Trump wants to bring manufacturing jobs back. The aviation industry can't hire fast enough

The aviation industry faces a looming shortage of skilled aircraft mechanics, with 40% of the current workforce over 60 and a projected shortfall of 25,000 technicians by 2028, according to a joint report from the Aviation Technician Education Council and Oliver Wyman. Airlines and manufacturers like GE Aerospace are increasing recruitment efforts and raising wages—with potential earnings reaching $130,000 at American Airlines—to attract younger workers and counter the effects of pandemic-era buyouts and a generally aging workforce. Despite these efforts, geographic immobility of workers and competition from other sectors remain challenges in filling these high-value manufacturing jobs.

Analysis

The U.S. aviation industry is confronting a significant and escalating shortage of skilled aircraft mechanics and technicians, a critical issue highlighted by a 2024 report from the Aviation Technician Education Council and Oliver Wyman, which projects a deficit of 25,000 technicians by 2028. This scarcity is driven by an aging workforce, with 40% of certified mechanics currently over 60, and exacerbated by talent loss during the COVID-19 pandemic when companies offered buyouts and cut staff amidst a sharp downturn in demand, reversing a pre-pandemic ramp-up. In response, major airlines like American Airlines (AAL) and manufacturers such as GE Aerospace (GE) are intensifying recruitment efforts, particularly targeting younger demographics, and increasing compensation; for instance, GE's Lafayette plant offers base pay between $80,000 and $90,000, while American Airlines technicians can potentially earn $130,000 annually at the top of their scale. Despite these efforts, which contribute to a moderately positive sentiment regarding industry adaptation, challenges persist, including the geographic immobility of labor, the long training periods for FAA licensing, and wage pressures across the supply chain, especially for smaller businesses. This labor constraint, also seen with air traffic controllers, poses a risk to airline growth and operational efficiency, even as the sector is recognized for its high-value jobs, with median pay for aircraft technicians ($79,140 in 2024) significantly above the national median.

Key Decisions for Investors

• Investors should closely monitor labor costs and their impact on operating margins for airlines (AAL, DAL, UAL) and aerospace manufacturers (GE, BA), as the persistent skilled technician shortage is driving wage inflation and necessitating increased recruitment expenditure.
• Evaluate companies within the aviation sector based on their strategies and success in attracting and retaining skilled labor, as effective human capital management will be a key differentiator for operational stability and growth amidst this shortage.
• Consider potential downstream impacts on airline capacity growth and aircraft production timelines, as the technician shortfall, coupled with issues like air traffic controller shortages, could create bottlenecks affecting the entire aviation ecosystem.
• Assess investment opportunities in companies providing aviation technical training, education, or innovative solutions that improve mechanic productivity, as these may benefit from the industry's urgent need to expand its skilled workforce.