Boeing's key supplier Spirit AeroSystems is limiting overtime and hiring as production declines due to lower output of 737 MAX jets, Spirit told Reuters on Friday.
Boeing's MAX jetliner production has fallen sharply in
recent weeks as U.S. regulators step up factory checks and workers slow the
assembly line outside Seattle to complete outstanding work. Boeing's deliveries
dropped by half in March from a year ago as it deals with a sprawling crisis
triggered by the Jan. 5 Alaska Airlines midair panel blowout.
The slowdown is spilling over to Spirit, the struggling
industry supplier Boeing spun off in 2005, which makes about 70% of the 737.
Boeing is now in talks to acquire the company.
"When I walk the shop floors things have slowed
down," said Cornell Beard, president of the Wichita, Kansas, union
district which represents Spirit Aero workers.
Beard said employees are expected to raise concerns about
potential layoffs at an internal union gathering on Saturday, adding the
company cut overtime last week. While Spirit has not announced layoffs, some
employees are nervous and are catching up on work they were behind on due to
slower assembly demands.
“We’re just hanging on,” he said.
Spirit has a requirements contract with Boeing for the 737
MAX program and the U.S. planemaker can reduce the purchase volume at any time,
according to a filing.
Spirit AeroSystems is “aligning our production to support
our customer’s rate profile,” spokesperson Joe Buccino told Reuters by email.
That includes in the near-term “limiting overtime as well as hiring for
specific roles, including contractors.”
Analysts and Reuters interviews with suppliers show Boeing
is largely continuing to take deliveries equivalent to a production rate of 38
jets a month, the cap imposed by the Federal Aviation Administration (FAA)
following the blowout, even though its monthly output is well below that level.
While the decline in Boeing's MAX output has raised
uncertainty and concern among suppliers, it is not yet clear how the move will
affect the planemaker's broader supply chain. Boeing was not immediately
available for comment.
AeroDynamic supply chain advisor Glenn McDonald said
Boeing's goal to reduce so-called traveled or pending work should make output
more stable in the future.
"The big unknown is how long the supplier rate will
stay at 38 if Boeing is not able to fix their issues on the production line and
increase the actual delivery rate," he said.
Spirit has not reported an annual profit since 2020
following two fatal 737 MAX crashes and the pandemic-induced slump in travel
that hit other Boeing suppliers.
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