chain.

Another approach is to boost local capacity by integrating businesses across the value chain and opening new production facilities locally. This helps reduce exposure to logistics and transportation bottlenecks.

Lastly, many are increasing their use of digital technologies to increase supply network visibility and improve control and coordination. This helps them to better manage their supply chain and respond to disruptions more effectively.


In 2023, addressing the tight labour market and high workforce turnover is expected to remain a top priority for aerospace manufacturers. Despite a record number of new hires, job openings in the industry are still high, with voluntary departures and layoffs leading to substantial workforce churn. This shortage, compounded by supply chain limitations, is impacting operational efficiency and margins. To address this, aerospace manufacturers are implementing several strategies such as raising wages, investing in reskilling and upskilling programs, implementing diversity, equity, and inclusion (DEI) initiatives, and offering flexible work arrangements.

Industry 4.0

Aerospace manufacturers are investing in smart factory transformations to drive future competitiveness. They are implementing technologies such as cloud, edge computing, and 5G to enhance connectivity and partnering with others in their value chain. Along with establishing a digital core, manufacturers are also investing in technologies like AR, AI, IoT, additive manufacturing, blockchain, and advanced analytics. Some companies are also experimenting with creating a seamless, unlimited reality experience such as a metaverse. Cybersecurity becomes a crucial feature for success.


This year manufacturers may need to closely monitor the fast-changing landscape of environmental, social, and governance (ESG) standards. Many business leaders know better waste management capabilities and using technology to improve product recycling can make operations more sustainable. Companies are also implementing supplier compliance and diversity programmes as part of their overall strategies, although progress on these initiatives may have slowed due to the pandemic and other disruptions. Smart buildings enabled by technology can also aid in achieving carbon neutrality by optimising everything from machines to production lines, and from sensor-enabled heating and cooling systems to facility lighting, resulting in cost savings and a cleaner and more resilient power supply.

Bright future

The rebound seen last year is expected to persist into 2023 and beyond, despite ongoing challenges such as supply challenges, talent shortages, and economic uncertainty. Factors such as energy price volatility, rising employment costs, and inflation concerns may also affect the industry. Despite these challenges, innovations and solutions developed in the past are likely to gain momentum in 2023 and may lead to changes in conventional business practices to drive growth and productivity.




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