Boeing May Stop 737 Max Jet Assembly Line
ARI SHAPIRO, HOST:
Boeing is temporarily stopping production of its 737 MAX airplanes starting next month. The company announced the decision after a meeting of its board of directors in Chicago today. All of these planes are out of service after two crashes that killed 346 people. This new decision suggests the plane will remain grounded for a while.
NPR's David Schaper joins us from Chicago to discuss the impact of Boeing's decision. Hi, David.
DAVID SCHAPER, BYLINE: Hey, Ari.
SHAPIRO: Aviation officials around the world ordered all 737 MAX planes grounded nine months ago. So why is Boeing only stopping production now?
SCHAPER: Well, because last week, the FAA gave Boeing a reality check and told the airplane manufacturer to stop pushing a return to service schedule that is, quote, "not realistic." You know, the FAA and other regulators around the world have refused to put any sort of timeline on returning the MAX to service, saying they're going to take all the time they need to review and analyze and test the software fixes for the plane. But Boeing has kept suggesting that approval of these fixes is imminent and kept on making planes, cranking out 42 of them a month out of the factory. So now there's about 400 of them in storage.
The FAA's message, though, is now, hold on; we set the timetable for returning the plane to service, not you, and won't be pressured into taking quicker action. And now it appears that Boeing is listening and responding to that.
SHAPIRO: Going from 42 planes a month to zero is an abrupt about-face. Did they consider slowing production rather than stopping?
SCHAPER: They did, but there are some advantages to completely shutting down the factory. One is cost. It's quite expensive to keep a factory open, making dozens of airplanes a month when you cannot deliver those planes to customers and you can't take final payment. So even slowing the rate would still cost the company a lot of money, according to Richard Aboulafia, an aviation industry analyst with the Teal Group.
RICHARD ABOULAFIA: But at this point, they're spending billions of dollars per quarter on keeping production going at a pretty high clip without bringing in any revenue. And financially, that hurts a lot.
SCHAPER: In a statement, the company says they believe this decision is the least disruptive to maintaining long-term production system and supply chain health. But another factor, the company says, is the uncertainty about the timing and conditions of returning the plane to service. And that's where this factory shutdown might actually hurt Boeing a little bit in sending the message that the grounding of this troubled plane may continue for a few more months at least, if not longer.
SHAPIRO: There are so many parts that have to be built before it even reaches the factory that we're talking about. So how is the supply chain going to be affected by this shutdown?
SCHAPER: Yeah, there are, like, 900-some companies that supply the parts to the Boeing planes - the fuselage, the wings, the wheels, all the components. And a lot of them are made elsewhere. So the ripple effect down the supply chain could be huge. Here, again, is Richard Aboulafia.
ABOULAFIA: All the suppliers would feel a great deal of pain. So major suppliers, say, in Evendale, Ohio, which is where the engine manufacturer is, or Wichita, which is where the body of the plane is built at Spirit AeroSystems - they would feel a great deal of pain, too.
SHAPIRO: And, David, what about the ripple effect for workers getting this news right before Christmas?
SCHAPER: Yeah, it's - there's a lot of uncertainty there, but there may not be any layoffs or furloughs of Boeing employees at the plant itself in Renton, Wash., just outside of Seattle. In the statement announcing the suspension of 737 MAX production, the company says it is planning to have affected employees, quote, "continue 737-related work or be temporarily assigned to other teams in the Seattle area." So there may not be any furloughs or layoffs, at least not right away. But a lot of people in that area are still anxious.
One thing that Boeing wants to do to - one reason Boeing wants to soften this impact on workers is because they don't want to risk losing that experienced and skilled workforce when they have to get the plant up and running again and get planes that are already manufactured delivered to the airlines that are expecting them.
SHAPIRO: That's NPR's David Schaper on news that Boeing is temporarily suspending production of the 737 MAX airplane.
SCHAPER: My pleasure, Ari.
(SOUNDBITE OF ZERO 7, HENRY BINNS, ET AL.'S "RED DUST") Transcript provided by NPR, Copyright NPR.