Aerospace chiefs fear for supply chain in crisis

BRUSSELS, April 16 (Reuters) - The aerospace industry's supply chain is struggling to secure finance as the credit crunch hits smaller sector players, the Aerospace and Defence Industries Association of Europe (ASD) said on Thursday.

"We believe public authorities need to pay particular attention to the situation we have now in our supply chains, where small and medium sized companies struggle to adjust to the worsening economic conditions," said ASD President Allan Cook, who is also chief executive of Britain's Cobham (COB.L).

"My company could not survive without the support of its vibrant supply chain," he said. "They need easier access to liquidity."

European institutions have already moved to provide EU member states with additional means to tackle the impact on companies of the credit squeeze.

So far, the European Commission has approved about 25 state measures in 10 member countries aimed at stabilising companies and jobs in the real economy.

Cook said he had not seen any suppliers actually closing down, but ASD board member Tom Enders added: "Every day we see suppliers in distress."

The sector particularly needs support for research and development to remain competitive in global markets, said Enders, who is also chief executive of Airbus (EAD.PA).

"Fast and secure communications are absolutely critical in both the commercial and military world," he added.

He also complained of slow progress with the European Commission's "Clean Sky" programme, a 1.6 billion euro ($2.1 billion) scheme launched last February to promote research into cutting noise, pollution and greenhouse gas emissions from planes.

The EU has set aside 800 million euros from its 2007-2013 budget, with industry committing itself to investing a similar amount, but red tape has prevented companies fully accessing those funds.

"I see the clear and present danger that the programme will fail to produce the results needed in time, and that industry will very soon be obliged to redirect its funds," Enders said.

"We cannot afford to tie up scarce resources -- 800 million euros of company money -- in non-functioning programmes," he added.

Cook said the industry was not asking for government bailouts and was well-equipped to weather the economic turmoil.

"There is no indication that the current crisis is worse than previous ones we've had in our sector," he said. (Additional reporting by Ilona Wissenbach; Editing by Andrew Macdonald) ($1=.7598 Euro)