SEATTLE (Reuters) – Since a crippling attack on many of Boeing’s U.S. aircraft factories ended more than a month ago, progress in ramping up production of its best-selling 737 MAX plane has been deliberately slow.
Safety inspectors at the 737 MAX factory outside Seattle laboriously searched half-built planes for defects they might have missed during the seven-week work stoppage.
Other workers pored over manuals to restore their expired safety permits. The factory was initially so lifeless in mid-November that an employee left early because the fastener bins he was supposed to replenish were not being used, a source within the factory said.
The result: no new 737 MAX aircraft has been completed. Boeing said on Tuesday it had restarted MAX production last week, as first reported by Reuters.
Boeing’s cautious approach, after criticism that the plane maker has ramped up production for years, has drawn praise from regulators and CEOs of some airlines.
But there are also some smaller suppliers who have cut jobs or hours during the strike and are reluctant to rehire staff, creating even more uncertainty in an already fragile supply chain, according to three suppliers, an analyst and a source from the sector.
Both Boeing and rival Airbus are struggling to meet production targets due to supply chain delays. Boeing CEO Kelly Ortberg told analysts in October that he expected a bumpy return for the supply chain after the strike.
Parts that used to take a day to be ready at a processing plant now take a week, a supplier told Reuters.
This account of Boeing’s efforts to restart production of its best-selling plane is based on interviews with a dozen Boeing factory workers and 10 suppliers, most of whom spoke on condition of anonymity because they are not authorized to speak to talk to the media.
It shows Ortberg is sticking to his pledge to cautiously restart production of the 737 MAX, prioritizing safety and quality as he faces heightened scrutiny from regulators following a mid-air blowout of a nearly new plane in January .
The interviews also revealed that some suppliers are still struggling to recover from the strike, after struggling with collapsing aircraft production during COVID-19 and the MAX grounding in 2019 following two fatal crashes involving the model.
Boeing “will continue to steadily increase production as we execute our safety and quality plan and work to meet the expectations of our regulator and customers,” said Boeing spokesperson Jessica Kowal. “We will also continue to work transparently with our suppliers, listening to concerns and seeking opportunities to improve collaboration to ensure our entire manufacturing system operates safely and predictably.”
FAA AT THE FACTORY
After weeks of inertia, there were new signs of movement at Boeing’s Renton 737 MAX factory last week, three sources said, with green fuselages entering the final assembly line where the wings and tail are attached.
Although the restart does not bring immediate relief, it is good news for the financially strapped fuselage supplier Spirit AeroSystems, which had little storage space during the strike. A Reuters reporter saw more than 100 MAX fuselages lined up at Spirit’s Wichita factory this week.
Spirit Aero spokesman Joe Buccino said the company was “working closely with Boeing as it restarts production.”
Boeing executives have said privately that they hope to produce 15 to 20 MAX jets this month, two of the 10 suppliers and one industry source said, although one cautioned that the odds of meeting that target’s loftier target is unlikely. The Boeing spokesperson did not comment on those figures.
Boeing typically closes most aircraft manufacturing operations between December 24 and January 1.
Although Boeing does not release production figures, the aircraft maker said in October that before the strike it was preparing to reach a target of 38,737 planes per month by the end of the year.
At the plant, daily tasks involve demanding efforts to clean up and take steps to prevent mistakes, with FAA officials taking notes with clipboards and reflective vests a regular occurrence, they said.
FAA Administrator Mike Whitaker on Dec. 5 praised Boeing for not following past practice by immediately restarting production after the strike, instead focusing on workforce and training.
Still, Whitaker told Reuters that Boeing has a long journey to achieve its focused safety culture. “The factory is cleaner, as you would expect, but they are honest about the fact that they still have a long way to go,” he said.
Stabilizing Boeing’s MAX production is critical for both the planemaker and the financial health of its aircraft supply chain, with 4,200 outstanding orders with airlines, and is expected to continue to boost revenues in the coming years.
Six of 10 suppliers told Reuters they will not bring back workers before 2025, partly because they are unsure whether Boeing will have to change its production plans again.
Two suppliers said Boeing told them the planemaker is expected to provide a private update this month on a major internal production milestone for the 737 supply chain.
“Supplier confidence in Boeing’s rates is at an all-time low,” said Glenn McDonald, supply chain specialist at US aerospace consultancy AeroDynamic Advisory, which advises clients on areas such as business and corporate strategy.
“Suppliers have been burned before by investing for rates that didn’t materialize… that doubt becomes a self-fulfilling prophecy.”
Bruised SUPPLIERS
In the short term, Boeing can likely rely on excess parts and components it has collected this year to build its planes, as until the strike it largely continued to buy from suppliers at a higher rate than necessary as it has fewer planes produced as a result of the blowout. .
Subsequently, purchasing largely collapsed during the strike. As production comes back online, suppliers’ skepticism about Boeing’s rates could hinder the investments needed to meet Boeing’s plans for a return to a rate of 38 and higher next year, according to three suppliers, McDonald and one industry source.
Boeing’s problems mean it will take longer to return 737 MAX production to pre-strike levels than it did after a work stoppage in 2008, when the planemaker returned to a monthly production of 31 in about 25 days, McDonald said .
That longer recovery is being felt acutely by some of the hundreds of small suppliers spread across Boeing’s manufacturing hub in Washington state.
Smaller aerospace suppliers are less optimistic about making capital investments than many of their larger counterparts, said Christopher Chidzik, chief economist at the Association for Manufacturing Technology, a trade group.
Despite the Boeing machinists’ strike, aerospace manufacturers in October increased production technology orders to a 2024 high, indicating they have used the downtime to replace and upgrade the technology used on production lines expand, he said.
Smaller job shops bucked this trend, he added.
Rosemary Brester, a Seattle-area supplier, hoped she and her husband would be able to get their metal aircraft parts processed more quickly after the strike ended, but delays persist.
The couple, who have run Hobart Machined Products from a workshop next to their home since 1978, rely on a finishing specialist to anodize and paint their precision parts before sending them to larger companies that sell to Boeing.
This used to take a day, but now it takes a week because the finishing specialist is short-staffed since laying off employees during the strike.
“All we can do is produce according to the schedule we have, maybe speed up parts and pay a little more to get them to our customers on time,” she said.
“Until I see some real stability, I’m not going to hire anyone,” Brester said.
Carmen Evans, co-owner of New Tech Industries in Mukilteo, Washington, near Boeing’s hulking Everett factory complex, said the small supplier is ready to produce more specialized tools for its largest customer. But they now find themselves in something of a limbo as they wait for Boeing’s MAX factory to start humming again.
“It’s not like the floodgates have opened yet,” she said.
(Reporting by Allison Lampert in Montreal, Dan Catchpole in Seattle; additional reporting by David Shepardson in Washington; Editing by Joe Brock and Claudia Parsons)
