- Title: Suppliers brace for impact as Boeing halts 737 production
- Date: 17th December 2019
- Summary: WICHITA, KANSAS, UNITED STATES (DECEMBER 17, 2019) (REUTERS) WIDE AERIAL OF SPIRIT AEROSYSTEMS HOLDINGS INC. AERIAL OF FUSELAGES SITTING IN STORAGE
- Embargoed: 31st December 2019 23:35
- Keywords: Boeing 737 Max production facility Spirit Aerosystems Holdings Inc. airplane fuselages
- Location: WICHITA, KANSAS, UNITED STATES
- City: WICHITA, KANSAS, UNITED STATES
- Country: USA
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA001BAD8K07
- Aspect Ratio: 16:9
- Story Text:Boeing Co's decision to stop production of its best-selling 737 MAX aircraft involved in two fatal crashes will impact U.S. economic growth and employment, but the pain may be brief and concentrated in areas where suppliers are located, analysts and executives say.
The biggest assembly-line halt in more than two decades at Boeing could cut first quarter 2020 gross domestic product growth by at least half a percentage point, economists estimated on Tuesday (December 17). The hit to GDP growth would come from a smaller inventory build.
The effects of the production halt are likely to ripple through other sectors of the economy. Boeing has not said how long production will be frozen but the Society of Professional Engineering Employees in Aerospace, a union representing Boeing and its suppliers' workers, said: "The company expects the shutdown to be measured in weeks, not days."
Though Boeing has said it would not lay off any of the roughly 12,000 employees who make the 737, economists expect some of the more than 600 smaller companies in the supply chain to lay off or furlough employees, or cut their hours. These developments would impact on U.S. employment data.
Wichita, Kansas-based Spirit AeroSystems Holdings Inc, for example, already cut contractors and temporarily reduced the work week for employees to 32 hours in June. They went back to full-time employment in September.
Boeing is Spirit's biggest customer. It makes an estimated 70% of the 737's parts and employs 17,000 people around the world, including more than 10,000 in Wichita, where it is the biggest employer in a city of about 390,000 residents with a 3.1% unemployment rate.
Seattle, where the bulk of Boeing's employee base is located, has an 3.3% unemployment rate.
(Production: Nick Oxford, Vanessa Johnston) - Copyright Holder: REUTERS
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