Boeing’s 737 output at risk with key supplier in labor turmoil

The clock is ticking on Boeing’s plan to hike output of its bestselling jet, as a key supplier heads back to the bargaining table in a labor dispute that has already shut down production of fuselage assemblies for the 737 Max. Boeing’s goal of raising build rates by almost a quarter to 38 jets a month by mid-year and then beyond was put in jeopardy on Thursday when Spirit AeroSystems Holdings Inc. suspended factory work in Kansas, where employees build most of the narrowbody’s frame. About 6,000 members of the International Association of Machinists and Aerospace Workers rejected a four-year contract offer and voted overwhelmingly to strike. Spirit is due to restart negotiations on Saturday with union leaders who had backed the earlier deal and have since told workers that “the membership has been heard.” Spirit, once part of Boeing, sends the 737 hulls by rail to Seattle-area factories. While the planemaker has some spares, a production glitch in April that temporarily halted shipments from its former unit means Boeing may have a smaller buffer available than normal. “Our best guess is that a possible strike of even 2-3 weeks would start to impact BA’s 737 output,” Cowen analyst Cai von Rumohr wrote in a research note. The main sticking points are maintaining health insurance coverage, Spirit’s onerous mandatory overtime policies and the length of the contract, said Cornell Beard, who heads District 70. Union members want a three-year deal instead of the four-year term in the management offer.<br/>