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Killing fields turn shop shelves

New York, March 26 (Reuters): Arms buyers are getting a live-action demonstration of some of the world’s latest war tools as the US-led war with Iraq rages.

Months before the Paris Air Show, the aerospace industry’s most important bazaar, possible customers can check out satellite-guided global positioning systems, the latest high-tech helicopters and missiles that blow up enemy projectiles.

What’s more, companies with the best-performing systems could see a burst of sales after the conflict ends, a boon when many aerospace and defence players, including Boeing, have seen their commercial airplane business sag with the weak economy.

“There’s no doubt the US will use the campaign to highlight certain weapons systems that they can eventually sell to its allies,” said Richard Turgeon, director of research and aerospace analyst for Victory Capital Management in Cleveland. “They did it very successfully during the first Gulf war — there was a big run-up in military purchases after the war.”

To be sure, companies sell a much greater proportion of their arms to US department of defence than to other countries — just about 13 per cent of Boeing’s sales are international. But with worries that the US deficit and the costs of rebuilding Iraq will siphon cash away from defence contractors, every little bit counts, analysts say.

“With all the military coverage, scenes of precision weapons hitting targets in Iraq, it’s showcasing a lot of products,” said Eric Hugel, aerospace analyst for investment bank Stephens Inc. “Your first reaction is: ‘Wow’ and your second question is: ‘Who makes that'’ ”

Among the most closely watched weapons systems, Lockheed Martin Corp’s newest Patriot, the PAC-3, is one that many are scrutinising. The Patriot Advanced Capability is a missile interceptor and destroyer that provides defence for ground combat forces. The updated version replaces Raytheon Co.’s Patriot PAC-2, used in the 1991 Gulf War with disappointing results. Specific details about the PAC-3’s effectiveness have not yet been officially released, but reports say Patriots have successfully shot down Iraqi missiles.

Helicopters are also under scrutiny after a CH-46E Sea Knight, made by Boeing, crashed in Kuwait on Friday. This week, an Army AH-64 Apache, also made by Boeing, went down in fighting south of Baghdad. The latest unmanned surveillance systems are also being studied, although many of them will take years to get the government’s approval for international sales, due to security concerns.

Northrop Grumman Corp.’s Global Hawk plane, for example, is likely providing high-resolution intelligence and surveillance imagery to battlefield commanders in Iraq, analysts say. The company and the Pentagon decline to comment on its possible presence. “Until you debut a weapons system in a battle situation or a conflict, my belief is that the curtain on the system hasn’t really been raised,” said Tom Jurkowsky, spokesman for Lockheed Martin.

Aerospace-related companies eagerly anticipate the Paris air show, held in June, as an opportunity to show their newest technology and products. The show, which is a mix of commercial and defence-related enterprises, is also a time when customers place huge orders.

In many ways, the conflict in Iraq is shaping up as a demonstration for aircraft and weapons that the show’s paper handouts and plastic models could not begin to illustrate.

”To a degree, the few weapons systems that shine in a conflict will be a focus,” said Chris Mecray, defence analyst for Deutsche Bank Securities.“War is a testing ground.”

Still, some companies and analysts say the most important testing already has been completed and demonstrated to customers long before the weapons see conflict.

“American military equipment is tested thoroughly, well in advance of deployment,” said James Fetig, spokesman for Raytheon. “The successes and failures are well publicised.”

But others say active conflict will offer buyers a rare chance to gauge weapons’ effectiveness, and it could possibly help companies boost sales, even if US defence spending slows.

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