Written by Alison Lampert
(Reuters) – Spirit AeroSystems, a major Boeing supplier, is restricting overtime and hiring in response to production declines caused by production of the 737 MAX jet, Spirit told Reuters on Friday.
Production of Boeing Co.'s MAX jetliners has fallen sharply in recent weeks as U.S. regulators ramp up factory inspections and slow assembly lines outside Seattle as workers complete unfinished work. ing. Boeing's deliveries in March were cut in half from a year ago as it grappled with a widespread crisis sparked by the Jan. 5 Alaska Airlines midair panel explosion.
The economic slowdown has also affected Boeing's struggling supplier Spirit, which it spun off in 2005 and makes about 70% of its 737s. Boeing is currently negotiating to acquire the company.
“As I walked around the site, things started to move slowly,” said Cornell Beard, president of the Wichita, Kan., union district representing Spirit Aero workers.
Beard said he expected employees to voice concerns about possible layoffs at an internal union meeting on Saturday, adding that the company cut overtime last week. Spirit hasn't announced any layoffs, but some employees are nervous and trying to pick up work that has been delayed due to lower demand for assembly.
“We're just enduring,” he said.
Spirit has a requirements agreement with Boeing for the 737 MAX program, and the U.S. aircraft maker can reduce purchases at any time, according to filings.
Spirit AeroSystems is “adjusting production to support our customers' rate profiles,” spokesman Joe Buccino told Reuters in an email. In the short term, this includes “limitations on overtime and the hiring of certain roles, including contractors.”
Reuters interviews with analysts and suppliers indicate that Boeing Co. has not made deliveries worth the equivalent of 38 jets a month, the cap imposed by the Federal Aviation Administration (FAA) after the explosion. Although it is significantly lower than the previous year, it was shown that it is almost continuing. .
Boeing's MAX production declines are causing uncertainty and concern among suppliers, but it's not yet clear how the move will affect the aircraft maker's broader supply chain.
Boeing said it was unable to comment due to a quiet period ahead of its April 24 quarterly results.
Glenn MacDonald, Aerodynamic's supply chain advisor, said Boeing's goal to reduce so-called travel and pending work should make production more stable in the future.
“The big unknown is how long the supplier ratio will remain at 38% if Boeing is unable to resolve production line issues and increase actual delivery rates,” he said.
Spirit hasn't reported an annual profit since 2020 due to two 737 MAX crashes and a pandemic-induced travel slump that hit other Boeing suppliers.
(Reporting by Alison Lampert in Montreal; Editing by Josie Kao)
