WICHITA — 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 Friday that it will lay off more than 20% of its workforce in Kansas, where it is based.
The announcement 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-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 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’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 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 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 AeroSystems CEO Tom Gentile said in a prepared 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 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 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.