Boeing Supplier Forced To Cut Jobs Following 737 MAX Shutdown

Kansas based Spirit AeroSystems is facing the prospect of job cuts now that the 737 MAX production has been suspended. More than 13,000 workers have been offered voluntary layoffs as the supplier halts the production of the 737 MAX parts that it makes. The supplier says the move is due to ‘uncertainty’ over the future of the aircraft.

737 MAX factory
A key supplier of the 737 MAX parts is looking to cut jobs. Photo: Getty

Voluntary layoffs offered

Spirit AeroSystems announced on Monday that it would offer employees voluntary layoffs in an attempt to rein in any losses incurred through the stoppage of the 737 MAX production. CEO Tom Gentile is reported In AP News as saying this was because the company doesn’t have “clarity on the timing for resuming MAX production or a firm production rate schedule when it does resume.”

In a statement issued to the press by the company, Spirit said,

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“Spirit AeroSystems is evaluating a range of potential actions to reduce costs due to ongoing uncertainty regarding the 737 MAX. We do not know how long the pause in production will last, or what the production rate will be when it does resume. Part of our effort includes offering a voluntary layoff program for eligible employees. While no final decisions have been made on additional actions, we remain focused on doing what is in the long-term interests of Spirit, its stockholders and other stakeholders, including employees.”

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Getty 737 MAX
Spirit AeroSystems make various parts for the MAX, including the fuselage. Photo: Getty

The voluntary job cuts are being offered to all employees in Wichita along with those in Tulsa and McAlester. Spirit’s employee base encompasses around 13,000 workers in Kansas, along with a further 1,300 in Tulsa. The company has not said how many jobs could be affected.

The unseen losers

For so much of the 737 MAX debacle eyes have been on airlines and how the loss of the type has impacted them. Eyes have also been on Boeing, watching how the manufacturer tackles this complicated problem. But there’s another major loser that hasn’t had much attention at all: the supply chain.

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Producing 40 or 50 aircraft a month, as Boeing was, requires a massive team effort from many different companies. One of the biggest is Kansas based Spirit AeroSystems. Known as ‘Spirit’, but not to be confused with the low-cost airline, the company builds several important pieces of Boeing aircraft, notably the fuselage of the 737.

At one point, Spirit AeroSystems was merely a department of Boeing, but was spun out more than a decade ago. Despite standing on its own two feet as a separate company, Spirit was incredible reliant on Boeing for its income. The 737 MAX production accounted for almost half of Spirit’s total revenue.

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Boeing is halting production of the 737 MAX until it is cleared by the FAA. Photo: Getty

In the aftermath of the 737 MAX grounding, Boeing worked out a deal to keep purchasing 737 MAX parts from Spirit at a rate of 52 per month, despite slowing its own production to 42 aircraft a month. However, with Boeing now putting the brakes on the 737 MAX production entirely, that agreement can no longer be honored.

Indeed, the supplier itself announced back in December that it would suspend Boeing 737 MAX production from January, following the lead of Boeing. Analysts are warning that it could be years before Spirit’s 737 production ramps back up to where it was. In the meantime, it’s a very uncertain future ahead for the thousands of employees at the company.

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Kevin

But don’t worry Spirit Aerosystems employees. Dennis Muilenburg is leaving Boeing with a $60 million severance package. He’ll be fine.

Frank

And all the shareholders got their dividend last quarter – so all is well

William

I find it curious that Boeing didn’t cut back production a little further, why 42/month?
The problem now is that if shut down too long the supply chain may be damaged and unable to recover.

Kevin

I seriously think that Boeing maintained the 42 rate to ensure that the Leap 1-B engines were coming to Boeing and not going to Airbus. I think if you could drill into the thought processes of Muilenburg you would find that keeping the LEAP engines out of the hands of Airbus was his main purpose for maintaining the 42 production rate. End of story.

Neil W

I think the thought process of Mullenburg was that Boeing could coerce the FAA into re-certifying the 737 Max many months ago.

shapes

You mean “pressure” the FAA into re-certifying the max, there are no ethics at work in boing. Keeping production going did indeed use up the supply of leap engines, it also mounted pressure to re-certify them, it was as flawed an idea as the max itself.

Frank

How long before those unemployed workers start looking for other work and Spirit starts to lose qualified people inn the industry to other companies. I hear Airbus is hiring in Alabama, if you can make the move…

charles woods

It will take spirit some time to come back on to its manufacturing schedule, even if the all clear for the 737 max comes in April / may these suppliers need time to ramp up production of the fusalage and recruit back its normal workforce, can’t see 737 production resuming till august / september?