U.S.-based Boeing (BA.N) and European rival Airbus (EAD.PA) have orders for over 8,000 aircraft, enough to keep them busy for the next six years, even without any new deals, and analysts predict the industry must increase production rates by a huge 45 percent in volume by 2015 to cope with the demand.

Whether suppliers can put the necessary processes in place and what planemakers can do to help has been one of the main topics of discussion at an industry event that has failed to deliver headline-grabbing orders.

"I am hearing much more about the discussions between the suppliers, the supply chain concerns and how companies are positioning to demonstrate that they are ready to invest in future capacity," said Accenture aerospace and defence expert Damien Lasou.

He said the risk was accentuated because a large number of suppliers serve all the manufacturers.

"When one of your customers is increasing production rate and asking you for more you may cope with it. But when all your customers are asking you to increase outcome and production output by 10-15 percent, then suddenly you have to grow 40-50 percent and it's another story."

Airbus and Boeing have already suffered embarrassing delays on flagship programmes such as their A380 and 787 Dreamliner planes and will be keen to avoid delays related to supply chain.

Aerospace specialist Stefan Ohl from consultancy Alix Partners said the original equipment manufacturers (OEMs) must monitor suppliers closely, sending in taskforces if needed.

"Not all, but some, maybe even many, suppliers are reaching capacity, whether in terms of production, management or cash," he warned.

David Hess, president of Pratt & Whitney, a United Technologies unit (UTX.N), said his company checks with suppliers rigorously on training, headcount capability and systems to make sure they are prepared when production of the company's geared turbofan engine ramps up.

"We haven't seen any capacity limitations yet, but we really start to see our volumes ramp sharply in 2015 and 2016," he said, adding the company was bringing in people who'd been involved with the Pratt Canada production rampup in the early part of the decade to help.

Stan Deal, Boeing vice president and general manager, supply chain management, said the U.S. planemaker learned during the development of the Dreamliner, which had more than a three-year delay in the face of production and design issues, that attention to details with suppliers can help ward off problems.

"Attention to detail early really can help make the difference between making a plan and missing a plan," Deal said.

CASH AND CONSOLIDATION

It's the smaller companies further down the supply chain, referred to as Tier 2 and 3, which are likely to struggle most to expand production.

"In the UK, many small companies aren't up for it," said Robin Southwell, CEO of EADS UK, referring to the need for those smaller companies to stump up the cash to invest in expansion.

He said the government should do more to emulate Germany, which is teeming with small, family-run companies with strong balance sheets.

British business secretary Vince Cable said the government was looking at encouraging non-bank financing.

"The situation got so bad some are just avoiding banks altogether," he said, saying that peer to peer lending and asset-based financing were becoming more common as a result.

After Airbus had to step in and buy some suppliers, the funding constraints could also lead to more consolidation between smaller suppliers.

"I think if we're going to continue at current production rates there will be no choice but to have consolidation in the second and third tier," said David Baxt, the global head of aerospace and defence investment banking at Jefferies. (Additional reporting by Rhys Jones, Cyril Altmeyer; Editing by Mark Potter)

• A Permanent Economic Emergency