Grounding of 737 Max takes growing toll on Kansas suppliers

This May 24, 2019 aerial photo, shows the Spirit Aerosystems Facility in Tulsa, Okla. The looming production shutdown of Boeing 737 Max jets is taking a toll on a key supplier. Spirit AeroSystems Holdings Inc. is asking employees if they will take voluntary buyouts. Spirit suspended production of fuselages and other parts for the Max on Jan. 1, after Boeing told the Wichita, Kansas, company to suspend shipments. Employees learned about the buyout offer – with terms depending on union contracts for workers in Wichita, Tulsa and McAlester, Okla. – in a Monday, Jan. 6, 2020, memo from CEO Tom Gentile

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

The announcement of 2,800 layoffs at a Wichita-based Spirit AeroSystems 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-than-anticipated state tax collections. Democratic Gov. Laura Kelly and the Republican-controlled Legislature have been able to boost spending on public schools and services, and the layoffs are likely to come up during the state's annual session, which starts Monday.

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

Spirit also produces forward fuselages for the 787 Dreamliner, which is built in North Charleston and Everett, Wash.

The Kansas 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, who make an averga of $81,000, so they could remain in their jobs.

Spirit's announcement also came on the same day that the jobs report shows U.S. manufacturers cut payrolls by 12,000 in December, compared to estimates for a gain.

Spirit produces about 70 percent of the 737 Max, including the fuselage. Contracts with Boeing for the Max represents more than half of the Kansas company's annual income.

"The difficult decision announced today 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 CEO Tom Gentile said in a written statement.

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

Just days ago, 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 Oklahoma plants in Tulsa and McAlester.

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 impact 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 impact by transferring some 737 Max employees to other programs and facilitate job fairs to help laid-off employees.

Spirit's stock price was down in midday trading Friday. It already had lost more than 20 percent of its value since Boeing grounded the 737 Max in March.

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

Boeing, by contrast, has said it doesn't plan to lay off any of its employees during the 737 Max shutdown.

Locally, the planemaker is shuffling staff at its North Charleston sites, moving those employees who design and build 737 Max engine parts at Propulsion South Carolina to the 787 Dreamliner final assembly site at Charleston International Airport. Once the 737 Max is cleared to fly, those workers will start returning to their regular assignments in a phase approach, according to the company.

About 3,000 Boeing workers in Renton, Wash., where the 737 Max is made, will be moved to other company sites on the West Coast.

The Post and Courier and John Hanna of the AP contributed to this report.