Aviation suppliers see jet order slowdown

By Scott Malone

CHICAGO (Reuters) - Aviation equipment suppliers expect commercial jet orders to fall in 2008 from last year's record levels, although that will probably not mean volatility for their operations, executives told the Reuters Manufacturing Summit in Chicago.

Leading plane makers Boeing Co (BA.N) and Airbus (EAD.PA) together booked nearly 2,750 commercial jet orders in 2007, an industry record, but analysts and executives expect that figure to drop sharply this year, perhaps by about half.

"It wouldn't surprise me if order rates dropped back a little bit because they have been at historically high levels and Boeing and Airbus are taking orders out through -- depending on the model -- 2010, 2011, 2012," said John Rice, chief executive of General Electric Co's (GE.N) infrastructure unit, which makes jet engines and other heavy equipment.

"That doesn't necessarily signal anything about the health of the industry, but just kind of common sense," Rice said.

Aerospace parts suppliers took heart that the plane manufacturers did not aggressively step up their capacity in the face of rising demand, thus extending the current cycle.

"The thing that is different this time ... is that OEMs (airplane makers) are not taking up their production rates to be able to handle all of the volume and get it done within a year or two," said Dave Cote, chief executive of Honeywell International Inc (HON.N), the world's largest maker of cockpit electronics.

"It's much smarter," Cote said. "As you know, boom-and-bust is not the preferred way of doing things. To the extent you can smooth that out, it's better for everybody."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Scott Malone; Editing by Lisa Von Ahn)