Spirit AeroSystems announces plans to lay off thousands of employees

WICHITA, Kan. (KWCH) Spirit AeroSystems announced Friday plans to lay off 2,800 employees at its Wichita facility.

The company says the layoffs are part of the 737 MAX production suspension and ongoing uncertainty regarding the timing of when production will resume and the level of production when it does resume. This decision allows Spirit to begin aligning its cost structure to the production suspension and, after such suspension, what Spirit expects will be production levels lower than Spirit’s levels in 2019.

Spirit is a significant supplier on the 737 MAX program, with its workshare accounting for 70 percent of the airplane’s structure. This includes the entire fuselage, thrust reversers, engine pylons and wing components. In addition, the MAX represents more than 50 percent of Spirit’s annual revenue.

Spirit has not received notice from its customer, Boeing, on how long the production suspension will last or what the production rate will be in the future. Spirit believes that, when production resumes, the levels will be lower than previously expected due, in part, to the customer’s need to consume over 100 MAX shipsets currently in storage at Spirit’s facilities. In addition, Boeing has several hundred MAX airplanes built but not yet delivered to its customers.

In conjunction with today’s actions, Spirit plans to implement smaller workforce reductions later this month for its plants in Tulsa and McAlester, Oklahoma, which also produce components for the MAX. Based on final production rates agreed with Boeing, Spirit may have to take additional workforce actions in the future.

“The difficult decision announced today is a necessary step given the uncertainty related to both the timing for resuming 737 MAX production and the overall production levels that can be expected following the production suspension,” said Tom Gentile, Spirit AeroSystems President and CEO. “We are taking these actions to balance the interests of all of our stakeholders as a result of the grounding of the 737 MAX, while also positioning Spirit to meet future demand.”

Employees will receive compensation for the applicable 60-day notice period. Spirit’s Wichita employees affected by these layoffs will start exiting the company beginning January 22.

Spirit has taken steps to lessen the impact of expected layoffs, transferring some 737 MAX employees to other programs where possible. Additionally, Spirit plans to facilitate job fairs with other aerospace companies to help laid-off employees transition to new jobs.

“Our goal is to support Boeing and a safe return to service of the MAX,” added Gentile. “We continue to work with Boeing to develop a new production schedule for 2020 with an eye toward minimizing disruption, maintaining the stability of our production capabilities, and best positioning Spirit for the future. When production levels increase sufficiently in the future, we look forward to recalling employees impacted by today’s announcement.”

Gentile released the following message to workers:

Team,

Today we issued a notice to the State of Kansas under the Worker Adjustment and Retraining Notification (WARN) Act of layoffs affecting approximately 2,800 employees at our Wichita facility. We have also notified union leadership for represented employees in Wichita of this action.

Hourly employees in Wichita impacted by today’s announcement will begin departing the company January 22 and salaried employees will depart beginning February 7. Although exit dates for affected employees will occur before the end of the 60-day notice period, all employees will receive compensation for the full 60-day notice period. In addition, we will make smaller employment reductions in Tulsa and McAlester later this month.

This is not the news I wanted to share, and I know it’s not the news you wanted to hear. But the continued grounding of the MAX fleet and the suspension of production has created a challenging situation for us.

Reducing employment is a necessary step given the uncertainty of when production of the MAX will resume and the expected lower production levels when it does resume. Spirit has not yet received notice from Boeing on when MAX production will restart or what production rates will be when it does. We are taking these actions to align our cost structure to what we expect will be lower production rates than Spirit’s 2019 levels.

Based on final production rates agreed with Boeing, Spirit may have to take additional workforce actions in the future.

We have taken steps to lessen the impact of expected layoffs, transferring some 737 MAX employees to other programs as permitted. Additionally, Spirit will seek to facilitate job fairs with other aerospace companies to help employees find new work. We will announce dates for these job fairs in future communications.

We wish we could avoid making a decision that will impact so many of the people we come to work with every day. However, as a significant supplier on the MAX program, the disruption to our business from the grounding of the MAX has an immediate impact on Spirit. We build 70 percent of the airplane’s structure, and it provides more than 50 percent of the company’s annual revenue.

We continue to work with Boeing to develop a new production schedule for 2020 with an eye towards minimizing further disruption, maintaining the stability of our production capabilities, and best positioning Spirit for the future. When production levels increase sufficiently in the future we look forward to recalling workers who may be laid off as a result of today’s announcement.

I ask that you continue to support one another as we work through the challenges we currently face. I remain committed to communicating with you as openly and transparently as possible during this challenging time.

Tom

IAMAW District Lodge 70 President Cornell Beard released the following statement Friday evening:

"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. We are continuing to meet with the company to find ways to lessen the impact of this situation as much as possible. The IAM will continue to look out for the best interests of the members who are part of this great union. We remain positive and hopeful for the future."