Boeing 737 Max Supplier Cuts Jobs as Fallout From Grounding Spreads

Spirit AeroSystems, which supplies the fuselage for the 737 Max, said the layoffs were due to uncertainty around when production will resume.

A fuselage for Boeing's 737 Max at the Spirit AeroSystems facility in Wichita, Kan.
A fuselage for Boeing's 737 Max at the Spirit AeroSystems facility in Wichita, Kan.Credit...Nick Oxford/Reuters

The company that supplies Boeing with the fuselage for its 737 Max jet said Friday that it would lay off around 2,800 employees at a facility in Kansas, as the economic impact of Boeing’s decision to suspend production of the jet ripples through the global aerospace supply chain.

The company, Spirit AeroSystems, said it was making the cuts at a plant in Wichita in response to the temporary production halt that Boeing announced last month. The jet has been grounded for 10 months in the wake of two crashes that killed 346 people.

“Spirit is taking this action because of the 737 Max production suspension and ongoing uncertainty regarding the timing of when production will resume and the level of production when it does resume,” Spirit said in a statement.

Boeing buys the parts that go into the Max from 600 companies, including major corporations like General Electric, which supplies the engines, and lesser-known manufacturers that specialize in components like lighting systems and seats.

Like many of those aerospace suppliers, Spirit is heavily reliant on Boeing: The Max alone accounts for more than 50 percent of the company’s annual revenue. In addition to the fuselage, Spirit makes thrust reversers, engine pylons and wing components that go into the plane.

Spirit said it had “not received notice” from Boeing on how long the production suspension would last or what the production rate would be in the future. “Spirit believes that, when production resumes, the levels will be lower than previously expected,” the statement said.

A Boeing spokesman, Peter Pedraza, said in a statement that the company recognized “the challenges the temporary 737 production suspension poses for our suppliers, our customers and our employees.”

“This is a difficult time for the industry,” Mr. Pedraza said. “We will continue working with Spirit AeroSystems, and with all of our 737 suppliers, to address hardships and manage risk.”

A software system developed for the Max played a role in both accidents, and since then the company has been working to update the system.

But as part of the work to return the Max to service, Boeing and its regulators have discovered new potential design flaws, and it’s unclear when the plane will be allowed to fly again. The crisis has already cost Boeing billions of dollars and forced airlines around the world to operate without the jet in service. It has also exposed a company culture that critics say disregarded safety concerns.

The layoffs announced on Friday could be the first of several rounds of cuts at Spirit. The company said it planned to make smaller reductions this month at plants in Oklahoma. And it may have to “take additional work force actions” in the future.

This is not the first time that companies in Boeing’s supply chain have felt the effects of the uncertainty surrounding the Max. After Boeing said in April that it would slow production of the Max to 42 airplanes a month from 52, the chief executive of Spirit, Tom Gentile, told investors that the company would freeze some hiring, reduce overtime and decrease its use of contractors.

And in June, Spirit moved about 6,000 employees in Kansas and Oklahoma to a four-day workweek, resulting in a 20 percent pay cut that lasted until the end of August.

Shares of Spirit fell 3 percent on Friday. In announcing the layoffs, the company said it had tried to limit the number of cuts by transferring employees who worked on the Max to other programs.

“When production levels increase sufficiently in the future, we look forward to recalling employees impacted by today’s announcement,” Mr. Gentile said in the company’s statement.