Boeing’s decision to halt production of the 737 MAX airliner could lead to layoffs and other effects here in the Granite State, where suppliers make engine parts and other components for the fleet grounded since March.
The world's largest aerospace company has 93 supplier and vendor locations supporting an estimated 5,500 direct and indirect jobs in New Hampshire, according to Boeing’s 2017 annual data. That year the company spent $199 million with companies across the state.
Suppliers in the state work on a broad array of Boeing products, including the electronics system in F-15 fighter jets used to detect missiles and approaching enemy planes.
“Boeing’s suspension of 737 Max production will have a ripple effect across the country because hundreds of suppliers and contractors are connected to the project,” said Jim Roche, president of the New Hampshire Business and Industry Association, in a statement.
While Boeing has said it won’t lay off or furlough its workers, but the supply chain could be affected.
“For New Hampshire firms doing business with Boeing, directly or as subcontractors to prime contractors, the production stoppage will adversely affect their own operations and profitability,” Roche said. “If the stoppage persists, it’s reasonable to assume employee layoffs could follow.”
Several companies, including GE Aviation in Hooksett and Albany International in Rochester, produce components for the LEAP jet engine used on the 737 MAX.
Safran Aircraft Engines, a French company that works in partnership with GE and Albany, saw its stock dip about 2% in the aftermath of the 737 MAX announcement.
GE and Safran produce the engine components through a joint venture, CFM International.
GE also produces products for Boeing’s European competitor, Airbus, and has the flexibility to move workers and manufacturing capability.
“GE is working closely with Boeing and our airline customers to ensure the safe return to service of the 737 MAX. We are partnering with our customers and suppliers to mitigate the impact of the temporary shutdown of the 737 MAX production, while protecting the company’s ability to accelerate production as needed in the future,” a GE spokesman wrote in an email to the Union Leader.
The 737 MAX production suspension marks the company’s biggest assembly-line halt in more than 20 years. The plane came under fire after crashes in Indonesia and Ethiopia killed 346 people within five months earlier this year. The crashes were linked to a new automated flight control system on the MAX.
Boeing did not say how long the production shutdown might last, stressing that was up to the FAA.
The array of suppliers show how the Granite State is part of a “global supply chain,” Taylor Caswell, commissioner of the state Department of Business and Economic Affairs, said last year.
Such contracts help boost the small-business manufacturing industry, but world tension related to trade wars can affect future business, he said.
Astronics Corporation, which operates Astronics AeroSat in Manchester, has seen an impact in the sales of its satellite communication connectivity systems for inflight WiFi and other features.
"As expected, third quarter revenue was light, due in part to the continued grounding of the 737 MAX and the resulting capacity challenges affecting the global airline industry,” said Peter J. Gundermann, president and CEO, in a statement on third quarter financial reports.
The company had hoped the 737 MAX would be back in flight by the end of the year.
Before the grounding of Boeing’s 737 MAX fleet in March, Manchester’s airport handled about 100 flights a year involving the model, said Deputy Airport Director Tom Malafronte at the time.
Southwest, which carries about half of the airport’s passengers, said it has removed the MAX from its flight schedule through April 13.
“By proactively removing the MAX from scheduled service, we can reduce last-minute flight cancellations and unexpected disruptions to our customers’ travel plans,” a statement read.
“The limited number of customers who have already booked their travel and will be affected by our amended schedule will be notified of their re-accommodated travel according to our flexible accommodation procedures. The revision will proactively remove roughly 300 weekday flights from our schedule out of our total peak-day schedule of more than 4,000 daily flights.”