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Boeing 737 Max disclosures put shareholders before workers, union rep says

Airplane fuselages bound for Boeing's 737 Max production facility sit in storage at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford

Union workers who assemble parts of Boeing’s (BA) 737 Max fuselage are weighing whether to voluntarily leave their jobs, without compensation, and without information as to when the aircraft will go back into production.

Spirit AeroSystems (SPR), one of Boeing’s largest suppliers, which manufacturers 70% of the Max fuselage, asked all of its hourly employees via email Monday to submit to a voluntary layoff. The company’s President and CEO Tom Gentile, in a letter to workers, said the reduction in workforce was necessary given Boeing’s planned temporary halt of the Max production line, slated for this month. The plane has been grounded by the Federal Aviation Administration since March 2019, after two fatal crashes that killed 346 people.

International Association of Machinists and Aerospace Workers district president, Cornell Beard, whose local chapter represents the majority of Spirit AeroSystem’s Max team workers, said the union’s members lack sufficient information to make an informed choice in response to the company’s request. And while the request was made in accordance with the union’s collective bargaining agreement, he said any indication of how long the proposed layoff would last is critical to employees.

“I think that if, if an actual timeline was put out there, it would affect the stocks, so putting that type of information out too early, would be devastating on stocks, but helpful to the employees that work there,” Beard, IAMAW District Lodge 70 president and director of business representative, told Yahoo Finance. “It's more about the stocks and the shareholders, rather than the people that actually helped them get what they make.” IAMAW workers who manufacture Max parts for Spirit AeroSystems average an hourly wage of $20, Beard said.

Asked whether he believed Boeing had been too aggressive in setting expected timeframes for the Max’s return to service, he said, “I think they lost their grip a long time ago. I think that all the other stuff that they have been putting out as far as the dates go, have all been B.S. to keep the stocks level. There’s no way you could know if the FAA is going to find another problem.”

Beard represents approximately 4,500 sheet metal workers, tooling fabricators, and machinists who build components for the Max from Spirit AeroSystem’s Wichita, Kansas facility. The company also requested voluntarily layoffs from its workers in Tulsa, Arizona and McAlester, Oklahoma. 

BOZEMAN, MT - MARCH 12: Boeing 737 Max 8 fuselages manufactured by Spirit Aerosystems in Wichita, Kansas are transported on a BSNF train heading west over the Bozeman Pass March 12, 2019 in Bozeman, Montana. The fuselages were en route to the Boeing assembly plant in Renton, Washington. (Photo by William Campbell-Corbis via Getty Images)

So far, Beard said, Spirit has not communicated to its employees or to the Union how many employees it needs to lay off, or how long it will leave the option open for employees to choose their fate. The lack of transparency from Spirit and Boeing, he said, is adding to pressure for workers faced with the difficult decision.

“Let's just go ahead and get the bad news out there and let people prepare for it, rather than keeping them hanging out there in the cold stressed out,” he said. “We've got thousands of people that need to make plans.”

The difficulty for workers who are years away from retirement comes from a hierarchical system that would go into effect if too few employees accept the voluntary layoff, and are instead terminated. 

“If you take the layoff, you’re eligible to come back. If you’re terminated, it’s way harder to get back on than if you took a voluntary layoff, or gave your two weeks notice,” Beard said. “If you don’t have a lot of seniority, you’re going to be the first to go anyway, so it’s best to go ahead and accept [the voluntary layoff],” he said. His reasoning is that workers who begin looking for new jobs first will have more opportunity to secure available jobs.

In an email to Yahoo Finance, Spirit said it did not know when Boeing’s Max production line halt would begin, and said it was evaluating potential actions to reduce costs as a result of “ongoing uncertainty” regarding the Max, including offering the voluntary layoff to eligible employees. “We do not know how long the pause in production will last, or what the production rate will be when it does resume,” the company added. 

In an email to Yahoo Finance, Boeing declined to say when the temporary halt would begin, explaining that it would inform its employees before external parties. So far, Boeing has said it has no plans to lay off its own employees who currently build the Max, and instead would assign them to work on its widebody programs in its Everett, Washington plant.

“We are discussing different scenarios with Boeing but nothing has been decided,” Gentile wrote in his letter to Spirit employees.

Despite describing the workforce reduction as distressing, Beard said that under the circumstances, he believes Boeing and Spirit have done an “excellent job” holding onto their workforces as long as they have.

On Tuesday, Boeing announced that it would recommend simulator training, in addition to computer training, for Max pilots prior to the aircraft’s return to service. Whether such training should have been required as part of the FAA’s original certification process has been a disputed matter.

“This recommendation takes into account our unstinting commitment to the safe return of service as well as changes to the airplane and test results. Final determination will be established by the regulators,” Boeing said in a press release.

On Sunday, reports surfaced that an internal audit conducted at the FAA’s request revealed concerns over wiring involved in control of the tail of the Max. Boeing has not provided details on the extent of the issue, or whether any proposed fixes would add to the timeframe for FAA certification. The grounding of the Max has so far focused on changes to a software system, MCAS, identified as one of the causes of the two crashes. The system erroneously took in data that pointed the planes in a downward trajectory, over attempts by the pilots to correct their path.

Alexis Keenan is a reporter for Yahoo Finance. Follow her on Twitter @alexiskweed.

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