Laura Kelly, Kansas Governor, has indicated that the state may have to step in and help pay the salaries of workers at Spirit AeroSystems if the troubled B737 MAX stays grounded for much longer, according to a report in The Wichita Eagle on December 17. Spirit makes the B737 MAX fuselages, which have continued to stack up on the tarmac while Boeing works with federal regulators to get the aircraft back in the air.
Among those state resources which Kelly can deploy, is the use of its unemployment system to help pay Spirit's workers. “We’ve done this before, it’s not unusual to go in what we call a shared-work programme, for instance, where they remain employees of Spirit, get a reduced paycheck, and we backfill that with unemployment benefits,” said Kelly.
She also said that it is vital to keep the Spirit workers employed so the city and state don’t lose that talent pool, which will be needed when the B737 MAX resumes production. Spirit employs about 12,500 people in Wichita, and is the Kansas city's largest employer, and over 50% of its revenue comes from the production of B737 components.
Kelly's nervousness about losing skilled labour is justified, as that is exactly what happened in 2013, when Boeing closed its facilities in Wichita. The bulk of Boeing Wichita’s work moved to Oklahoma City, San Antonio and the Seattle area, and most of its 2,100 employees followed the company out of town, were laid off or retired.
In the December 17 article, Governor Kelly also said that she had spoken with the Tom Gentile, the manufacturer's Chief Executive Officer and that he was hopeful that production would recommence imminently.
However, just days later, the Wichita-based manufacturer announced in a press release on December 20 that it would suspend all B737 MAX production and deliveries on January 1. The suspension “will have an adverse impact” on Spirit’s business, financial condition, results of operations, and cash flows," the company said in the release. It is also made it clear in the release that there was no timetable for production resumption.
The company's release continued: "Spirit is evaluating all potential actions to align its cost base with lower production levels expected in 2020. Decisions will be guided by a focus on what is best for the long-term interests of Spirit's stockholders and other stakeholders, including employees."
This announcement followed the decision by Boeing on December 17 to suspend B737 MAX production in January. The B737 variant has been grounded globally since March, following the second of two fatal crashes, believed to have been caused by faulty software in its Maneuvering Characteristics Augmentation System (MCAS) that is supposed to prevent the aircraft from stalling.
