Woe to those who think the ups and downs of the aerospace industry only affects Western Washington. Just like an aircraft engine, there are many moving parts for this business sector. When Boeing stopped producing 737 MAX planes following the tragic crashes of two airliners, the effect reverberated throughout the manufacturing pipeline, even here in the Inland Empire. The impact of grounding the MAX and temporarily halting production is costing Boeing $2 Billion a month, according to analysts at J.P Morgan. But it’s not just Boeing, many of the businesses that feed into that Boeing pipeline are also feeling the effects. That may ultimately mean scaling back production, perhaps even layoffs.
Here in the Inland Northwest, our region has over 120 manufacturers, suppliers, distributors and organizations associated with the worldwide aerospace industry. That’s according to Advantage Spokane, Greater Spokane Inc.’s economic development website. Those businesses employ 8,000 people locally so it’s a huge part of our economy. There are also another 300 local Community College students pursuing high tech and aerospace degrees; planning on getting jobs once they graduate. This region produces aircraft parts and equipment as well as providing maintenance, repair and overhaul services.
Manufacturers in our area generally fall into what are considered Tier 2 and Tier 3 level businesses in the supply chain. That means most of the products created supply top tier businesses with components necessary to complete projects. For instance, in Wichita, Kanas, Spirit AreoSystems is a multibillion-dollar company that manufactures fuselages, thrust reversers and engine pylons and wing components for the MAX. It plans to lay off 2,800 employees due to the suspension of the MAX with ongoing uncertainty how quickly production will resume.
Local businesses are also feeling some impact since the halt of 737 MAX production. Fortunately, most do not rely solely on the one type of aircraft for their production; but they are still operating at only 80% of what they were last year.
Laying off workforce is not an option for many companies with a large investment in training and education coupled with the short labor supply. Many businesses are also exploring diversification into medical and high-end instrumentation. This diversification could mitigate the impact of the 737 MAX shutdown by opening new doors of opportunity.
As we move deeper into 2020, it will be interesting to see how diversification and the markets will change and grow local manufacturing in the Inland Empire.