A&D manufacturing trends in 2025: Secure digital transformation on the battlefield and in smart factories

The defence manufacturing industry enjoys full-order books and a bullish outlook. The US Department of Defense (DoD), the biggest global customer, is increasing its annual spending to nearly $1 billion US in 2024, with further increases likely. The new course of the new US administration is unlikely to halt this trend as the global instability will not improve any time soon.

But defence contractors face challenges far beyond issues affecting manufacturing industries at large, such as global supply chain disruptions and rising material prices. Defence manufacturers will find it most challenging to comply with demands for heightened flexibility in contracts and the enforcement of new, enhanced cybersecurity rulings. Four distinct trends will drive the aerospace and defence (A&D) manufacturing industry in 2025:

Tighter cybersecurity for DoD contractors

As defence combat systems become more connected and reliant on data, the threat of cyberattacks is growing. Cyberattacks by non-friendly nations to circumvent the International Traffic in Arms Regulations (ITAR) are on the rise. US regulators are deeply concerned about lessons from current armed conflicts. The extent of intellectual property leakage in defence electronics to hostile nations through ITAR breaches led the DoD to significantly raise requirements for cybersecurity. The regulator has responded by sharpening the ruling on handling Controlled Unclassified Information (CUI) from the DoD, subject to defence contracts. The Cybersecurity Maturity Model Certification (CMMC 2.0) model has evolved to address more sophisticated threats to national security. Penalties for non-compliance are severe and could lead to exclusion from the right to bid for defence contracts. On the upside, the US regulator is encouraging the deployment of Software-as-a-Service (SaaS) applications via the cloud if the security standards are met via Federal Risk and Authorization Management Program (FedRAMP) certification.

Cybersecurity enforced on the supply chain

The global A&D supply chain has become a target for cyber threats. Managing risks related to the supply of parts and materials, especially for sensitive defence projects, has led to greater emphasis on tracking security gaps along the entire supply chain. The scope of the current CMMC 2.0 regulation includes all ITAR-relevant suppliers of DoD contractors via flow-down requirements. Market observers report that approximately 300,000 businesses will be affected by CMMC 2.0 compliance. Many are tier suppliers to defence manufacturers, the largest being Lockheed Martin, General Dynamics, RTX, Northrop Grumman, and Boeing. Some smaller suppliers, especially those operating in industries with very tight margins, may exit defence contracts due to the additional pressure on their cost base. Others will invest in the necessary certification to increase market share. The barrier to entry into the defence market is rising, and a consolidation among suppliers can be expected.

DoD contractors need more speed, flexibility, and scalability

The other dramatic shift concerns the pressure on defence manufacturers to deliver faster innovation, higher flexibility, smaller and connected devices, and a massive upscaling in distributed production for ammunition. Armed forces now draw on the importance of:

• Rising demand for hypersonic flight, with speeds beyond Mach 5 being a key focus for military application. The US, China, and Russia are leading the development and defence manufacturers are requested to invest intensely in research and development (R&D) for hypersonic programmes.
• Increasing focus on autonomous drones in armed conflict. The use of drones, both in reconnaissance and combat roles, as well as defence networks against them, has quickly become the cornerstone of military operations.
• Need for connected, multi-modular systems that can quickly be reconfigured for different missions, from intelligence gathering to combat operations. This includes multi-purpose aircraft, naval ships, and ground vehicles. Future conflicts will likely involve a combination of cyber, space, air, sea, and land domains, requiring defence systems to operate seamlessly across these domains.

These new paradigms of the arms race all require manufacturers to differentiate on fast electronic and physical innovation leaps, short cycle improvements, and fast volume delivery.

Factories in A&D must become smart and connected

Manufacturers need to fundamentally switch their long-term industry thinking in complex development projects with decade-long lifecycles for battle tanks, fighter planes, and naval ships. They must modernize their manufacturing facilities and data-capturing IT systems while facing increased costs for R&D to scale up production and accelerate deployment to the battleground. Smart factories transform A&D production. Major aspects include the integration of additive manufacturing (3D printing), higher automation, digital twin, artificial intelligence (AI) technology, and more connectivity via the Internet of Things (IoT):

• Additive manufacturing allows for the rapid production of complex parts with reduced material waste. It enables replacement parts to be printed on the fly directly in combat zones.
• Automated production lines and robotic systems improve the capability to meet high demand and tight schedules.
• Digital twins are used to model complex systems like aircraft, naval vessels, or tanks. Engineers test and optimise designs digitally, reducing errors and prototyping costs. Extreme conditions such as combat scenarios can be accurately simulated.
• AI is increasingly used in design, production, supply chain management, and predictive maintenance. One of the fastest-rising use cases is quality control. AI can identify defaults more accurately and faster, reducing the risk of defective components reaching the battlefield.
• Smart defence factories are connected via IoT and cloud computing. Sensors leverage data to be distributed and processed across connected systems, enhancing operational efficiency.

Advanced digital technologies transform the manufacturing of defence systems by enhancing efficiency, precision, and innovation. Digitalisation enables smarter, more flexible, and cost-effective operations with improved performance, reliability, and lifecycle of A&D products.

Takeaway: Smart defence factory empowered by the cloud

A standardised and consolidated cloud platform facilitates the smart factory by providing the following key benefits to defence manufacturers:

• Better protection against cybersecurity risks: Providers of multi-tenant cloud solutions keep their infrastructure at the latest protection level and anticipate threats early via cyber defence teams and forensic analysis of cybercrime patterns.
• Preconfigured and FedRAMP-certified modules facilitate compliance with cybersecurity (CMMC 2.0) and defence accounting (DFARS - Defense Federal Acquisition Regulation Supplement) regulations.
• Increased flexibility: Manufacturers can rapidly adapt to new design requirements or deploy new cloud-based applications in the entire manufacturing ecosystem at once.
• A standard IT platform leads to standardised digital processes with little customisation, allowing far more comprehensive automation.

Enhanced insights: A highly standardised IT platform enables faster and simpler integration, processing, and analysis of data from multiple sources in real-time for AI deployment use cases. Learn how defence contractors use Infor CloudSuite Aerospace & Defense to keep pace with the ever-evolving industry challenges.