June 11, 2020, © Leeham News: Spirit Aerosystems, maker of the Boeing 737 fuselages, yesterday said it will lay off 900 workers on the MAX line for three weeks.
“Spirit received a letter from Boeing directing Spirit to pause additional work on four 737 MAX shipsets and avoid starting production on 16 737 MAX shipsets to be delivered in 2020, until otherwise directed by Boeing,” the supplier said in a press release.
“Based on the information in the letter, subsequent correspondence from Boeing dated June 9, 2020, and Spirit’s discussions with Boeing regarding 2020 737 MAX production, Spirit believes there will be a reduction to Spirit’s previously disclosed 2020 737 MAX production plan of 125 shipsets,” the company said.
Spirit also is furloughing workers at two locations in Oklahoma.
Sources tell LNA the 737 line is currently producing at a rate of about 1/mo. Boeing declined to confirm this.
“While we aren’t disclosing our specific rate ramp, we have restarted production at an initial low rate due to the impact of COVID-19 on our industry,” a Boeing spokesman said. “This transition from simulations to build work will be very gradual as we reactivate the Central line. The exact rate ramp pace will be determined by the pace of deliveries to our customers. We will reactive the other two production lines over time as we gradually step up our rate.”
LNA was also told the second line won’t be restarted this year. Boeing declined comment other than the above statement.
Suppliers are producing parts and components at a rate greater than the production. In a May 27 letter to suppliers, Elizabeth Lund, VP and GM of Supply Chain, “production is restarting slowly and the rate ramp is paced conservatively.
“The supply chain production deviates from the 737 final assembly production in order to help maintain production stability and amass sufficient inventory to support seamless production and eventual ramp ups,” Lund wrote.
Lund wrote that the MAX backlog is now more than 3,800 airplanes. This reflects some 500+ cancellations or reclassifications of orders to credit-challenged customers.
Spirit has about 120 completed fuselages in storage. A new agreement reduced the number of new production fuselages Boeing wanted this year from 216 to 125.
The stored fuselages are customer-specific. Although not “stuffed” with Buyer Furnished Equipment (seats, bins, galleys, lavs), they are “plumbed” for these installations. With customers cancelling or deferring airplanes (and in some cases, going out of business), the stored aircraft would require revised “plumbing” (including electrical) for a different customer.
Spirit previously said it would take up to two years to clear the inventory.