Airplane fuselages bound for Boeing’s 737 Max production facility sit in storage at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019.
An aerospace supplier to Boeing, Spirit AeroSystems, said it would lay off 2,800 employees — and possibly more at a later point — because of Boeing’s 737 Max production halt.Spirit makes more than 50% of its annual revenue building components for the 737 Max, including the plane’s fuselage, thrust reversers, engine pylons, and wing components.Boeing initially said it would not lay employees off during the suspension, but the company has more than 600 suppliers which depend on the Max for revenue.Sign up for Business Insider’s transportation newsletter, Shifting Gears, to get more stories like this in your inbox.Visit Business Insider’s homepage for more stories.Spirit AeroSystems, an aerospace manufacturer based in Witchita, Kansas, said on Friday that it would lay off 2,800 workers in a cost-cutting measure due to Boeing’s suspension of 737 Max production.Spirit builds aircraft components for plane-makers including Boeing, and is among the most significant suppliers to the 737 Max program. The company builds the plane’s fuselage, thrust reversers, engine pylons, and wing components, under contract to Boeing’s specifications.The company said that the Max represents more than 50 percent of Spirit’s annual revenue.Boeing announced last month that it would suspend production of the 737 Max. The plane has been grounded worldwide since March, 2019, following the second of two fatal crashes.Throughout the grounding, Boeing continued producing new jets, reducing from a rate of 52 per month to 42, but has not been able to deliver them to airline customers. This has led to a growing pileup at Boeing’s various storage facilities, with more than 400 undelivered planes sitting idle.Boeing initially said it would not lay off or furlough employees at its Renton, Washington, factory, where the Max is assembled, reassigning employees to other teams instead. The plant employs 12,000 workers.However, almost 600 suppliers manufacture components for the plane, along with scores of subcontractors. Some of these companies have less diverse revenue streams than Boeing and are expected to be less able to absorb the financial impact of the temporary production halt.Spirit said in a statement that it had not received any notice from Boeing on how long the production suspension would last, nor what the production rate would be when it resumes. Spirit added that it believes that “when production resumes, the levels will be lower than previously expected due, in part, to the customer’s need to consume over 100 Max shipsets currently in storage at Spirit’s facilities.”Spirit also plans additional layoffs at its plants in Tulsa and McAlester, Oklahoma, and said that it may take additional actions in the future.
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