Dive Brief:
- Spirit AeroSystems will implement a 21-day furlough for approximately 700 employees effective Oct. 28, EVP and CFO Irene Esteves said in a company message Friday morning.
- The furloughs will affect employees who work on Boeing’s 767 and 777 plane programs at the Wichita, Kansas, plant because the supplier does not have the storage capacity needed to continue producing new units for the aircraft company, Esteves said.
- All other programs will continue as normal. However, the company may take additional actions — including layoffs and more furloughs — if the strike between Boeing and the International Association of Machinists and Aerospace Workers District 751 extends past Thanksgiving. The ongoing strike at Boeing’s West Coast facilities began Sept. 13.
Dive Insight:
In addition to furloughs, Spirit AeroSystems is making additional efforts to contain costs due to lower revenues. Effective immediately, the company is implementing a hiring freeze until further notice.
The company also eliminated overtime, travel, advertising, marketing and consulting expenses. The cost-cutting measures also include reduced non-labor spending by 15%, reduced working capital and scaled back capital expenditures, the release stated.
Spirit AeroSystems will share more information when they file their Q3 financial results and again in mid-November should the strike continue, Esteves said. A date has not been set for the company’s next Q3 earnings release.
“Please know this decision was made after careful consideration and pursuit of all available options,” Esteves told employees.
It’s the second time this year that Spirit AeroSystems has taken actions that affected workers at its Wichita plant. In May, the company announced plans to lay off up to 450 employees due to the cuts on high inventory levels after its deliveries plunged in Q1.
The Wichita plant also has IAM workers, representing Local Lodge 839. Last year, the company and union inked a new four-year contract after a short strike caused a temporary work stoppage at the Wichita plant.
IAM did not immediately respond to a request for comment.
Spirit AeroSystems also had a rough quarter like its largest customer, Boeing, which lost $1.4 billion. While the fuselage supplier reported a Q2 revenue increase of 9%, or approximately $1.5 billion year over year, it lost $415 million compared to a $120 million loss in the same period last year.
Boeing is also taking action to cut costs amid its ongoing strike with IAM 751. The company’s President and CEO Kelly Ortberg announced last week that Boeing plans to cut 10% of its workforce, roughly 17,000 employees, over the next few months.
