Aerospace and Defence Manufacturers Face Supply Chain Risks

Manufacturers within the aerospace and defence supply chain are contending with tightening access to critical raw materials, as demand rises across the energy transition, data centres, artificial intelligence and smartphones.

For manufacturers that depend on stable input costs and predictable lead times, this shift is beginning to disrupt production planning.

The result, according to a new report from Roland Berger, is a pattern of sourcing delays and shortages that has now reached the European aerospace and defence sector directly.

The report examines how upstream supply chain issues are creating vulnerabilities for manufacturers and sets out measures that governments could take to help address them.

Pressure builds on material inputs

For manufacturers, raw materials were once treated as a background cost, something to be sourced reliably and planned around with confidence. That assumption no longer holds. Ongoing geopolitical developments have reshaped supply chains globally, placing raw materials at the centre of production planning rather than at the margins.

Manufacturers building components for electrification programmes are now confronting the structural dependencies built into their supply chains. Rising Western demand for clean energy technologies has exposed underinvestment in domestic material capabilities, a gap that manufacturers cannot close on their own.

China's position in the rare earth elements market compounds this exposure. China holds 60% of mining output and more than 90% of refining capability, leaving Western manufacturers reliant on a single dominant source.

Titanium exposure across production lines

Different countries maintain their own lists of critical materials, shaped by domestic demand and production capacity. NATO has identified 12 raw materials that it considers a strategic necessity while also carrying supply chain risk.

According to NATO's list, these materials are titanium, aluminium, tungsten, platinum, cobalt, lithium, manganese, graphite, beryllium, gallium, germanium and key rare earth elements.

The European Critical Raw Materials Act goes further, naming 35 materials as essential to supply chain resilience as part of Europe's strategic autonomy objectives. For manufacturers operating across European production sites, this list could shape procurement priorities for years to come.

Rachel Hugo, Senior Partner at Roland Berger and co-author of the report, told Supply Chain Digital: "Critical raw materials have become one of the most significant risks facing aerospace and defence manufacturers. Demand is rising sharply, whilst supply remains highly concentrated and vulnerable to disruption. 

"Titanium and rare earth elements sit at the heart of every major platform – engines, airframes, radars, electric motors – so any upstream constraint has an immediate impact on production and capability delivery.

"Aerospace and defence supply chains are only as strong as their weakest link. Roland Berger’s latest report suggests a cumulative aerospace-grade titanium supply chain gap of around 100 kilotons could emerge over the next decade if production and recycling capacity doesn’t scale more quickly. Even relatively small shortages can have ripple effects across aircraft and engine and defence equipment programmes, making the avoidance of bottlenecks a strategic priority."  

Solutions to consider

Although European manufacturers handle final assembly of aerospace and defence components, upstream processing of raw materials remains concentrated in China and Russia. This leaves manufacturers dependent on regions outside their direct control.

The report sets out three measures that manufacturers and governments could pursue to reduce exposure to shortages.

The following options are outlined in the report:

• Scaling domestic production reduces reliance on trade and secures supply, though it involves high investment costs and time before production becomes possible.
• Prioritising materials recycling could speed up supply security, though recycled volumes remain limited.
• Developing substitute materials could reduce reliance on critical minerals, though many of the core materials manufacturers need remain non-negotiable.

Governments and industry bodies have already begun forming alliances with other nations or investing in domestic production capabilities. For manufacturers, the report suggests the next step is identifying which materials matter most to their own operations and building mitigation strategies around those specific dependencies.

The report states that original equipment manufacturers (OEMs) face particular exposure to early-stage disruptions in the supply chain, given their position downstream of raw material processing.

Coordinated action across the chain

Adam Healy, Partner at Roland Berger and co-author of the report, says no single organisation can resolve this issue in isolation: "Building a resilient raw materials ecosystem requires coordinated investment across OEMs, suppliers and governments." 

For manufacturers, the report frames this as a call to action rather than a problem to defer. Supply chain disruptions already threaten to affect operations, and the pressure on critical materials extends beyond aerospace and defence.

Demand from energy, smartphones and data centre sectors means manufacturers across multiple industries could face similar exposure. This could point to a need for cross-industry collaboration to secure raw material availability over the long term.

Rachel says there is no single solution to the problem: "Manufacturers need to understand where their biggest material dependencies lie and take a proactive approach to securing supply through strategic partnerships alongside alternative sourcing, recycling and investment in domestic capacity," she says.

She adds that building resilient supply chains requires coordinated action across industry and government "to ensure critical materials remain available for generations to come".

The report concludes that mass investment in Western production capacity is needed to strengthen upstream capabilities available to manufacturers. Short-term investment of time and money could bring long-term benefits, across a range of industries.