No one predicted the grounding of Boeing’s 737 MAX fleet a year ago. Or that Boeing’s best-selling narrow-body airliner would not return to service for at least a year, maybe more. However, there is certainty that a lot of effort is going toward putting the 737 MAX back in the air – from the manufacturer, regulators, and airlines. Only the exact timetable is unclear. This uncertainty makes a forecast for 2020 problematic, but I am optimistic the plane will be recertified this year and the U.S. commercial aerospace sector will endure this temporary upheaval.
Reasons include new management at Boeing (see page 10). New President & CEO David Calhoun’s first email to employees stressed “taking steps to maintain our supply chain and workforce expertise so we’re ready to restart production.”
Boeing is reassigning 3,000 workers to other jobs as it halts production of the 737 MAX jet. Meanwhile, Spirit AeroSystems – which supplies about 70% of the 737’s structure – is furloughing 2,800 employees with two months’ pay. Since Boeing has already compensated five major airlines hundreds of millions of dollars in total for financial losses incurred by the 737 MAX grounding, it makes sense that Boeing management should consider sharing the burden with a principal supplier to help maintain its workforce beyond that period. Just days before Calhoun took over, Spirit AeroSystems President and CEO Tom Gentile stated in a press release, “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.”
Minimizing disruption and maintaining supply chain stability is a stated Boeing goal, so maybe Calhoun’s promise that “Boeing must keep innovating to succeed” includes supporting a supplier for which the 737 MAX represents more than 50% of its annual revenue? Boeing’s position as the world’s largest aerospace company, a top U.S. exporter, and anchor in the Dow Jones Industrial Average calls for innovative thinking. And consider the 737 MAX backlog, valued at $500 billion.
While Boeing’s woes dominate the headlines, the company retains a six-year backlog on its 777 widebodies. There is other good news, noted on Aerospace Manufacturing and Design’s news pages in January.
Airbus is increasing the production rate of A320 family aircraft at its U.S. manufacturing facility in Mobile, Alabama, by the beginning of 2021. The company also will add 275 jobs for the A220 assembly line opening this year and construct an additional support hangar on the site.
The U.S. government ordered 50 more Lockheed Martin C-130J transports, worth $3.4 billion. And Lockheed Martin continues to ramp up production of the F-35 fighter – with its 1,500+ global suppliers and more than $44.2 billion total economic impact – increasing 2019 output by 50 units from the year before. The defense giant plans to deliver at least the same number of F-35s this year (141 jets) and increase production to reach a peak in 2023.
So, despite one platform’s challenges, aerospace manufacturing’s broader outlook remains promising. – Eric