Friday, December 20, 2019

Spirit AeroSystems announced Friday morning that it is suspending the production of the 737 Max in Wichita beginning January 1.

In an email to employees, CEO Tom Gentile said Boeing sent Spirit a letter Thursday directing them to halt 737 Max deliveries during January, including ship-in-place deliveries.

Gentile says all 737 employees will return to work on January 6 after an extended holiday shutdown. He said even though employees will not be working on the 737, there is other work to catch up on.

The new developments of the suspension at Spirit put pressure on the company because the Max program accounts for more than 50 percent of its revenue. At this time, there are no layoffs and no furloughs.

Spirit said it is evaluating all potential actions to align its cost base with lower production levels expected in 2020.

Additional financial information related to the suspension will be provided in the company's fourth quarter/full year 2019 earnings release.

Spirit's announcement that it's suspending production of the 737 Max on Jan. 1 means the 52 aircraft per month the company had been producing in Wichita drops to zero.

Currently, those working on 737s will return to work as scheduled on Jan. 6, following an extended holiday break. When they return, they'll work on the other projects within the company, Spirit says.

The company hasn't said how many of the approximate 10,000 to 13,000 employees at Spirit this will affect.

Looking beyond the company and even beyond aviation, economists say Spirit creates another 106 jobs elsewhere for every 100 jobs with the company.

Spirit hasn't announced any furloughs or layoffs and economists and aerospace industry insiders say they'd see either of those options as an extreme, worst-case scenario for the company because they believe the 737 Max will be back in the air sooner rather than later.

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Ninety 737 Max fuselages sit waiting behind Spirit AeroSystems as uncertainty at the company continues with Boeing's announcement that it's temporarily suspending production for the grounded aircraft.

The big question remains what this ultimately will mean for workers at Spirit, which makes about 70 percent of the 737 Max. The project makes up more than half of the company's revenue.

Until the 737 Max is cleared to fly, Boeing has a backlog of planes in Wichita that it can't deliver. Since the FAA grounded the 737 Max in March, Spirit maintained a production rate of 52 fuselages per month. But Boeing has slowed production at its headquarters, leading to the backlog of fuselages in Wichita.

It's not currently clear if Spirit will furlough or lay off employees, but there are resources and options available for those that may need to find another job.

"At Texton, I know they just had a layoff in some of their engineering, but they are still working on the production side and have a need for that touch labor. Spirit has jobs posted on their website today," says Amanda Duncan with the Workforce Alliance.

Duncan says this comes at a time of low unemployment in Wichita and high demand for Aerospace.

"We're used to seeing some up and downturns in aviation and so individuals who may be affected are obviously able to come into our center," she says.

Eyewitness News is keeping close contact with the union who represents close to 10,000 Spirit employees.