Boeing suppliers’ shares hit by production pause

Workers stand beneath wing of 737 MaxImage copyright Getty Images

The price of shares in suppliers to Boeing tumbled on Tuesday after the planemaker revealed it would pause production of its 737 Max aircraft.

Shares in Senior, which counts Boeing as one of its biggest customers, fell by as much as much as 9%.

Meanwhile, shares in Meggitt and Melrose dropped by more than 1%.

On Monday night, Boeing confirmed it would halt production of the plane, which was grounded after two crashes that killed 346 people.

Around 400 of the 737 Max jets have been delivered to airlines around the world since the first one rolled off the production line in 2017. But Boeing had orders for more than 4,000 of the planes, which cannot be delivered because of the global grounding.

Boeing employs more than 2,500 people across 65 sites in the UK.

Just last year, the planemaker opened a £40m factory employing 75 people making parts for planes including the 737 Max.

Boeing has said it will temporarily assign other roles to its own employees who are affected by the shutdown in production of the 737 Max.

But that may not be as easy for Boeing’s direct suppliers who employ 21,000 people in the UK, where the planemaker spent £7.6bn between 2015 and 2018.

Image copyright Getty Images

One of those suppliers is Aeromet International, which makes parts for planes including the 737 Max.

The firm’s chief executive, Howard Kimberley, told the BBC that the firm has had “ample time” to slow down production after the 737 Max was grounded by regulators.

“We’re in a wait-and-see mode at the moment,” he said.

But he said Aeromet’s workforce had not been impacted by the slow down in production and he expected that other firms would redeploy workers into other areas of their businesses.

“Whilst we’re clearly waiting for further news and updates from the Boeing Company I think in the short term I don’t expect there to be any significant change in manning and the supply chain.”

Peter Bruch, a director of the Midlands Aerospace Alliance, which represents the region where a lot of plane parts are made, said Boeing’s decision would send a “shock wave” through the UK aerospace sector.

He said the decision to suspend production of the plane in January would see demand for parts fall to nothing with very little notice for suppliers.

That will have a “very dramatic” impact on cash flow for those firms he said and he noted that it could lead to job losses.

However, he said workers who had been laid off would not struggle to find other work in the sector, which is struggling with too much demand – rather than too little.

In a statement, Senior said it “continues to work closely with Boeing and its other customers”.


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