Renton Boeing employees may face large layoffs due to the shutdown of the 737 MAX production.
Boeing Chief Executive Officer (CEO) Dennis Muilenburg announced a possible shut down of the 737 MAX production line in Renton could happen if they can’t return to service at the current timeline. The announcement was made during an earning conference call with other Boeing leaders and the press on Wednesday, July 24.
The Renton Boeing factory gathered international interest after the grounding of the 737 MAX 8 and 9 aircraft by nations and airlines, including the Federal Aviation Association (FAA). The 737 MAX 8 is assembled in Renton, as well as a quarter of the world’s fleet of commercial jets.
In April, they reduced the production rate at the Renton production plant to 42 planes to accommodate the slowdown in MAX deliveries. Muilenburg said they’ve used this time to improve the production line process. It also helped production health at the line, Chief Financial Officer Greg Smith said.
Boeing expects to maintain this production rate, slowly increasing until they are at 57 planes in 2020. But if the predictions are off, it could result in lowering production or a temporary shut down at the Renton plant.
“It’s not something we want to do, but an alternative we have to prepare for,” Muilenburg said.
In the call, Muilenburg said as long as the company’s estimate of returning to service in the next first quarter is correct, they can maintain the current low production rate.
The Boeing plant in Renton employs about 12,000 people and is a large staple in the city’s economy.
Longer than expected slow production rate at Boeing hit its the second-quarter earnings. The 737 MAX has reduced revenue by $5.6 billion. They will continue to see finances impacted until the 737 MAX is safely back in service and productions ramp up, Smith said. Boeing will continue to assess if the temporary shut down of the Renton plant is needed.
The 737 MAX 8 and 9 planes were grounded worldwide after two crashes within six months of its 737 MAX aircraft. Muilenburg said in a conference call the morning of July 24 that the crashes “continued to weight heavy” on the company.
In an update, Muilenburg said they are currently working on FAA and other regulators to complete elements of certification, and that the timeline of recertification and end of grounding of the MAX will depend on those regulators.
International Association of Machinists and Aerospace Workers (IAM) district 751 is a machinists union representing 9,000 employees who work on the 737 in the Puget Sound. In an email to union members, IAM stated that it would be “irresponsible for us or anyone to speculate on what may or may not happen.”
They emphasized the comments on the shut down were around unknown potential scenarios.
In the statement, it states the union has not been notified of any current changes to production, and it will react accordingly to any future changes.