Spirit AeroSystems might have to resort to more drastic measures to account for its reduced workload if a strike at Boeing continues into next month.
Most employees at Spirit have been on a three-day work schedule since the Machinists union went on strike Sept. 6, idling Boeing plants in Wichita and the Pacific Northwest. Spirit employs about 10,500 people in Wichita.
But Spirit president and chief executive Jeff Turner said in a memo to employees Wednesday that the company must look at other alternatives beyond a shortened workweek for employees supporting Boeing production programs should the strike last much past October.
"These alternatives, in the worst case, include the possibility of broad shutdowns and temporary layoffs, possibly as early as November," Turner said in the memo. "Hopefully, this alternative can be avoided."
Turner called the situation fluid and said Spirit is looking at all its options. He said the company will discuss those options with local union leaders.
"A shutdown is clearly not our preference but may be necessary in the weeks ahead if the strike continues," he said.
A shutdown and temporary layoffs could have a detrimental impact on the Wichita economy, a Wichita State University professor said.
Conservatively, Wichita could take a $5 million a week economic hit if most employees are temporarily laid off at Spirit, said John Wong, interim director of WSU's Hugo Wall School of Urban and Public Affairs.
The figure doesn't include the impact Spirit vendors may feel as well, he said.
It also would affect retailers and other businesses in Wichita, especially if it lingers into the holiday shopping season.
"With the loss of potentially millions of dollars of spending, it obviously looks dismal," Wong said.
Boeing Machinists went on strike after rejecting the company's contract offer by an overwhelming margin. About 27,000 Machinists, including 750 at Boeing Wichita, walked off the job.
Renewed talks between the union and Boeing broke down Monday, a day after they began.
"It was certainly disappointing... that there wasn't more progress," said Spirit spokeswoman Debbie Gann.
Peter Arment, managing director of American Technologies Research, which does research on defense companies, said the strike is likely to last at least until early November.
Through the strike, Spirit has continued to build 737 fuselages and parts of other Boeing aircraft but at a slower rate.
With Boeing plants shut down in the Pacific Northwest, Spirit has been unable to make shipments there. In the meantime, 737 fuselages have been stacking up inside and outside the Spirit plant.
Spirit typically gets payment for those fuselages, and other parts it makes for Boeing, upon delivery.
"We've been working with Boeing on payment terms," Gann said. "Obviously, this is an exceptional circumstance. They've been working with us to try to keep us healthy.
"It's in their best interest to keep our line hot so when the strike is over we're able to supply product at the rate that they need it."
Arment predicts Boeing will have to reduce 737 production because of the changes in the global economy and in the credit markets, along with lower traffic and aircraft utilization.
"It's a fair assumption, I think, that the rate is moving lower," Arment said.
Gann said Boeing has healthy backlogs for the 737.
"I sure haven't seen any announcement that they're losing a lot of orders," Gann said. "We haven't been given any different direction."
In the meantime, Spirit and its employees are watching the strike at Boeing closely. "I think the whole community is," Gann said.