Thales sees economy threat to suppliers

Alex Dorrian, executive vice president of Thales, speaks during the Reuters Aerospace and Defense Summit in Washington December 16, 2008.

WASHINGTON (Reuters) - French defense electronics group Thales (TCFP.PA) sees a "significant risk" of disruption to the global supply chain as small aerospace firms are swept along in the financial crisis, a senior executive said on Tuesday.

Alex Dorrian, Chief Executive of Thales UK, who also runs operations in the United States, Australia and Canada, said this was one of the main threats facing the industry as credit and demand freeze up.

"There is a significant risk that some key suppliers will find themselves in difficulties," he told the Reuters Aerospace and Defense Summit in Washington.

Thales is closely analyzing its supplier base "to be certain that any critical suppliers in our supply chain are not in difficulty," especially in those cases where there were only one or two suppliers for any given part.

Dorrian said about 100 of the companies suppliers around the world were "critical" to the company's success, but a much smaller number were in the latter category.

Thus far, he said, the company had not felt it necessary to intervene to support any particular supplier.

Chairman and CEO Denis Ranque said in October that Thales was considering stepping in to help any suppliers threatened by the financial crisis.

European planemaker Airbus (EAD.PA), a major customer of Thales, has been asked for financial help by Latecoere (LAEP.PA), which builds doors for jetliners, including the Boeing (BA.N) 787, and other fuselage structures or systems.

The aerospace industry is battling to keep up with a seven-year backlog of demand for airliners, even as orders are threatened by the economic crisis and defense budgets tighten.

Thales has a backlog of over two years. "For us, we've got a significant lead time, but we're not immune," Dorrian said.

Dorrian said Britain's decision to delay the entry into service of two aircraft carriers, which Thales will supply with systems, by 1 to 2 years, had "no material impact" on Thales.

He confirmed that Thales Australia plans to cut jobs at the Bendigo plant that makes the Bushmaster troop-carrier but declined to say how many jobs were involved.

(Reporting by Tim Hepher, Andrea Shalal-Esa; Editing by Tim Dobbyn)