The company’s stumble, which started with the fatal crashes of two 737 Max aircraft, could have repercussions for the entire county.
(Bloomberg) – Leaders in Wichita, Kansas, suffered a series of gut punches in recent weeks after their biggest employer, Spirit AeroSystems, said it would stop working on the troubled Boeing 737 Max jetliner announced 2,800 layoffs in its home city.
City manager Robert Layton is sitting through two or three meetings a week on what to expect, as fallout from the Max’s temporary shut-down ripples through the aircraft’s 600 mostly U.S. suppliers. Republican Senator Jerry Moran of Kansas promptly called Boeing’s new chief executive and the head of the Federal Aviation Administration to urge them to get the Max flying again. The new mayor of Wichita – a city of 380,000 that claims to be the “Air Capital of the World” – just took office on Monday, three days after Spirit announced its mass layoffs.
Boeing is the largest manufacturer and exporter in the U.S. Its stumble, which started with the fatal crashes of two 737 Max aircraft and culminated in the grounding of its best-selling Max fleet last March, could have repercussions for the entire U.S. economy.
Treasury Secretary Steven Mnuchin has said the company’s problems could cut U.S. gross domestic product by half a percentage point this year – a figure repeated by President Donald Trump on Wednesday.
While Wichita tries to suss out what’s to come, aviation supply chain experts warn that the numerous suppliers could fail causing major job losses if the U.S. industrial titan allows the Max program’s shutdown to linger much past this month. Boeing shares have fallen about 25% from a record high on March 1.
“I would not be surprised that smaller suppliers end up going out of business, because they’re two, three levels down,” said Gary Weissel at consultancy Tronos Aviation Consulting. “The guys above them can’t take deliveries.”
That could prove a hurdle for Trump as he makes his case for reelection on the strength of the economy and his record on job creation, although Boeing’s biggest supplier bases in Kansas and Washington are in deeply red and blue states, respectively.
“With the shutdown, there could be political pressure exerted in the FAA’s direction to get things moving,” said Kevin Michaels, a managing director at consultancy AeroDynamic Advisory.