Boeing’s latest challenge is labour
For Boeing Co., the pandemic was just one item on the long list of its existential concerns over the past four years. But after a massive talent exodus, the tragedies of its 737 Max jets falling from the sky, and stiff competition, the company is gearing up for a production resurgence that will help mount the industry’s steepest ramp-up in modern aviation history.
The comeback rides on whether a Boeing factory south of Seattle can pump out 31 of its cash cow Max jets each month, a goal set for early this year. It’s a breakneck acceleration — a 63 per cent jump from the present pace — at a time when rival Airbus SE is also pushing the pedal to the floor. And then the real challenge will be to keep steadily moving higher.
But Boeing can’t do it alone. The risk is that the constellation of suppliers that ship millions of parts to plane makers and engine makers won’t be able to hire enough workers to keep pace. Those smaller manufacturers are facing labour shortages two years after U.S. aerospace companies jettisoned 57,000 employees. Already at the current low production pace, there are signs of stress and spot shortages. With an industry upturn looming, the crunch looks poised to get much worse.
If the labour squeeze means Boeing can’t get the parts it needs, timed precisely to its production process, the company risks not only costly logjams, but also the prospect of churning out scads of partially completed planes.
About two-thirds of suppliers surveyed by RBC Capital Markets say the ability to staff up is the biggest risk to the aerospace recovery. Michaels estimates worker shortfalls of 10 per cent to 20 per cent are common. Concerns are particularly high for two foundries, Howmet Aerospace Inc. and Warren Buffettowned Precision Castparts Corp., which produce the lion’s share of highly complex jet-engine components. The companies reduced head count by 17 per cent and 40 per cent respectively during the downturn.