The defense-tech manufacturing sector is struggling to find and keep skilled workers, leading to major delays and financial losses. Here's why:
These challenges cost mid-sized firms over $300 million annually due to delays and skill gaps. Solutions include partnerships with schools for workforce training, better compensation packages, and streamlining clearance processes to secure top talent faster.
Defense-Tech Manufacturing Hiring Challenges: Key Statistics and Impact
Defense-tech manufacturing depends on expertise that's increasingly hard to find. Fields like mechatronics, avionics, AI-integrated systems, embedded electronics, propulsion engineering, and advanced composites demand highly specialized knowledge. Yet, only 42.6% of engineering graduates are ready for these roles, with just 4.4% having formal manufacturing training. Adding to the challenge, nearly 65% of defense OEMs and Tier-1 suppliers report significant hiring difficulties.
The rise of digital-first warfare has only deepened this skills gap. Modern defense projects now rely heavily on software, with approximately two software engineers hired for every hardware engineer. Expertise in areas like AI, cybersecurity, and autonomous systems is more crucial than ever. Meanwhile, the global shortage of semiconductor engineers - expected to surpass 1 million by 2030 - is already disrupting production schedules. Companies like Boeing and Airbus are feeling the strain. For instance, in September 2024, Boeing faced $5 billion in losses due to production delays caused, in part, by a lack of skilled machinists and welders. These issues highlight the urgent need to address workforce shortages in critical roles.
The skills imbalance makes certain roles especially critical. Positions like aerospace engineers, AI specialists, propulsion experts, avionics engineers, naval systems specialists, and semiconductor designers are among the most sought-after. For example, the U.S. is projected to need 3,800 new aerospace engineers annually from 2021 to 2031. Without these experts, defense organizations risk falling behind in cutting-edge technology.
"The defense enterprise will continue operating largely as a set of industrial-age institutions that leverage technology ineffectively rather than as twenty-first century organizations where technology and technologists are managed like a strategic asset." - Lindsey R. Sheppard, CSIS Briefs
To tackle these shortages, defense contractors are forming partnerships with educational institutions. One example is the Maricopa Community Colleges system in Arizona, which, as of October 2023, had trained 712 students through its "Quick Start" semiconductor program. This 10-day intensive course, developed with Intel, equips entry-level technicians with essential skills. Similarly, Lockheed Martin partnered with the College of Central Florida to create a sustainable apprenticeship pipeline. Their micro-degree program delivered a return on investment exceeding 400% by October 2022.
Another initiative, the Florida Applied Research in Engineering (FLARE) program, connects the Air Force Research Laboratory with the University of Florida. Backed by $19 million in funding over five years as of 2024, FLARE focuses on advanced weapons systems and workforce training. These collaborations help bridge the gap between industry timelines - often just 18 months ahead - and the longer cycles required for updating academic curricula. Additionally, starting security clearance investigations during college internships, rather than post-graduation, reduces the 8+ month clearance bottleneck. These efforts are vital to ensuring a steady flow of skilled talent for defense projects.
Security clearances are a major hurdle in defense-tech hiring. Right now, there are between 500,000 and 700,000 open positions requiring clearances across the U.S.. However, the number of professionals with active clearances doesn’t come close to meeting this demand, with an estimated shortage of 70,000 cleared professionals. This gap poses a serious risk to critical projects.
The timeline for obtaining clearances adds to the problem. By the third quarter of fiscal year 2025, the average wait time for a Top Secret clearance is 243 days - over eight months - while Secret clearances take 138 days on average. These delays leave recruiters with little choice but to focus on candidates who already hold active clearances, as waiting for new ones can take months.
Stringent eligibility rules further shrink the candidate pool. Federal "zero tolerance" drug policies disqualify individuals for marijuana use, even in states where it’s legal. Additionally, "Foreign Influence" and "Foreign Ties" criteria exclude candidates with dual citizenship, foreign passports, or close family living abroad. Yet, despite these strict standards, only 2–5% of clearance applications are denied each year by the U.S. Department of Defense. These challenges disrupt workforce planning and emphasize the importance of managing clearance processes efficiently.
One way to tackle these challenges is through early candidate evaluation. Pre-screening for clearance eligibility before starting the formal process can save time and resources. This step helps uncover potential issues - like financial problems, recent drug use, or foreign associations - that might delay or derail an application.
Some companies also explore expedited options, such as interim clearances. For urgent roles, finding candidates eligible for interim access allows them to start work while the full clearance process continues. However, many recruiters have moved away from this approach due to the unpredictability of interim clearance approvals.
A strong network of professionals with active clearances can dramatically speed up hiring. For example, in early 2025, CCS Global Tech helped a federal contractor fill 10 cybersecurity analyst roles requiring Top Secret/SCI clearances and full-scope polygraphs. The client’s internal team estimated a 6–8 month hiring timeline, but CCS Global Tech leveraged its network of 100,000 pre-vetted professionals to deliver 14 fully cleared candidates in less than three weeks. All 10 positions were filled within 30 days, avoiding an estimated $1 million in contract penalties.
Veterans also play a key role in solving this challenge. Many leave military service with active clearances and a deep understanding of federal systems, making them ready to step into roles immediately. Similarly, organizations that maintain "alumni" networks of former employees with clearances can quickly re-engage these professionals when new projects arise. These strategies help bypass the lengthy clearance process and create a pool of ready-to-deploy talent.
Geographic challenges add another layer of complexity to the recruitment struggles in defense-tech manufacturing. This industry is heavily concentrated in a handful of states, leaving many regions without the skilled workforce needed to support growth. From fiscal year 2012 to 2020, the top 15 states increased their share of total defense contract value from 74.8% to 77.6%, with the top 10 states alone accounting for 66.7% of that value. This concentration not only drives up wages in key areas but also makes it difficult for companies in less-served regions to attract talent.
The disparity is clear. Texas benefits from major programs like the F-35 Lightning II and large military installations. California remains a hub for aviation and key acquisition agencies like the Naval Information Warfare Systems Command. Maryland leads in cyber capabilities, with Fort Meade and the NSA at its core. Meanwhile, Huntsville, Alabama, supports space and missile defense through Redstone Arsenal, and Connecticut relies heavily on defense contracts, with 7.7% of its economy tied to submarines and aviation.
Software talent follows a similar pattern, clustering in urban areas like Washington state, California, Oregon, New York, and D.C. This creates additional hurdles for software-intensive defense platforms. To address this, the Pentagon has set up satellite offices - such as the Defense Innovation Unit in Silicon Valley, Boston, and Austin - to tap into local innovation. Companies outside these hubs face a tough challenge: they must either attract talent to less competitive regions without overinflating wages or develop a local workforce from scratch.
Remote work may seem like a solution, but strict security protocols often require on-site access to Secure Compartmented Information Facilities (SCIFs). Many defense-tech roles involve classified information that can only be handled in these secure environments, preventing employees from working entirely from home.
Still, there’s room for flexibility. For unclassified tasks like administrative work or early design stages, hybrid arrangements can reduce the need for full-time relocation. In the U.S., workplace flexibility is a key factor for employees deciding whether to join or stay with a company. Options like flexible hours or compressed workweeks can make jobs in remote areas more appealing without requiring companies to match the higher salaries found in major tech hubs.
To manage costs while addressing staffing needs, companies often use recruitment bonuses, relocation assistance, and retention incentives. When these strategies fall short, businesses increasingly focus on developing local talent as a long-term solution.
When hiring externally becomes too costly or impractical, companies turn to building talent pipelines within their own communities. Partnerships with community colleges and technical schools are becoming more common, offering short-term technical training programs - typically lasting 10 to 20 weeks - rather than traditional degree paths.
A notable example is Intel Corporation’s initiative in Ohio, where it’s establishing two semiconductor fabrication plants in an area with no prior semiconductor workforce. Intel has pledged $100 million, with an additional $50 million from the NSF, to fund scholarships, curriculum development, faculty training, and lab equipment for local colleges and universities.
For these programs to succeed, employers must clearly signal demand, encouraging schools to invest in specialized training. By 2030, advanced technology industries in the U.S. are expected to face shortages of over 100,000 technicians, 270,000 engineers, and 1 million computer scientists. Companies that prioritize local talent development now will be better positioned to overcome geographic limitations and secure the workforce they need to stay competitive.
Defense-tech manufacturing faces intense competition for specialized talent, not just within its own sector but across the broader tech industry. Fields like AI, cybersecurity, and advanced manufacturing all require niche expertise, creating a high demand for professionals. For instance, the need for cleared experts in cybersecurity, data analytics, and intelligence operations grew by 12% year over year as of 2024. Meanwhile, the global cyber talent gap is estimated to be between 3.4 and 4 million unfilled positions.
The hiring landscape has shifted significantly. The ratio of hardware to software hires now stands at 1:2, reflecting the growing emphasis on digital warfare. This shift fuels competition for skilled workers who can command premium salaries. Professionals with TS/SCI clearances, for example, earn 20% to 25% more than their non-cleared counterparts. Adding to this, commercial tech companies’ ability to onboard talent quickly makes the competition even tougher.
The stakes for defense-tech companies are enormous. A median-sized aerospace and defense firm with 20,000 to 30,000 employees can lose between $300 million and $330 million annually due to skill gaps, employee disengagement, and hiring delays. With aerospace and defense turnover hitting 15% in 2024 - four times the national average - companies that fail to secure top talent face not only hiring challenges but also substantial financial losses. These pressures make competitive compensation and workforce strategies critical.
A strong compensation package starts with a competitive base salary. Defense-tech companies must benchmark their pay against both defense contractors and commercial tech firms. In Europe, defense salaries average 43% above standard industry wages, while in the U.S. and Australia, specialists in AI and cyber defense earn 30% to 50% more than their peers in other industries. For example, AI security engineering roles now offer salaries ranging from $150,000 to $160,000+.
But salaries are just the beginning. Sign-on bonuses and retention incentives can help reduce turnover, while covering clearance renewal costs eases administrative burdens for employees. For roles requiring relocation, offering recruitment bonuses and relocation assistance can offset the higher cost of living in tech hubs.
Benefits also play a key role. In the U.S., workplace flexibility is a major factor in attracting and retaining talent. While many defense roles require on-site work in Secure Compartmented Information Facilities (SCIFs), offering hybrid options for tasks like administrative work or early design stages can boost job satisfaction and make roles more appealing.
Technical professionals often value career growth that allows them to deepen their expertise without being pushed into management roles. However, many defense organizations still operate within rigid hierarchies, which can drive talent toward companies with more flexible structures. For example, some firms use "rank in person" models, enabling specialists to advance without leaving technical work behind.
Creating senior-level technical roles equivalent to GS-14 and above gives experts a clear path to leadership within their field. When employees see opportunities to grow while staying in their area of expertise, they’re more likely to remain with the company.
"People don't quit their job. They quit their managers." – CSIS Brief
Programs that fund certifications like CISSP or AWS Certified Security, along with leadership development and specialized training, are also essential. Offering internal rotations or private-sector tours every few years helps employees refresh their skills and stay engaged. This is especially important given that 44% of aerospace and defense employees prioritize developing specialized technological skills, compared to only 24% of employers who emphasize them.
Focusing on internal development can help address talent shortages while reducing dependence on costly external recruitment. For example, in June 2023, Raytheon (now part of RTX) had to rehire retirees to restart production of the Stinger missile system due to a lack of current workforce expertise. This highlights the importance of knowledge transfer and upskilling programs.
"STEM talent leaves the defense enterprise when they lack purpose, frequently because they do not have the necessary skills, tools, and opportunities to solve tough problems in support of defense missions." – CSIS Brief
The U.S. Air Force’s Digital University partnered with Coursera in 2024, achieving a 100% utilization rate among enrolled learners while expanding the pool of skilled internal candidates for technical roles.
Some companies are also using "Talent Win Rooms" - agile teams combining HR, data science, and professional development to streamline hiring and internal growth. These teams ensure new hires have immediate access to the tools and resources they need while coordinating ongoing training to keep pace with rapidly evolving technologies like AI and cybersecurity.
For defense-tech companies, building strong talent pipelines and prioritizing continuous employee development are no longer optional - they’re essential for staying competitive. By focusing on internal promotions and robust training programs, companies can better position themselves to attract and retain top talent across industries.
The defense-tech manufacturing sector faces distinct hiring challenges, with the average mid-sized company losing an estimated $300 million to $330 million annually due to lost productivity. Adding to this strain, retirements threaten to leave a gap of 3.5 million workers across manufacturing by 2026.
Addressing these challenges requires a shift in how recruitment and retention strategies are approached. Companies must adopt long-term workforce planning, extending timelines from the typical 18 months to 3–5 years. This involves building robust talent pipelines through partnerships with universities and trade schools, pre-screening internship candidates for clearance eligibility, and maintaining networks of cleared professionals. Tackling geographic challenges also demands creativity, such as offering hybrid work for non-classified tasks and creating regional training programs to cultivate local talent.
Retention strategies are equally vital. Competitive compensation packages, clear career paths for technical experts, and comprehensive training programs can help keep top talent engaged. Defense organizations must evolve into modern workplaces where technology and the experts behind it are treated as strategic priorities.
Without these efforts, companies risk delays and rising costs that could jeopardize critical defense missions. By investing in strategic workforce planning, enhancing employee value propositions, and focusing on continuous development, organizations can secure the specialized talent essential for success. Taking proactive steps today ensures readiness for the challenges of tomorrow.
In a competitive talent market, reactive hiring is not an option. Companies that address these challenges head-on will not only avoid delays but also strengthen their role as indispensable contributors to national defense. A unified approach to recruitment and retention is the key to sustaining the industry's critical mission.
Defense-tech companies can address security clearance delays by adopting a mix of practical strategies. Leveraging advanced technologies and data-driven tools offers a way to streamline the clearance process, cutting down on processing times and boosting overall efficiency. Another smart move is encouraging reciprocity of clearances between agencies, which helps sidestep delays caused by red tape.
On the workforce side, companies can implement creative approaches to attract and keep talent with existing clearances. Offering flexible work arrangements, competitive benefits, and targeted training programs can make a big difference. Additionally, building robust talent pipelines and identifying key skills early on can reduce the impact of clearance-related bottlenecks. By blending process improvements with forward-thinking talent management, defense-tech firms can better handle these challenges and ensure projects stay on schedule.
To strengthen the local talent pool for defense-tech manufacturing, public-private partnerships play a key role. By bringing together government, industry leaders, and local communities, these collaborations can create workforce programs tailored to the sector's needs. Think apprenticeships or specialized training programs designed specifically for the unique demands of defense-related projects. These partnerships also ensure that regional workforce development aligns with the skills required for upcoming defense initiatives.
Another important step is investing in education and early outreach. Collaborating with high schools and community colleges to teach technical skills - like cybersecurity, engineering, and advanced manufacturing - helps build a steady stream of qualified candidates. Programs that lower entry barriers for specialized roles and offer clear career growth paths can make the industry more attractive and accessible to local talent. By combining these efforts with forward-thinking workforce planning, organizations can address the hiring needs of this specialized field effectively.
Employee turnover in defense-tech roles tends to be higher due to the unique demands and opportunities in this field. These positions require highly specialized skills, making professionals in this area highly attractive to commercial tech companies. These companies often lure talent by offering faster-paced work environments, more autonomy, and the chance to tackle exciting, forward-thinking projects.
On top of that, defense-tech roles come with challenges like mandatory security clearances and strict regulations, which can feel restrictive compared to the flexibility and creativity found in private sector tech jobs. These factors create a strong pull for skilled professionals to transition out of defense-tech and into the commercial tech world.
