Aerospace hot market for manufacturers

By Bill Rigby

NEW YORK (Reuters) - U.S. manufacturers are feeling the pinch from the slowing U.S. auto and housing sectors, but the booming aerospace business is providing relief to some.

Diversified manufacturers Honeywell International Inc. (HON.N: Quote, Profile, Research, Stock Buzz) and General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) as well as more specialized companies are benefiting from explosive growth in the sector, according to executives at the Reuters Manufacturing Summit in New York this week.

"Aerospace had a very good quarter," said David Cote, chief executive of Honeywell at the summit on Monday, predicting the commercial side of the business "stays good for quite a while."

Honeywell is the biggest maker of cockpit electronics in the world and also supplies wheels, brakes, lights and other key parts for commercial and military planes.

The market for business jets is "going gangbusters," said Cote, estimating that there will be 20,000 business jets flying in five years, almost double the number five years ago.

According to industry figures, a record 885 business jets were delivered last year, up 18 percent from the year before, which means a fast-growing market for makers of original parts and spares, like Honeywell.

In the mainstream of air travel, Cote also looked forward to strong growth as airlines vie with low ticket prices to win a share of the travel-hungry public.

"That's a very bad dynamic for airlines," said Cote. "(But) a very good dynamic for anyone who makes the stuff that they all fly. The demand is there, and someone is going to fly them, and you'll see a lot of low-cost airline start-ups."

Cote added that the inevitable overhaul of the United States' aging air traffic control system is also a good opportunity for Honeywell, which is making the flight management system for Airbus' A380 flagship superjumbo and other state-of-the-art jets.

"There's a big question about how you fund this stuff," said Cote. "But this is one that has to get sorted out for the infrastructure of the country and to support an industry we are global leaders in."

GLOBAL GROWTH

GE, one of the world's leading jet engine makers and plane lessors, also pointed to aerospace as a growth market, especially in China.

"Aviation's had some very nice winds," said John Rice, who runs GE's Infrastructure unit, speaking about China at the summit on Tuesday.

"GE won four out of the last five aviation orders in China," said Rice, predicting "healthy growth" for some time in that country.

Smaller manufacturers are also capitalizing on the boom.  Continued...