Boeing’s woes hit sup­plier with 2,800 laid off in Kansas

Baltimore Sun - - BUSINESS - By Roxana Hegeman

WI­CHITA, Kan. — Prob­lems for Boeing and its trou­bled 737 Max air­craft, which ap­pear to be grow­ing deeper, have be­gun to rip­ple out­ward, with a ma­jor sup­plier an­nounc­ing that it will lay off more than 20% of its work­force in Kansas, where it is based.

The an­nounce­ment last week of 2,800 lay­offs at a ma­jor em­ployer in Wi­chita, the state’s big­gest city, came a day af­ter doc­u­ments be­came pub­lic show­ing that Boeing em­ploy­ees raised doubts about the safety of the 737 Max, ap­par­ently tried to hide prob­lems from fed­eral reg­u­la­tors, and ridiculed those re­spon­si­ble for de­sign­ing and over­see­ing the jet­liner.

The lay­offs threaten to dam­age a state econ­omy that has been solid for months, with low un­em­ploy­ment and bet­ter-thanan­tic­i­pated state tax col­lec­tions un­der Demo­cratic Gov. Laura Kelly and a Re­pub­li­can- con­trolled Leg­is­la­ture.

Spirit AeroSys­tems is the largest em­ployer in Wi­chita, which bills it­self as the “Air Cap­i­tal of the World” due to a heavy con­cen­tra­tion of aero­space man­u­fac­tur­ers. More than 40 aero­space com­pa­nies, most of them in and around Wi­chita, pro­vide parts and ser­vices for the pro­duc­tion of the 737 Max.

The gov­er­nor’s ad­min­is­tra­tion had been con­sid­er­ing the use of the state’s fund for un­em­ploy­ment benefits to pay part of the salaries of Spirit work­ers so they could re­main in their jobs.

Spirit pro­duced about 70% of the 737 Max, in­clud­ing the fuse­lage. Con­tracts with Boeing for the Max rep­re­sents more than half of Spirit’s an­nual in­come.

“The dif­fi­cult de­ci­sion ... is a nec­es­sary step given the un­cer­tainty re­lated to both the tim­ing for re­sum­ing 737 pro­duc­tion and the over­all pro­duc­tion lev­els that can be ex­pected fol­low­ing the pro­duc­tion sus­pen­sion,” Spirit AeroSys­tems CEO Tom Gen­tile said in a state­ment.

Em­ploy­ees will be paid for a 60-day no­tice pe­riod. Af­fected em­ploy­ees will leave the com­pany be­gin­ning Jan. 22.

Ear­lier this month, Spirit broached the sub­ject of vol­un­tary buy­outs with em­ploy­ees. The com­pany sus­pended pro­duc­tion of fuse­lages and other parts for the Max on Jan. 1, af­ter Boeing or­dered Spirit to sus­pend shipments.

Spirit plans to im­ple­ment smaller work­force re­duc­tions this month for its plants in Tulsa and McAlester, Ok­la­homa.

Cor­nell Beard, pres­i­dent of the lo­cal branch of the In­ter­na­tional As­so­ci­a­tion of Ma­chin­ists and Aero­space work­ers, said the union was meet­ing with the com­pany to find ways to lessen the ef­fect of the sit­u­a­tion as much as pos­si­ble.

“It’s an ex­tremely dif­fi­cult time for the work­ers at Spirit AeroSys­tems who have ded­i­cated their lives to making this com­pany a leader in aero­space. Ma­chin­ists mem­bers and their fam­i­lies in this com­mu­nity have some tough de­ci­sions in front of them,” Beard said.

The com­pany said it has taken steps to lessen the ef­fect by trans­fer­ring some 737 Max em­ploy­ees to other pro­grams and fa­cil­i­tate job fairs to help laid­off em­ploy­ees.

Dozens of smaller aero­space com­pa­nies are also be­gin­ning to shed jobs.

The loss of the 2,800 Spirit jobs is ex­pected to have an ef­fect on about 5,800 jobs in the econ­omy, he said, not­ing that other aero­space man­u­fac­tur­ers in the sup­ply chain have been an­nounc­ing lay­offs.

“While th­ese fur­loughs will af­fect a large part of the aero­space work­force in Wi­chita, I know the com­mu­nity is pre­pared to as­sist in ev­ery way pos­si­ble,” Re­pub­li­can Sen. Pat Roberts said in a state­ment. “Wi­chita is the Air Cap­i­tal of the World, and I am com­mit­ted to making sure that does not change.”

Rep. Ron Estes, whose con­gres­sional district in­cludes Wi­chita, said he will con­tinue to work with the Fed­eral Aviation Ad­min­is­tra­tion “to en­sure grounded air­craft caus­ing th­ese fur­loughs can safely re­turn to the skies with­out any un­nec­es­sary de­lays.”

TRAVIS HEYING/THE WI­CHITA EA­GLE

Com­pleted Boeing fuse­lages, made at Spirit Aerosys­tems in Wi­chita, Kansas, sit cov­ered in tarps near the fac­tory.

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