By Amy Wilson Published: 9:12PM BST 15 Aug 2009  Suppliers for BAE's typhoon fighter have been hard hit by recession  The defence giant is supplied by tens of thousands of smaller manufacturers that are far more vulnerable to the funding squeeze than the company itself. BAE has a £45bn order book and recently raised $1.5bn (£900m) in a bond issue.  Suppliers backed by private equity firms are particularly at risk from the lending freeze and next year could see a rise in companies requiring equity injections from their backers or new loan terms to ride out the global slump.  Jason Steen, who runs Steen Associates, an aerospace and defence M&A advisory firm, said: "The equipment manufacturers have learned lessons from the last downturn and are trying to keep the healthy suppliers alive.  "For aerospace and defence companies that took on pretty big amounts of leverage in 2007 and early 2008, the fall off in demand is going to be pretty catastrophic. Private equity-financed businesses are more vulnerable, and private equity companies are having to think hard about whether they want to re-leverage or sell."  Within the aerospace sector, Firth Rixson, a private-equity backed supplier to German engine maker MTU, has received a £100m injection from owners Oak Hill Capital Partners, a US private equity firm, as part of renegotiations with its lenders.  Others such as Gardner, which supplies BAE with parts for the Typhoon fighter plane and is owned by Carlyle, have been hard hit by the recession but are understood to be able to access extra funding from backers if required.  BAE included the warning on its supply chain in its recent half-year results, although it was not mentioned in the "principal risks" listed in the company's annual report published ahead of the AGM in May.  BAE warned: "Some of the group's suppliers or subcontractors may be impacted by the current economic environment and constraints on available financing, which could impair their ability to meet their obligations to the group."  Chief executive Ian King has said BAE is being "very vigilant about the health of the supply chain".  A company spokesman said the issue of supply chain risk had come up during preparation for the recent bond and there was no particular supplier causing concern.  Firth Rixson could not be reached for comment.
BAE systems has warned that its supply chain is at risk from suppliers failing    to obtain adequate credit.