Spirit AeroSystems, one of Boeing’s major suppliers for the Boeing 737 MAX, has announced that it will have to layoff approximately 2,800 employees at its Wichita, Kansas facility in the United States. The company, which manufactures fuselages for several Boeing aircraft types including the Boeing 737 MAX but also manufactures other aircraft components such as thrust reversers, is taking this measure as a result of Boeing’s decision to temporarily shut down the production line of the Boeing 737 MAX.
Spirit AeroSystems today issued a notice under the Worker Adjustment and Retraining Notification Act of layoffs affecting approximately 2,800 employees at its Wichita, Kansas facility. It is taking this action because of the (temporary) Boeing 737 MAX production suspension and ongoing uncertainty regarding the timing of when production will resume and the level of production when it does resume. This decision will allow Spirit AeroSystems to begin aligning its cost structure to the production suspension and, after such suspension, what Spirit expects will be production levels lower than Spirit’s levels in 2019.
Spirit AeroSystems is a significant supplier on the 737 MAX program, with its workshare accounting for 70 percent of the airplane’s structure. This includes the entire fuselage, thrust reversers, engine pylons and wing components. In addition, the Boeing 737 MAX represents more than 50 percent of Spirit AeroSystems’ annual revenue.
Spirit AeroSystems has not received notice from Boeing on how long the production suspension will last or what the production rate will be in the future. It believes that, when production resumes, the levels will be lower than previously expected due, in part, to Boeing’s need to consume over 100 Boeing 737 MAX shipsets currently in storage at Spirit’s facilities. In addition, Boeing has several hundred MAX airplanes built but not yet delivered to its customers.
In conjunction with these actions, Spirit AeroSystems plans to implement smaller workforce reductions later this month for its plants in Tulsa and McAlester, Oklahoma, which also produce components for the Boeing 737 MAX. Based on final production rates agreed with Boeing, Spirit AeroSystems may have to take additional workforce actions in the future.
“The difficult decision announced today is a necessary step given the uncertainty related to both the timing for resuming 737 MAX production and the overall production levels that can be expected following the production suspension,” said Tom Gentile, Spirit AeroSystems President and CEO. “We are taking these actions to balance the interests of all of our stakeholders as a result of the grounding of the 737 MAX, while also positioning Spirit to meet future demand.”
Employees will receive compensation for the applicable 60-day notice period. Spirit AeroSystems’ Wichita employees affected by these layoffs will start exiting the company beginning January 22.
Spirit AeroSystems has taken steps to lessen the impact of expected layoffs, transferring some Boeing 737 MAX employees to other programs where possible. Additionally, Spirit AeroSystems plans to facilitate job fairs with other aerospace companies to help laid-off employees transition to new jobs.
“Our goal is to support Boeing and a safe return to service of the MAX,” added Gentile. “We continue to work with Boeing to develop a new production schedule for 2020 with an eye toward minimizing disruption, maintaining the stability of our production capabilities, and best positioning Spirit for the future. When production levels increase sufficiently in the future, we look forward to recalling employees impacted by today’s announcement.”
10 January 2020