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  • Demand-Driven Needs a Demand

    What a $151 billion demand signal teaches economic and workforce developers about certainty

    Training manufacturers

    Economic and workforce developers live by an unforgiving rule: before a region can train anyone, someone must say which jobs, how many, where, and when. The sharpest current test of that rule comes from an unexpected direction, the federal government’s new homeland missile defense initiative and the contract vehicle behind it. The story is set in defense, but the lesson travels to any region, any industry, and any training dollar that has to be spent before the future announces itself.

    On January 15, the Missile Defense Agency completed the last of three award tranches under SHIELD, the Scalable Homeland Innovative Enterprise Layered Defense contract, the $151 billion vehicle that will carry most of the Trump Administration’s Golden Dome missile defense initiative. More than 2,400 companies now hold a position on it, and across the missile defense industrial base the hiring has already begun. The workforce development system cannot answer this demand signal, and the reason is not the one usually given. The problem is not only that the workers are missing. The problem is that the demand has no shape, and training systems can only aim at shapes.

    The Shortage Everyone Can See

    The familiar half of the story is well documented. The most recent Aerospace Industries Association (AIA) and McKinsey (2025) workforce study counts 2.21 million workers in the American aerospace and defense sector and reports attrition holding near 15 percent, roughly double the average across other United States industries. Seventy-six percent of member firms report sustained difficulty hiring engineering talent; 56 percent report the same for the skilled trades. Against the production surge now underway, an analysis published by Voyager Technologies (2026) puts the sector’s skilled technical deficit above 200,000 workers and estimates that the labor pool serving programs like Golden Dome would need to grow 30 to 40 percent to meet demand.[1] These figures are contested at the margins, but no serious observer disputes the direction. If Golden Dome were an ordinary program, this would be an ordinary, if large, shortage story.

    The Structure Few Are Reading

    Golden Dome is not an ordinary program, and the difference sits in the acquisition mechanics. SHIELD is a ten-year, indefinite-delivery, indefinite-quantity contract. The $151 billion is a ceiling, not an appropriation; the agency obligated no funds at the base award, and revenue flows to a vendor only when it wins a task order. The awards themselves went out in three tranches over six weeks: 1,014 companies on December 2, another 1,086 on December 18, and a final 340 on January 15 (Defense One, 2025; Defense Security Monitor, 2026). The money actually in hand is real but far smaller: roughly $24.4 billion provided through the 2025 reconciliation act and $13.4 billion in the fiscal year 2026 defense appropriation, with the administration planning to seek some $17 billion more through reconciliation next year (Federal News Network, 2026a, 2026b). Congressional appropriators, meanwhile, complain that they have received no master deployment schedule, no cost schedule, and no finalized system architecture (Federal News Network, 2026a; see also Defense One, 2026). If the members who fund the program cannot learn where and when the work will occur, a community college dean has no chance.

    What Training Systems Need to Aim At

    This matters because every workforce program that has ever delivered at scale was built against knowable demand. The scholarship names the same failure mode: MIT’s Task Force on the Work of the Future concluded that American training institutions are capable but fragmented, and that workers and firms alike underinvest in skills when the return is uncertain (Autor et al., 2022).[2] Consider the counterexample from submarine country. The Navy awarded Electric Boat a $15.38 billion contract modification in March (Reed, 2026); the yard committed to 8,000 hires this year (InsideDefense, 2026); and the New England training partnership that feeds it passed 10,000 workers trained on July 1 (turnto10, 2026; What’s Up Newp, 2026).[3] That pipeline works because five things are known: the employer, the occupations, the counts, the location, and the dates. Golden Dome inverts every term. The employer is any of 2,400 firms. The occupational mix depends on which architecture survives, and there is no finalized architecture. The locations follow task orders that have not been issued. The dates are whatever the ceiling becomes when it turns into orders. A regional consortium can train welders against a submarine contract. No one can train anyone against a ceiling.

    What Firms Do in the Meantime

    In the absence of shape, firms that can afford to pre-position are doing so with their own capital. True Anomaly raised $650 million in April, plans to nearly double its workforce to 500 employees by the end of the year, and intends to grow its factory footprint from 140,000 square feet toward two million over four years (CNBC, 2026).[4] Northrop Grumman has pointed part of a $1.65 billion capital expenditure budget at readying its Space Park campus for rapid production cycles (Voyager Technologies, 2026). These are rational hedges, and they have a predictable labor market consequence: firms that cannot see demand hire ahead of it, and firms that cannot hire ahead of it recruit from one another. With sector attrition already near 15 percent, much of the apparent hiring boom is the same cleared, experienced workers cycling among badge colors at rising wages. The deficit does not close, it circulates.

    The Regional Gamble

    The same uncertainty falls hardest on regions. Golden Dome work will eventually concentrate somewhere; the obvious candidates, given agency and prime contractor footprints, include Huntsville, Colorado Springs, Southern California, and Florida’s Space Coast, and firms like True Anomaly are already placing their factory bets in Colorado. But no governor can know today whether their state is on that list, and the list itself will be written one task order at a time. A steady-state shortage lets a region invest where its employers already are, the way southern Arkansas built training around a munitions cluster that has expanded sharply in the past three years, with Lockheed Martin, General Dynamics, and the Rafael-Raytheon joint venture R2S all adding capacity on a defense footprint dating to the 1940s (Arkansas Money & Politics, n.d.; RTX, 2025).[5] A shapeless shock forces the opposite calculation: gamble scarce training dollars on demand that may materialize three states away, or wait for certainty and forfeit the first-mover position that regional economic developers spend careers pursuing. Either choice is defensible. Both are expensive. And the cost is borne by exactly the institutions, community colleges and state workforce agencies, least able to absorb a wrong bet.

    The Case for the Ceiling

    The acquisition logic behind SHIELD deserves its due.  A flexible, broadly competed vehicle lets the government move at commercial speed, avoids betting the program on a single architecture that intelligence or technology may overturn, and keeps two thousand innovators in the game rather than three primes.  Judged purely as procurement reform, it may prove to be good design; that question belongs to others.  The point here is narrower.  Flexibility for the buyer is uncertainty for everyone downstream, and uncertainty does not disappear when it is exported.  It comes to rest on the smallest actors in the system: the supplier deciding whether to add a second shift, the community college deciding whether to stand up a program, the technician deciding whether the job will exist in three years.  The Harvard Project on Workforce has mapped that system as it actually exists: thousands of mostly small, local training providers, exactly the institutions least equipped to absorb the risk that flexibility exports (Project on Workforce at Harvard, 2023).  The federal government has spent decades asking training systems to be demand-driven.  Golden Dome is what happens when the demand declines to specify itself.

    What Mobilization Has Always Required

    There is precedent for both paths.  When community colleges and certification bodies aligned curricula and credentials to the Artemis and Commercial Crew programs, from the Louisiana college that mapped its coursework to the technician tasks at the plant building the Artemis core stage to the FAA-recognized certifications anchoring Space Coast apprenticeships, the alignment worked because there were named vehicles, named sites, and named dates to align to (NASA, n.d.; Nunez Community College, n.d.; SpaceTEC, n.d.).[6]  The Strategic Defense Initiative of the 1980s offers the other lesson: a loud national demand signal that never resolved into stable production, and left behind little durable workforce infrastructure.  Which precedent Golden Dome follows will be decided less by the appropriated billions than by the task orders, because task orders are where a ceiling acquires an address, an occupation, and a start date.  The industrial base has been asked to mobilize, and it is trying.  But mobilization has never been a function of enthusiasm or even of money.  It has always required someone to say what, where, and when.  Until the task orders say so, the 200,000-worker question is not hard to answer.  It is impossible to ask precisely.  You cannot train against a ceiling.  You can only train against an order.

    Footnotes
    • [1] Voyager Technologies is a defense technology firm with a commercial interest in Golden Dome, and its figures characterize Aerospace Industries Association and McKinsey data.  The underlying study reports a 2.21-million-person workforce, attrition near 15 percent, and hiring difficulty rates of 76 percent for engineering and 56 percent for the skilled trades; it does not itself state a 200,000-worker deficit.  Treat these estimates as the analyst’s synthesis, not a study finding.
    • [2] The MIT Task Force on the Work of the Future reported in 2020; the book is cited here for its durable institutional findings, not for current labor market data.
    • [3] The partnership, run by the Southeastern New England Defense Industry Alliance (SENEDIA), holds a $98.3 million contract to train roughly 8,600 more workers through 2029.
    • [4] Company-announced targets, not audited filings or realized headcount.
    • [5] The R2S joint venture opened its East Camden plant in November 2025 and holds a $1.25 billion Tamir production contract (RTX, 2025); General Dynamics and the Army opened a $110 million load, assemble, and pack facility in April 2025.  See also the companies’ pages: Lockheed Martin (n.d.), General Dynamics Ordnance and Tactical Systems (n.d.), and Rafael Advanced Defense Systems (n.d.).
    • [6] The Space Coast credentials are anchored by SpaceTEC, host of the Space Coast Consortium Apprenticeship Program (n.d.).  The alignment was built by the colleges and certification bodies against the programs’ known requirements, not directed by NASA.

    References

    Aerospace Industries Association & McKinsey & Company.  (2025).  Accelerating progress: Maximizing the return on talent in A&Dhttps://www.aia-aerospace.org/wp-content/uploads/AIA-McKinsey-Annual-Workforce-Study-2025.pdf

    Arkansas Money & Politics.  (n.d.).  America’s arsenal: In Camden, defense industry big and getting biggerhttps://armoneyandpolitics.com/camden-defense-industry/

    Autor, D., Mindell, D. A., & Reynolds, E.  (2022).  The work of the future: Building better jobs in an age of intelligent machines.  MIT Press.  https://mitpress.mit.edu/9780262547307/the-work-of-the-future/

    CNBC.  (2026, April 28).  True Anomaly raises $650 million to support space interceptors for Trump’s Golden Domehttps://www.cnbc.com/2026/04/28/true-anomaly-trump-golden-dome.html

    Defense One.  (2025, December).  Another 1,000 defense companies chosen for $151B Golden Dome competitionhttps://www.defenseone.com/business/2025/12/another-1000-more-defense-companies-chosen-151-billion-golden-dome-competition/410326/

    Defense One.  (2026, January).  Where’s all that Golden Dome money going?  Lawmakers want to knowhttps://www.defenseone.com/policy/2026/01/wheres-all-golden-dome-money-going-lawmakers-want-know/410828/

    Defense Security Monitor.  (2026, January 16).  Pentagon mobilizes industrial base for “Golden Dome” missile shield with $151B SHIELD award.  Forecast International.  https://dsm.forecastinternational.com/2026/01/16/pentagon-mobilizes-industrial-base-for-golden-dome-missile-shield-with-151b-shield-award/

    Federal News Network.  (2026a, January).  Golden Dome got $23 billion, but lawmakers still don’t know how it will be spenthttps://federalnewsnetwork.com/congress/2026/01/golden-dome-got-23-billion-but-lawmakers-still-dont-know-how-it-will-be-spent/

    Federal News Network.  (2026b, April).  White House seeks $17.5 billion for Golden Dome, but most funding hinges on reconciliationhttps://federalnewsnetwork.com/budget/2026/04/white-house-seeks-17-5-billion-for-golden-dome-but-most-funding-hinges-on-reconciliation/

    General Dynamics Ordnance and Tactical Systems.  (n.d.).  Homehttps://www.gdots.com/

    InsideDefense.  (2026).  Electric Boat targeting 8,000 new hires in 2026https://insidedefense.com/insider/electric-boat-targeting-8000-new-hires-2026

    Lockheed Martin.  (n.d.).  Camden, ARhttps://www.lockheedmartin.com/en-us/careers/locations/camden-arkansas.html

    NASA.  (n.d.).  Ways community college students can get involved with NASAhttps://www.nasa.gov/learning-resources/ways-community-college-students-can-get-involved-with-nasa/

    Nunez Community College.  (n.d.).  Aerospace manufacturing technologyhttps://www.nunez.edu/academics/aerospace-manufacturing-technology

    Project on Workforce at Harvard.  (2023).  The workforce almanac: A system-level view of U.S. workforce training providershttps://pw.hks.harvard.edu/post/workforce-almanac-2023

    Rafael Advanced Defense Systems.  (n.d.).  Homehttps://www.rafael.co.il/

    Reed, J.  (2026, March 22).  New $15.38B U.S. Navy contract for Electric Boat aims to spur production of next-gen submarines [Press release].  https://www.reed.senate.gov/news/releases/reed-new-1538b-us-navy-contract-for-electric-boat-aims-to-spur-production-of-next-gen-submarines

    RTX.  (2025, November 21).  R2S receives $1.25 billion Tamir production contract for facility in Camden, Arkansas [Press release].  https://raytheon.mediaroom.com/2025-11-21-R2S-receives-1-25-billion-Tamir-production-contract-for-facility-in-Camden,-Arkansas

    Space Coast Consortium Apprenticeship Program.  (n.d.).  Homehttps://spacecoastconsortium.org/

    SpaceTEC.  (n.d.).  National Science Foundation’s Center for Aerospace Technical Educationhttps://spacetec.us/

    turnto10.  (2026, July 1).  New England Submarine Shipbuilding Partnership passes 10,000 workers trained.  NBC 10 WJAR.  https://turnto10.com/news/local/new-england-submarine-shipbuilding-partnership-passes-10000-workers-trained-electric-boat-southeastern-new-england-defense-industry-alliance-july-1-2026

    Voyager Technologies.  (2026).  What it will take for America’s industrial base to deliver the Golden Domehttps://voyagertechnologies.com/insights/what-it-will-take-for-americas-industrial-base-to-deliver-the-golden-dome/

    What’s Up Newp.  (2026, July 1).  SENEDIA submarine shipbuilding partnership surpasses 10,000 trained in New Englandhttps://whatsupnewp.com/2026/07/senedia-submarine-shipbuilding-partnership-surpasses-10000-trained-in-new-england/

  • Data Centers: What EDO Leaders Should Know

    The race to build data centers is reshaping local economies faster than almost any other real estate trend. From 2023 to 2024, data center construction spending increased by 70%, more than triple the rate of any other property type. [i] The sector is drawing billions in venture capital and now consumes up to eight percent of total U.S. electricity.[ii]  

    For local communities, that growth is arriving with both a windfall and a set of tradeoffs: improved fiber and broadband networks, short-term and permanent job gains, and large tax receipts on one side, with infrastructure demands, public health concerns, and general local opposition on the other. Data centers are coming; the question is how economic developers can help communities capture the benefits and manage the tradeoffs.

    Why are there so many new data centers?

    A data center is a facility used to house large computer systems.[iii] There are many types of data centers hosting different services, but today’s headline centers are mostly used for cloud computing, including massive hyper scalers, which host at least 5,000 servers and can be 60,000 square feet in size.[iv] Cloud computing is an on-demand computing service, which can be rented by consumers. These centers are used for various IT purposes like storage, networking, and software deployment.

    Separately, AI training data centers use cloud-computing’s on-demand infrastructure with specialized hardware and storage to train Large Language Models (LLMs), like ChatGPT. The AI market is booming and driving data center growth through investments by such companies as Microsoft, OpenAI, Google, and AWS. As these companies search for sites, EDO leaders are often the ones asked to explain what a data center will mean for a community. This piece is built for those conversations: a guide to the benefits, costs, and tradeoffs that come up when a project is proposed.

    What are the potential benefits?

    New tax revenues are the most significant benefit of hosting a data center. Depending on state and local tax regimes, new centers may pay real property taxes, personal property taxes, business income taxes, and sales and use taxes. Revenue can particularly surge in states which impose a personal property tax.

    Some communities also benefit from developer philanthropy. Though unlike tax receipts, this giving is rarely guaranteed. A good example is Meta’s Data Center Community Action Grants program, which funds local STEM education and community projects.[v] A Meta facility in Huntsville, Alabama contributed to broadband expansions that brought internet access to nearby rural communities.[vi] While some communities benefit from data center philanthropy, , most charitable giving is contingent on specific Public Benefit or Community Benefit Agreement (PBA, CBA). These agreements typically stipulate investments in local workforce, agreements to limit the use of resources like water and energy, and investment in local funds. One such agreement in Cedar Rapids, Iowa required data center developers to invest in the local Community Betterment Fund, administered by the city council.[vii]

    While data centers offer job gains, the highest number are related to the construction stage with permanent jobs, while high-paying, typically number less than 100 per site. Moreover, the scale depends on facility type and may take years to materialize. A Brookings analysis found that counties receiving their first large data center saw total private employment grow by 2,000 to 4,000 jobs over six years. Construction and IT sectors see the sharpest gains, but the overall employment effect is modest relative to the scale of investment these facilities represent.[viii]

    What are the drawbacks?

    Perhaps the most urgent challenge posed by data centers is energy use. A single modern AI data center can use energy equivalent to 100,000 homes over a year, and even larger data centers are entering the pipeline further increasing the demand.[ix] This creates a major challenge for utilities, community leaders, and economic developers, especially if this power demand results in higher costs for other consumers.

    Data centers can also affect local air quality. To avoid using congested municipal power grids, some data centers utilize on-site natural gas turbines for power. These turbines – as well as diesel backup generators[x] at grid-connected centers – produce fine particulate matter and nitrogen oxides.[xi] The U.S. Environmental Protection Agency identifies both[xii], [xiii] as causes of harm to human health, but it remains difficult to isolate how much of these pollutants any single facility adds to a community’s air.[xiv]

    As with energy, data centers need large amounts of water to cool their servers. In some cases, the water is taken from municipal sources which can raise water prices for residents. However, water consumption depends heavily on the type of cooling a data center uses. Centers that use closed-loop or immersion cooling consume less than those using evaporative cooling.[xv] Large data centers, like those that train LLMs for AI, can use as much as 5 million gallons per day.[xvi]

    Taken together, the energy, air quality, and water demands of data centers represent costs that often fall on residents rather than developers. That doesn’t mean communities should turn data centers away, but it does mean the terms of any agreement matter enormously.

    Are data centers right for your community?

    Like every expansion project, communities should treat every transaction as a negotiation ensuring that any tradeoffs are more than offset by project benefits. Because demand for sites is high, developers need communities as much as communities need them, and that gives community leaders room to negotiate. Some Community Benefit Agreements have required developers to invest in local workforce programs, infrastructure, and community funds. Others have secured commitments to reduce grid electricity demand and water consumption.

    What undermines this leverage is the incentive package. Many communities are offering tax exemptions and other concessions to attract developers, which can minimize potential tax revenue that makes data centers attractive. This is a particular risk given the relatively low job creation for residents.[xvii]  

    The financial case for data centers rests heavily on their tax contributions, and those contributions can erode quickly when lofty incentives are on the table.

    Major Takeaways

    Data center development is moving fast, and the communities best positioned to benefit are those that have assessed their leverage, tax structure, and infrastructure capacity before entering negotiations.

    • Tax revenue can be substantial, but incentives offered to attract developers can offset those gains
    • Data centers are not major job creators and generate modest local wage increases, so financial benefits largely depend on tax structure
    • Energy and water demands can raise costs and health risks for residents, particularly in densely populated areas
    • Community Benefit Agreements that require developers to invest in the community including workforce programs and infrastructure
    • The type of data center matters: cooling systems, on-site power generation, and facility size all affect local impact

    Data centers are less about job creation and more about tax base expansion, infrastructure investment, and long-term economic positioning. For communities, the real value comes when leaders align these projects with broader development goals while carefully managing tradeoffs like energy demand, land use, and community concerns. EDO leaders can use this information to help communities enter negotiations with a clear picture of what a given project will actually cost and deliver for their community before extending incentives.


    Sources

    [i] https://americanedgeproject.org/wp-content/uploads/2025/12/Americas-AI-Surge-Powering-Growth-in-Every-State.pdf

    [ii] https://americanedgeproject.org/wp-content/uploads/2025/12/Americas-AI-Surge-Powering-Growth-in-Every-State.pdf

    [iii] https://www.congress.gov/crs-product/R48646

    [iv] https://www.ibm.com/think/topics/data-centers

    [v] https://about.fb.com/news/2025/11/expanding-meta-data-center-community-action-grants-program/

    [vi] https://www.brookings.edu/articles/why-community-benefit-agreements-are-necessary-for-data-centers/

    [vii] https://ipmnewsroom.org/how-do-data-centers-benefit-the-places-where-theyre-built-local-mayors-give-mixed-reviews/

    [viii] https://www.brookings.edu/articles/new-evidence-on-data-center-employment-effects/

    [ix] https://www.wri.org/insights/us-data-center-growth-impacts

    [x] https://ecology.wa.gov/air-climate/air-quality/data-centers

    [xi] https://www.epa.gov/sites/default/files/2020-10/documents/c03s01.pdf

    [xii] https://assessments.epa.gov/isa/document/&deid=310879

    [xiii] https://www.ncbi.nlm.nih.gov/books/NBK588512/

    [xiv] https://www.vpm.org/news/2025-12-17/virginia-data-centers-diesel-backup-generators-deq-loudoun-turner-dowd

    [xv] https://www.brookings.edu/articles/ai-data-centers-and-water/

    [xvi] https://www.brookings.edu/articles/ai-data-centers-and-water/

    [xvii] https://www.brookings.edu/articles/new-evidence-on-data-center-employment-effects/

  • AI Will Not Save the Defense Industrial Base. Here is What Will

    Artificial intelligence (AI) is being adopted faster than any technology in modern history.  Within two years of widespread availability, 39.4 percent of American adults were using generative AI tools, a pace that outstripped both the personal computer and the Internet at comparable stages (Deming, 2024).  Yet the defense industrial base (DIB), the network of manufacturers that produces everything from fighter jet components to submarine hull plates, has no structured workforce training program to match this adoption curve.  The technology is arriving.  The people who need to use it are not ready.

    That disconnect is the central finding of a 32-source analysis conducted by the Center for Regional Economic Competitiveness (CREC) under a cooperative agreement with the Department of Defense (DoD) Manufacturing Technology (ManTech) Program Office.  The research draws on peer-reviewed studies, policy documents, industry analyses, and workforce data to answer a straightforward question: what does AI actually mean for the defense industrial base over the next five years?  The answer is more nuanced, and more urgent, than most of the conversation around AI in defense would suggest.

    The Workforce Problem Is the AI Problem

    The bottleneck in defense manufacturing is not access to AI.  It is the availability of workers who can use it.  Manufacturing labor productivity has been nearly flat since the mid-2000s despite decades of automation investment.  The missing ingredient is not more technology but more skilled humans: process engineers, electricians, robotics specialists, maintenance technicians, and quality inspectors.  Deloitte projects 3.8 million net new manufacturing jobs by 2033.  The question is not whether humans are needed but whether enough of them will be available with the right skills.

    AI tools produce a median 25 percent productivity improvement when used effectively (Sadun, 2025), but that word effectively carries enormous weight.  Without structured training and integration support, adoption produces uneven results and worker frustration rather than sustained gains.  The Computer Numerical Control (CNC) revolution of the 1970s and 1980s provides the relevant precedent.  Plants that adopted CNC were 75 percent more likely to use problem-solving teams, twice as likely to offer technical training, and held regular shop floor meetings at substantially higher rates than non-adopters (Deming, 2024).  Automation changed the nature of skilled work but did not eliminate the need for it.  AI will be no different.

    AI Is Hollowing Out the Talent Pipeline

    One of the most consequential findings in the research is a dynamic that almost no one in defense manufacturing is discussing: AI is absorbing the routine tasks that junior workers need to develop into senior experts.  Anthropic’s own internal study found that while engineer productivity gains grew from approximately 20 percent to 50 percent year over year, senior engineers reported growing concern about skill atrophy among junior staff.  Junior engineers stopped asking questions of mentors because AI answered faster (Orrell, 2025).

    In defense manufacturing, this pattern is particularly dangerous.  Senior machinists, welders, quality inspectors, and maintenance technicians acquire their expertise through years of hands-on practice that begins with routine work.  If AI absorbs those tasks before workers have the chance to learn from them, organizations gain short-term productivity at the cost of a long-term senior talent shortage.  The pipeline narrows even as current output rises.

    The Technology Is Not Ready for What Defense Demands

    Enthusiasm for AI in manufacturing often outpaces what the technology can reliably deliver.  AI-powered Automated Optical Inspection (AOI) systems currently achieve 60 to 70 percent accuracy, a rate that is insufficient for defense applications where tolerances are measured in thousandths of an inch.  On the agentic AI front, the best-performing architecture for manufacturing decision support, a Retrieval-Augmented Generation (RAG) system, achieved 77.89 percent accuracy compared to 52.37 percent for a baseline Large Language Model (LLM).  Better, but not defense-grade.

    The implication is straightforward: human-in-the-loop oversight will remain essential in defense manufacturing for the foreseeable future.  Planning for AI in this sector means planning for augmentation, not autonomy.  Workforce development strategies that assume AI will replace human judgment are building on a foundation that does not yet exist.

    Implementation Matters More Than the Technology

    The same AI technology can produce opposite outcomes depending on how it is deployed.  Where AI is implemented primarily for surveillance and performance monitoring, workers report reduced autonomy, lower morale, and increased turnover.  Where workers are involved early in design and deployment, 96 percent reported increased job satisfaction when freed from monotonous tasks to focus on higher-level work.  Collaborative robots (cobots) can increase worker productivity by up to 85 percent when paired with proper training (International Federation of Robotics).  For defense manufacturers, the management decision matters more than the technology decision.  Procurement of AI systems without parallel investment in organizational change is a misallocation.

    The System Is Not Built for This Speed

    AI capabilities evolve on timelines measured in months.  Defense acquisition spans years.  Secretary of Defense Pete Hegseth has publicly stated that the current acquisition system is archaic and must shift from decade-long development cycles to rapid iteration.  Small and mid-size defense suppliers cannot wait for multi-year contract modifications to adopt AI tools that may be obsolete by the time approval comes through.

    Meanwhile, the data needed to make smarter workforce investments now exists.  CREC and RTI International, under the ManTech cooperative agreement, produced the first national dataset measuring the Critical Technology Area (CTA) workforce in aerospace and defense manufacturing, delivered in December 2025.  This dataset maps supply and demand for skills in AI, autonomous systems, additive manufacturing, and other priority technology areas across the top 30 aerospace manufacturers.  The data confirms significant gaps between CTA skill supply and employer demand.  Yet no federal workforce investment program currently uses it.  The approximately $6 billion the federal government spends annually on workforce development through the Workforce Innovation and Opportunity Act (WIOA), the Perkins Act, and grants from the Economic Development Administration (EDA) and the National Institute of Standards and Technology (NIST) is allocated without reference to defense-specific workforce intelligence.

    The Untapped Pipeline

    Approximately 200,000 service members transition out of the military each year with technical training, leadership experience, security clearances, and familiarity with defense systems and culture.  They represent the single most qualified talent pipeline available for defense manufacturing.  Yet persistent mismatches between military occupational specialties and civilian job classifications, inadequate credentialing bridges, and employer unfamiliarity with military skill sets prevent this pipeline from flowing at scale.  Community colleges, which should function as the primary bridge between military training and civilian manufacturing careers, vary widely in their alignment with local defense labor markets.  The best performers, such as Dallas College, Wake Tech, and Miami Dade, maintain active employer relationships and anticipate skill demand.  Most do not (Fuller, HBS).

    AI is a necessary but insufficient condition for a competitive defense industrial base.  The binding constraints are workforce readiness, organizational capacity to integrate new tools, acquisition pathways that match the pace of technology change, and analytical infrastructure that connects federal investment to measurable outcomes.  Technology alone will not resolve any of them.

    Deliberate action looks like this: structured AI training for the existing manufacturing workforce.  Redesigned development pathways that ensure junior workers still build expertise even as AI absorbs routine tasks.  Acquisition reform that matches technology timelines.  And federal investment guided by actual workforce data rather than assumptions about where the gaps are.  The data exists.  The talent pipeline exists.  The question is whether the institutions responsible for the defense industrial base will use them before the window closes.

    Sources

    Deming, D. (2024). “The Rapid Adoption of Generative AI.”  NBER Working Paper.

    Deming, D. (2024). “How Computers Turned Machinists Into Problem-Solvers.”

    Fuller, J. (HBS). “Why the Skills Gap Persists.”  Harvard Business School.

    Linder, B. (2026). “AI Won’t Save Manufacturing.”  Forbes.

    Orrell, B. (2025). “What Anthropic’s Internal Study Suggests About the Future of Work.”  American Enterprise Institute.

    RTI International / CREC / ManTech (2025). “Measuring the Size and Dynamics of the CTA Workforce.”

    Sadun, R. (2025). “Reskilling the Workforce With AI.”  Harvard Business School.

    “Agentic AI for Smart Manufacturing” (2025).  SSRN.

    “AI and Job Quality: Insights from Frontline Workers” (2024).  Partnership on AI / SSRN.

  • A Critical Window for Workforce Intermediaries in Defense Manufacturing

    Manufacturing training image

    Global events are reshaping the environment in which manufacturers operate, accelerating defense production and increasing pressure across supply chains. Workforce systems must be ready to respond.

    • Work with manufacturers now to map surge occupations and talent gaps.
    • Align training programs with emerging technologies and defense production needs.
    • Strengthen partnerships across colleges, workforce boards, and industry associations.
    • Improve access to workforce data so manufacturers can better understand where talent is available.

    Let’s compare notes and talk about practical next steps. Connect with us.

  • What 2026 Appropriations May Signal for Economic Development

    What 2026 Appropriations May Signal for Economic Development

    On January 8, Congress released its proposed FY 2026 mini-bus appropriations for Commerce, Justice, Science budget. This budget reflects a recalibration for economic development, and it offers useful clues about how federal economic development policy is likely to shape state and regional practice in 2026 and beyond.

    On the bright side in this environment, the budget provides a relatively flat $466 million funding level for EDA, only slightly less than FY 2024 and FY 2025. That alone is telling. Congress appears comfortable with the current scale of EDA. The real signal lies in the reallocation of dollars within that total.

    Legacy line items like Technical Assistance and Trade Adjustment Assistance are receiving haircuts and the funds are being shifted to Economic Adjustment Assistance and Assistance to Coal Communities. While not dramatic, the cuts reinforce a longer-running shift away from generalized support functions toward more targeted, place-based execution. Furthermore, Recompete now appears as an $18 million line item. Congress clearly want to protect this effort to address the challenges in distressed areas that keep working age adults out of the workforce. Where it can, Congress is clearly prioritizing adjustment tied to real economic shocks and structural transition.

    In addition, workforce development is clearly a rising EDA priority. Workforce Training Grants appear as a standalone $10 million line item for the first time. At first blush, one might see this as a rebranding of the soon-to-be defunct Good Jobs Challenge program. Likewise, the STEM Apprenticeship program continues at $2.5 million. Not enough funding for either program to create an impactful national workforce strategy, but these funding allocations send a signal that workforce development is a national economic development priority. Workforce has been embedded across EDA programs for years, but this year EDA is continuing to elevate industry-driven training as a priority. At some point, we may begin to see significant dissonance with this focus on human capital when the agency has traditionally emphasized Public Works and Planning activities focused on physical and community infrastructure investments.

    There are also quieter signals worth noting. Biomass funding disappears as a distinct line item, indicating less appetite for narrowly scoped sector carve-outs within EDA. Salaries and Expenses decline by $2 million, reinforcing the commitment to streamline Federal agency staffing.

    Taken together, these shifts reinforce a federal government not looking to expand the economic development toolkit. The investments place more emphasis on adjustment, workforce execution, and place-based competitiveness. We’ll also see more pressure to show results.

    For economic development leaders, the takeaway is to better integrate workforce training, adjustment strategies, and industry engagement into a coherent execution model. Organizations that rely on planning grants or loosely connected initiatives will find the environment less forgiving. In that sense, the FY 2026 EDA budget is best read as a preview. It reflects how Congress expects economic development to function. Stable funding, but with fewer labels, more distinct priorities, and a higher bar for execution.

  • Preparing America’s Future Defense Manufacturing Workforce

    Preparing America’s Future Defense Manufacturing Workforce

    The start of a new year brings both momentum and responsibility to CREC and our partners to ensure that the nation’s defense industrial base is ready to respond to technological innovation. We must move beyond short-term responses to workforce shortages across all advanced manufacturing sectors and toward a more deliberate effort to build the technical capacity this sector will require over the next decade. The challenge is no longer simply filling positions; it is preparing workers to succeed in environments shaped by rapid technology cycles, digital engineering, advanced materials, automation, and increasingly compressed production timelines. Defense manufacturers are integrating AI-enabled systems, model-based design, additive manufacturing, and resilient supply-chain technologies; as such, the workforce must adapt as skill needs change

    Employers, state leaders, and federal partners are seeking to modernize training models and create more accessible and affordable credentials to meet industry need. The approach to pedagogy is also changing to accommodate more immersive and simulation-based learning, replacing traditional classroom settings and supplementing work-based learning. Emerging pathways offer opportunities for reskilling and upskilling to better align with data-driven production, cybersecurity, robotics, and other critical technology areas.

    From our perspective at CREC, we are especially pleased to see that more leaders are recognizing the importance of workforce development as a strategic enabler of defense readiness. The Department of Defense, through ManTech and its partner Manufacturing Innovation Institutes, are taking a more active role in translating the skills required to apply cutting-edge research in manufacturers by ensuring those firms have access to relevant training solutions, aligning those solutions to the delivery capabilities of education providers, and supporting efforts that help to build regional talent pipelines prepared to fulfill the advanced skill needs for both near-term production and long-term technological advantage.

    We expect the pace of change in 2026 to accelerate. Technology-enabled manufacturing, cross-sector partnerships, and regionally grounded strategies are becoming the norm, so existing organizations will need to partner to adapt. At CREC, we remain committed to supporting the work of bringing key partners together and linking them with unique resources like the MIIs, but we are clear-eyed about what it will take to succeed. Lasting impact will depend on coordination across federal programs, sustained industry engagement, and continued investment in the institutions and intermediaries that connect people to advanced manufacturing careers. By strengthening these partnerships and fully leveraging ManTech’s EWD investments, we can ensure that America’s defense manufacturing workforce is ready for what comes next and be well positioned to lead it.

  • “Mission-Ready Workforce” — the power of veterans behind U.S. defense manufacturing

    “Mission-Ready Workforce” — the power of veterans behind U.S. defense manufacturing

    Veterans are not only essential to national defense in uniform but remain mission ready as part of the civilian manufacturing workforce. Their leadership, discipline, and technical precision are cornerstones of the defense supply chain. 

    Across the country, millions of veterans are contributing to the civilian economy. Current labor force data show steady employment participation among both men and women veterans, with women veterans continuing to close long-standing participation gaps. The percentage of women veterans in the core working age group reached a high at the start of 2022 and again in 2024, reaching 80%, almost matching the participation rate of men. Labor force participation among veterans closely mirrors the national rate for all workers in the same age group, which has remained between 80% and 84% over the past 15 years.1 

    Changes in Labor Force Participation for Core Working-Age Veterans Over Time 

    Source: U.S. Bureau of Labor Statistics Current Population Survey. 

    While women’s participation rates have declined over the past year, women veterans continue to represent an increasing proportion of the veteran workforce overall. The growing involvement of women veterans indicates a broadening talent pool, reflecting wider participation across the workforce. 

    Women’s Share of the Veteran Workforce Over Time 

    Source: U.S. Bureau of Labor Statistics Current Population Survey. 

    This trend is echoed in unemployment data: in 2025, the veteran unemployment rate stood at just 2.9%, well below the 4.3% rate for nonveterans, which is clear evidence of an active and resilient veteran labor pool.2  

    Generally, the location of employed veterans reflects regional defense activity, with Virginia, Texas, California, and Florida consistently leading in veteran employment. Major metropolitan areas in these states lead in essential defense manufacturing industries. Los Angeles and Dallas serve as key hubs for aircraft manufacturing, Norfolk is central to shipbuilding and repair, and Houston is a major center for petroleum refining. Despite significant regional strengths in defense manufacturing,  close to two million manufacturing jobs could remain unfilled by 2033 if talent gaps are not resolved.3 This underscores the importance of veterans as a ready, technically trained, and mission-oriented workforce that can help close critical gaps. 

    Veteran Unemployment Rate by State 

    Source: U.S. Census Bureau American Community Survey, 1-Year Estimates, 2024. 

    Regional strengths are reinforced by national partnerships designed to align veteran skills with cutting-edge manufacturing technologies. Manufacturing Innovation Institutes—such as BioMADE in biomanufacturing, NextFlex in flexible electronics, and the ARM Institute in robotics—routinely partner with veteran training centers to build advanced-skills pipelines that connect transitioning service members to critical industry roles. 

    The training that defines military service, like mechanical maintenance, electronics, cybersecurity, and logistics translates naturally to defense-relevant manufacturing. Veterans’ experience with supply-chain integrity, secure systems, and quality control gives them a unique advantage in facilities operating under export controls or classified production requirements. Their understanding of mission success translates directly into reliability on the factory floor. 

    National initiatives are closing the gap between service and industry. The DoD SkillBridge program enables service members to work in civilian companies during their final 180 days of service, often with advanced manufacturers.  

    Rockwell Automation, a provider of industrial automation and digital transformation technologies, is a participant in the SkillBridge program. The 12-week program trains veterans for high-tech careers in advanced manufacturing, then places them in roles at manufacturing sites. As of 2023, 373 veterans graduated from the program, and of those, 90% go-on to work for Rockwell’s manufacturing customers.4 

    Additionally, partnerships via Hiring Our Heroes and the America’s Manufacturing Competitiveness Coalition link veterans to technical apprenticeships and certifications. Combined with apprenticeship tax credits and Department of Labor hiring incentives, these efforts make veteran hiring both a strategic and an economic advantage for defense contractors. 

    States are also stepping up to expand veteran opportunity, with 33 states offering incentives that support veteran-owned businesses, encourage veteran hiring, or develop veteran skills. Programs like South Carolina’s Veteran Apprenticeship Credit, New York’s Hire-A-Veteran Credit, and Minnesota’s Reservist and Veteran Business Loan Program demonstrate how states are strengthening the role of veterans in their regional economies, linking service experience to entrepreneurship and workforce participation. 

    Veterans represent a uniquely skilled and values-driven segment of the U.S. workforce. Their technical experience, leadership, and familiarity with secure, mission-critical operations make them indispensable to sustaining the nation’s defense industrial base. As manufacturers face mounting workforce shortages, continued investment in veteran hiring, training, and entrepreneurship is not just a matter of gratitude—it is a matter of national competitiveness. The next generation of innovation in critical defense industries will depend on people who understand what readiness means. Veterans embody that readiness, ensuring that the country’s manufacturing strength remains mission-ready as well. 


    Sources:

    1 https://fred.stlouisfed.org/series/LNS11300060

    2 https://www.dol.gov/agencies/vets/latest-numbers#:~:text=Annual%20Employment%20Situation%20of%20Veterans,the%20full%20report%20for%202024. 

    3 https://themanufacturinginstitute.org/wp-content/uploads/2024/04/Digital_Skills_Report_April_2024.pdf?

    4 https://www.forbes.com/sites/jimvinoski/2023/10/05/rockwell-automation-manpowergroup-offer-us-vets-advanced-manufacturing-training/ 

  • Building Globally Ready Communities: Tools to Attract Investment and Exports

    International Engagement Ready Communities Initiative

    From 2017–2018, CREC collaborated with SRI International’s Center for Innovation Strategy and Policy (CISP) and Stone & Associates to equip regions with tools to attract foreign direct investment (FDI) and foster export promotion.

    Building a Best Practices Toolkit

    The International Engagement Ready Communities (IERC) Initiative began with qualitative and quantitative analyses of successful international strategies. Insights from experts, practitioners, and regional partners shaped a Best Practices Toolkit—complete with “how to” guides, case studies, checklists, and briefings to help regions implement effective strategies.

    Equipping Regions Nationwide

    As part of this initiative, CREC developed and evaluated an Assessment Tool and Toolkit, which was widely deployed across the United States. By providing actionable strategies, the IERC Initiative gave regions practical methods to leverage their unique strengths, attract investment, and expand into international markets.

  • Strengthening Pennsylvania’s Local Development Districts

    Pennsylvania Local Development District System Strategy

    In 2019, CREC and EntreWorks Consulting partnered to help Pennsylvania’s seven Local Development Districts (LDDs) strengthen coordination and effectiveness. Each LDD provides technical and programmatic assistance in business finance, export and international marketing, government procurement, and transportation planning—while also responding to unique regional needs.

    Evaluating Strengths and Limitations

    Through the system strategy, the CREC/EntreWorks team worked closely with Pennsylvania’s LDDs to evaluate their strengths and limitations. This assessment ensured resources were used in the best manner possible to support community growth and regional economies.

    Promoting Regional Coordination

    The project’s purpose was clear: better promote effective regional coordination, public sector performance, accountability, and efficient service delivery. By helping the LDDs align their approaches, CREC contributed to more impactful and sustainable development across Pennsylvania.

  • Building Resilience in the Kankakee-Iroquois Region

    In May 2021, the Kankakee-Iroquois Regional Planning Commission (K-IRPC) launched an effort to strengthen its ability to withstand and recover from economic disruptions. Working with Kimley-Horn and Associates, Inc., the Center for Regional Economic Competitiveness (CREC) contributed expertise to create a regional Economic Resilience Strategythat ran through February 2022.

    Project Purpose

    The project’s goal was clear: enhance the region’s ability to respond to and recover from economic disruptions, especially those highlighted by the COVID-19 pandemic. To achieve this, the strategy assessed local assets and vulnerabilities, examined community priorities, and laid out a roadmap for strengthening recovery and long-term resilience.

    CREC’s Role

    CREC provided critical support throughout the process, including:

    • Designing and administering stakeholder surveys and focus groups
    • Facilitating strategy sessions with regional partners
    • Conducting research into existing regional assets, strategies, support programs, and outreach efforts
    • Identifying threats to recovery, gaps in support, and opportunities for collaboration

    Methodology

    The work combined qualitative engagement and quantitative analysis. CREC facilitated interviews and focus groups to surface regional concerns such as infrastructure gaps, broadband access, and public service needs. At the same time, data on employment, commuting, and income levels was analyzed to pinpoint strengths and vulnerabilities. Prior planning documents were also reviewed to ensure alignment with community goalsNew Quals Descriptions.

    Outcomes

    The result was a COVID-19 Recovery Plan that provides a step-by-step guide for building resilience, supported by objective performance measures. Key recommendations included:

    • Improving broadband and transportation infrastructure
    • Supporting agribusiness diversification
    • Expanding collaboration among jurisdictions
    • Developing protocols for economic shock recovery
    • Advancing quality-of-life initiatives
    • Supporting entrepreneurship
    • Leveraging state and federal partnerships

    By adopting this strategy, K-IRPC positioned itself as a central convener and coordinator of regional development and resilience efforts