The State of Aerospace & Defense Supply Chains

RapidRatings conducted a stress test on the Aerospace & Defense supply chain modeling a rapid defense production ramp scenario against a simultaneous cost inflation shock - 3% across COGS, staff, and operating expenses, with costs scaling faster than revenue. The scenario reflects two concurrent pressures: a demand-side surge driven by accelerated defense spending, and a cost-side shock driven by a major Middle East conflict causing uncertainty for critical shipping in the Strait of Hormuz and triggering broader energy market volatility.

What's Inside:

• Overall High and Very High Risk rises from 17.6% to 20.3% post-stress — a net +2.7 percentage point deterioration across the 4,309-company universe.
• Privates are significantly more stressed than publics, with HR+VHR increasing from 22.1% to 26.7% (+4.6%), versus publics moving from 15.9% to 17.9% (+2.0%).
• Energy-intensive and materials-dependent sectors bear the heaviest stress: Petroleum & Coal (+21.9%), Iron & Steel (+26.1%), and Nonresidential Construction (+30.8%) show catastrophic HR+VHR escalation.
• The Aerospace sector (the largest tracked) shows meaningful deterioration (+6.1%), making it a priority focus for ongoing supplier health monitoring.