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UPDATE 2-Give us orders not just targets, arms firms tell Europe

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By Andrew Gray and Tim Hepher

BRUSSELS, Nov 30 (Reuters) - European defence industry leaders called on Thursday for more firm orders to help them respond to pressure for increases in capacity to meet war demand in Ukraine and other security needs.

The ASD aerospace, security and defence association, which lobbies for the industry in Brussels, said ramping up defence capacity required long-term planning and more tangible co-operation with the European Union and national governments.

"Ukraine has been a wake-up call for the European industry and many countries are spending a lot more on defence than we used to," Micael Johansson, CEO of Sweden's Saab and vice-chairman of the ASD association, said.

"We have to restart production of ammunition and weapons systems that we haven't done for a very long time and that requires a whole ecosystem ... which is really a challenge," he said on the sidelines of an annual industry meeting.

"This is a huge investment and we cannot in the industry do that only on our own," he told reporters.

Thierry Breton, the EU commissioner for industry, has said arms companies are making progress in ramping up production.

But Johansson said he could not predict when it would be able to meet an EU target of boosting annual output of 155-millimetre shells, a key element in Ukraine's growing war of attrition against Russia, to 1 million rounds a year.

EU Commission President Ursula von der Leyen told a separate meeting of the European Defence Agency on Thursday that Europe would be able to produce 1 million ammunition rounds next year.

German Defence Minister Boris Pistorius said earlier this month that a separate target of supplying Ukraine with 1 million artillery shells and missiles by next March would not be met.

Johannson also voiced concerns about the proportion of Europe's increased defence budgets being spent on buying weapons from the United States.

Ukraine's urgent need for arms following last year's Russian invasion, which Moscow calls a special military operation, has sparked a debate over how much Europe should bridge a gap in its own defence capacity with imports from the global market.

"It might in the short term be a good decision to buy things from outside the EU, but it will not give the return on investment for taxpayers...if we continue in that way," Johannson said.

Turning to other geopolitical pressures, Airbus CEO Guillaume Faury, who chairs the ASD association, said tensions between the U.S. and China had kept traffic between the world's two largest economies to just 10% of pre-COVID levels.

But with air travel broadly back to pre-pandemic levels worldwide, demand for jets is outstripping supply, which is held back by ongoing problems in the industry supply chain, he said.

The ASD said earlier that European aerospace and defence employment had returned to pre-pandemic levels of just under a million jobs.

Labour shortages have been a pressing concern since the COVID-19 crisis, as the industry ramps up to meet resurgent air travel demand and growing security challenges. (Reporting by Tim Hepher, Andrew Gray Editing by Bernadette Baum and Christina Fincher)

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