The recent rejection of Boeing’s latest contract offer by striking workers has caused a fresh threat to the operations of aerospace suppliers, such as family-run Independent Forge. With over 33,000 workers on strike, the planemaker’s production has come to a halt, affecting the entire supply chain.
One such supplier, Independent Forge, located in Orange County, California, is already feeling the impact of the strike. President Andrew Flores has stated that if the strike continues for another month, the company will have to cut its operations from five to three days a week to save money and retain workers. This decision is not an easy one, as Independent Forge has already had to lay off a few employees. Flores emphasizes that the remaining 22 workers are crucial for the company, especially when demand for their aluminum aircraft parts picks up after the strike ends.
“They are the backbone of our shop,” Flores said. “Their knowledge is irreplaceable.”
Boeing’s latest contract offer was rejected by 64% of its West Coast factory workers on Wednesday, further delaying the assembly of its commercial jets. This has created a new challenge for suppliers like Independent Forge, which has been in operation since 1975.
Boeing’s vast global network of suppliers, ranging from large modern factories to small garage workshops, was already under pressure due to the company’s quality and safety crisis earlier this year. The demand for parts has dropped, causing a strain on suppliers who had invested heavily to meet the renewed demand for planes in the post-pandemic era.
The strike, which began on September 13th, is expected to have a significant impact on Boeing’s future ability to resume its plane production. If it continues for an extended period, it could lead to more job cuts, furloughs, and a freeze on investments for suppliers.
Five Boeing suppliers interviewed by Reuters this week have stated that they would have to furlough workers, freeze investments, or even consider halting production if the strike continues. This could have a ripple effect on Boeing’s efforts to restore and increase production of its 737 MAX planes, which are currently under a regulator-imposed cap of 38 planes per month.
Boeing declined to comment on the situation, but Seattle-area supplier Pathfinder’s CEO Dave Trader has stated that they will likely have to lay off more employees if the strike continues. The company, which runs a project to attract young recruits to the aerospace industry and trains them alongside skilled workers, has already had to let go of a quarter of its workforce last month. They will also have to send more of their aerospace students back to their high schools instead of training them in their factories.
Suppliers on a regular call with Boeing’s supply-chain executives have stated that they expect the strike to continue for weeks, according to a participant who spoke to Reuters. This is a cause for concern as 60% of the 2.21 million Americans who work in the aerospace industry have jobs directly linked to the supply chain, according to the U.S. industry group Aerospace Industries Association.
The decisions made by suppliers to reduce staffing could create a vicious cycle, putting added strain on Boeing’s efforts to restore and increase production of its 737 MAX planes. CEO Kelly Ortberg has stated that restarting the factories and the supply chain will be a challenging task, and it will take longer than expected if the strike continues.
Southwest Airlines’ Chief Operating Officer Andrew Watterson has also expressed concerns about the strike, stating that it could cause delays in the supply chain. This sentiment was reflected in the stock market, with shares of Boeing suppliers falling on Thursday. Howmet lost 2%, while Honeywell and Spirit AeroSystems fell 5% and 3%, respectively, following weak results.
Spirit AeroSystems, one of Boeing’s key suppliers, has already announced the furlough of 700 workers on the 767 and 777 widebody programs for 21 days. The company has warned that it would have to implement layoffs if the strike continues past November. According to analysts, it could take up to a year from the end of the strike to get 737 production back to the pre-strike rate of 38 planes per month.
The strained supply chain, combined with Spirit Aero’s challenges and increased regulatory oversight from the Federal Aviation Administration over MAX production, could lead to a longer recovery period. Analyst Rob Stallard from Vertical Research Partners has stated that it could take up to a year to get 737 production back to its pre-st
