U.S. aerospace and defense industry welcomes Trump victory

November 9, 2016 3:14 PM EST

U.S. President-elect Donald Trump speaks at election night rally in Manhattan, New York, U.S., November 9, 2016. REUTERS/Mike Segar


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By Alwyn Scott

SEATTLE (Reuters) - U.S. aerospace companies and lobbying groups embraced Donald Trump's presidential victory on Wednesday, setting aside fears that his policies would depress sales, shatter global alliances and roll back trade agreements.

Defense contractors in particular stand to benefit from a Trump presidency, given his pledges to beef up the U.S. military.

Boeing Co (NYSE: BA), which is finalizing a deal to sell 100 jetliners to Iran, congratulated Trump and members of Congress and said it looked forward to working with them to promote global economic growth and protect workers. Trump has strongly criticized an Iran nuclear deal that made the sale possible.

The warm response from the world's No. 1 plane maker echoed friendly overtures from other U.S. manufacturers such as Ford Motor Co (NYSE: F), which endured sharp criticism from Trump during the campaign for its growing operations in Mexico.

Manufacturers also pressed Trump on issues such as restoring the U.S. Export-Import Bank, increasing defense spending and pouring more investment into airport infrastructure.

Shares of aerospace and defense companies rose on Wednesday. The Dow Jones U.S. aerospace and defense index was up 4 percent in afternoon trading. Boeing shares were up 2 percent at $145.20 on the New York Stock Exchange. Among other major arms makers, Raytheon Co (NYSE: RTN) was up 7.4 percent at $146.56 and Lockheed Martin Corp (NYSE: LMT) was up 6 percent at $253.50.

NO "TREATY RIPPING"

Trump had derided trade agreements such as the North American Free Trade Agreement and the pending Trans-Pacific Partnership as bad deals, and vowed to renegotiate them. He also threatened to upend global security alliances.

But on Wednesday, industry trade groups said Trump had not created as much uncertainty for manufacturers as his rhetoric suggested, and offered policy prescriptions.

"It would be hard for a brand new president to come in and say, 'I'm ripping up this treaty,'" David Melcher, chief executive officer of the Aerospace Industries Association, said in an interview. The organization, founded in 1919, represents more than 300 aerospace and defense companies.

Requiring alliance partners to pay more for defense "is probably a neutral" for U.S. arms sales, he added.

Boeing's defense and space businesses could get a boost from an expected increase in military spending under Trump.

"We congratulate President-elect Trump and newly elected members of Congress," Boeing said in a statement. We "look forward to working with them to ensure that U.S. companies can compete, win and grow our economy to provide good jobs to U.S. workers, as well as preserve American leadership in national security."

There were signs of lingering concern about the negative tone of the campaign. The National Association of Manufacturers sent a letter to Trump on Wednesday, signed by more than 1,100 business leaders citing "an urgent need to restore faith in our vital economic and government institutions."

Signers included the chief executives of Boeing, Honeywell International Inc (NYSE: HON), United Technologies Corp (NYSE: UTX), Lockheed Martin Corp (NYSE: LMT), Northrop Grumman Corp (NYSE: NOC) and Caterpillar Inc (NYSE: CAT).

U.S. businesses "cannot truly prosper ... in a country that is divided and distrustful," Jay Timmons, chief executive officer of the trade group, wrote in the letter, adding it is "time to mend the divisions in our country."

(Reporting by Alwyn Scott; Editing by Tom Brown and Alan Crosby)



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