Boeing suppliers face uncertainty as Max grounding continues

Avatar for Ken PoleBy Ken Pole | February 10, 2020

Estimated reading time 3 minutes, 58 seconds.

As it continues to wrestle with the aftermath of two catastrophic 737 Max crashes within five months – Lion Air Flight 610 in late October 2018 and Ethiopian Airlines Flight 302 in early March 2019 – Boeing is keenly aware of the importance of its supply chain to a timely resumption of production and deliveries.

Ted S. Warren/Associated Press
The 2019 financial year marked a net loss of US$636 million for Boeing, the OEM’s first loss in two decades. Ted S. Warren/Associated Press

Over the century it has been sourcing parts, components and services with a constellation of suppliers, including more than 600 of various sizes currently scattered across Canada, it has become more than “the sum of its parts.”

It’s an industrial symbiosis in which the suppliers depend on Boeing for their existence and, in turn, Boeing needs their efficiencies and economies of scale to keep turning out ever-evolving aircraft to serve a growing global market.

It’s something David Calhoun, the new president and chief executive officer of Boeing, was keenly aware of when, at less than three weeks on the job, he had to preside over a Jan. 29 “earnings” call with market analysts and media about Boeing’s 2019 financial report. The call confirmed a full-year net loss of US$636 million after record earnings of US$10.46 billion in 2018. It was Boeing’s first loss in more than two decades.

Those two crashes, attributed to a flight software conflict, saw the eventual grounding of the global Max fleet in March 2019 except for some crew-only deliveries to service centres.

However, Boeing continued to build the Max in the hope of dealing with a multi-year order backlog, but eventually had to suspend production when it found itself with an inventory of some 400 grounded aircraft to manage.

Calhoun said it will take about 18 months to complete and deliver all of them once regulators clear the Max to fly again, which could come by mid-year. “Folks want the airplane,” he said.

The financial outlook is also clouded by issues with other aircraft programs. Boeing also revealed in its January earnings call that it will slow monthly production of its 787 Dreamliner to 10 by early 2021, down from the current 14 produced each month.

Then, there’s the uncertain market for its new 777X, which had its first flight in late January and which Calhoun described as “a proof point of Boeing’s engineering and technology prowess.” First delivery is expected in 2021.

Following its decision to suspend 737 Max production in January, Boeing Commercial Airplanes (BCA) instructed suppliers to suspend shipments for a month. BCA’s Seattle-based spokesman, Paul Bergman, told Skies that it also set out scenarios for managing their production.

“The scenarios show some possible supplier delivery rate options that are under consideration, and are not specific commitments,” said Bergman, adding that supplier input would help BCA’s overall planning.

He acknowledged that this posed “challenges for some suppliers,” but he reiterated Calhoun’s commitment to working with them “to manage risks, address hardships and ensure their ability to support seamless production resumption …

Some suppliers have laid off workers, including Wichita, Kan.-based Spirit Aerosystems, which makes fuselages for the Max program and has laid off close to about 2,800 people. Other companies have shuffled workers to other programs or assigned them different tasks in the hopes of retaining their skilled labour force until the Max program is reinstated.

Bergman said Boeing remains committed to its supply chain.

“Our objective is unchanged:  a healthy and stable 737 production system.”


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1 Comment

  1. ENOUGH OF BASHING BOEING. FAA wanted “common flight characteristics” in order to avoid the need for a separate type rating. Boeing proposed the MCAS solution–flight tested it, and FAA signed off on it. There have been NO problems with adequately trained crews.

    Boeing has taken a huge financial hit–as have all of the airlines that can’t use the new jets. By comparison, FAA has taken NO hit–NO responsibility. FAA continues to drag its feet in signing off on the issue–it has no “ownership” of the problem.

    MCAS WORKS. Nearly every 737 pilot I’ve talked to says “I’d fly it tomorrow if able.” NO trained jet pilot would try to counter an adverse trim–just SHUT IT OFF. BOEING should insist on having redundant MCAS systems to avoid a “single point of failure.” (additional MCAS systems were offered as an option, but some airlines didn’t opt for them). It’s an easy fix–it eliminates the problem at little additional cost.

    The FAA, for its part, needs to step up–acknowledge its own part of the problem, and certify the dual MCAS system–WITHIN ONE MONTH. There is no reason not to do so–the problem has been identified–the multiple system has been an option since the first airplanes were delivered–training programs have been developed–THE FAA NEEDS TO GET OFF THE DIME!

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