Boeing and Airbus supplier Spirit AeroSystems plans to lay off 400 to 450 workers at its factory in Wichita, Kansas, according to a memo posted to Reddit on Thursday and verified by an International Association of Machinists and Aerospace Workers spokesperson.
“Due to high inventory levels, we must slow down our operations to align our workforce with the needs of our customers,” Terry George, SVP site leader for the supplier’s plants in Wichita and Tulsa, Oklahoma, said in the memo to IAM union Wichita employees.
Spirit AeroSystems cited lower delivery rates as a catalyst for the cuts, as the company has has slowed delivery rates in recent months to comply with an increased inspection process implemented by Boeing.
“The recent slowdown in the delivery rate on commercial programs compels a reduction to our workforce in Wichita,” the company said in a statement on Thursday. “In the coming weeks, we will inform affected employees. We are committed to implementing this transition in as compassionate a manner as possible.”
Spirit AeroSystems did not immediately respond to a request for additional comment.
The Wichita facility has approximately 12,590 employees, according to the fuselage supplier’s 2023 annual report.
The workforce reduction announcement comes a week after Spirit AeroSystems reported losing $616.7 million in Q1 due to stalled Airbus pricing negotiations and its efforts to address manufacturing quality issues related to Boeing.
Spirit AeroSystems’ deliveries dropped approximately 11% year over year, decreasing from 346 to 307, according to a May 7 securities filing. Boeing 737 fuselage deliveries have also been delayed or not delivered due to the inspection changes, the company said.
The fuselage units have been building up at the Wichita facility, resulting in higher levels of inventory amounting to approximately $1.8 billion.
The aerospace supplier ended the quarter with a cash flow balance of $352 million, a 57% YoY drop from $824 million. Spirit AeroSystems also burned through $444 million in the quarter, surging approximately 544% YoY from $69 million.
The negative financial performance during the quarter quarter has led the company to contemplate options to raise capital for its liquidity needs, according to the May 7 filing.
“We are actively gathering details and evaluating the situation to determine the most effective ways to support those affected,” IAM said in a statement on Thursday. “Together, we will continue to work to protect the strength of the aerospace industry in Wichita and ensure our members receive the assistance and resources they need to overcome this challenge and emerge stronger.”
