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U.S. aerospace industry projects tenth straight growth year

By Jim Wolf

WASHINGTON (Reuters) - U.S. aerospace and arms companies are poised for sales growth in 2013 for what would be their 10th straight year, even as the Pentagon prepares to cut its purchases as much as 10 percent, the industry's chief trade group said Wednesday.

One of the economy's bright spots, these companies continued to lead the United States in the net export of manufactured goods, buoyed by strong civil aircraft sales, the Aerospace Industries Association said.

Exports rose to an estimated $95.5 billion this year from $85.3 billion last year and are likely to grow during "at least the next several years" based on order backlogs, the AIA said in its annual year-end review and forecast publication.

Civil aircraft, engines and parts represent about 88 percent of all aerospace exports and about $9 billion of the increase in overall exports in 2012, the report said.

China, a prominent growth market, could account for 20 percent of all global business jet deliveries by the end of the decade, up from 7 percent now, AIA cited estimates as showing.

Overall sales are projected to have risen 3.4 percent this year from $210.8 billion in 2011 to $217.9 billion, it said.

Leading U.S. aerospace companies and simultaneous top Pentagon suppliers include Lockheed Martin Corp , Boeing Co , Northrop Grumman Corp , BAE Systems Plc , Raytheon Co and General Dynamics Corp .

Bolstered by the worldwide market for commercial aircraft, sales for 2013 are expected to total $224 billion, which would make it the 10th consecutive year of growth, the group said.

"While the overall industry forecast for 2013 looks to be even better (than this year's performance), the fiscal cliff and sequestration are creating uncertainty in both the civil and military sectors," AIA said.

Roughly $600 billion in combined U.S. tax hikes and spending cuts are to take effect in January for fiscal 2013 alone - the so-called cliff - if President Barack Obama and Republicans in Congress fail to strike an alternative debt-reduction deal.

The across-the board spending cut, known as sequestration, would lop about $54 billion from U.S. national security spending with purchases of weapons nipped, the trade group said, an estimated 10.3 percent.

"It's an industry that remains healthy despite the obstacles," Marion Blakey, AIA president and chief executive, said in remarks prepared for an industry luncheon.

A combination of bipartisanship, collaboration and pursuit of common ground represents the best chance for addressing U.S. fiscal, economic and defense challenges, she said.

Demand for U.S. military exports is anticipated to remain strong for the new years, AIA said, citing concerns about Iran's disputed nuclear program as contributing to large purchases by oil-rich Gulf states, among other factors. .

Similarly, growing Chinese defense budgets have led to significant new U.S. sales in Asia - deals that should more than offset ebbing sales to European countries that are trimming military spending, the report said.

The U.S. military aircraft sector continues to contract, falling 2.4 percent over the past year. It is projected to sink more than 10 percent in 2013.

Closure of Lockheed Martin Corp's F-22 fighter production line and decisions not to fund additional Boeing Co C-17 military transport plane purchases or development of a future strategic lifter, each took a toll.

As of 2012, no fewer than three key military production lines - for Boeing's C-17 military transport aircraft, its F-15 tactical fighter and Lockheed's F-16 multi-role fighter, are being sustained largely by international export demand.

(Reporting By Jim Wolf; Editing by Alden Bentley)

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