Dive Brief:
- Spirit AeroSystems’ inventory buffer helped minimize 737 unit delivery disruptions for Boeing following a worker strike in June, according to a Q2 earnings call.
- The supplier had built up its buffer stock during the period where 737 MAX aircraft were grounded, President and CEO Tom Gentile told analysts. At the time, Spirit AeroSystems was building 52 aircraft a month and delivering 42 to Boeing.
- “The good news is that that buffer came in very handy during both the vertical fin issue and the strike,” Gentile said. “We were able to deliver more units from buffer [stock] to help minimize the disruption to Boeing.”
Dive Insight:
The supplier’s buffer stock “is still performing a very valuable function to ensure we can meet Boeing’s production rates as they go up and as we go up,” the CEO told analysts. Although backstock has gone down, Spirit AeroSystems still has roughly 50 to 55 737 units in Wichita, Kansas, as well as some in Seattle, Washington, he added.
Spirit AeroSystems aims to increase its monthly 737 unit deliveries to 35 to meet Boeing’s 38-unit 737 production target, Gentile said.
To reconcile the difference between the two delivery targets, Gentile noted that Spirit AeroSystems is currently delivering 42 monthly units, with two full lines producing 21 aircraft every month. Although the supplier expects to end the year at 42 deliveries per month, unscheduled days in the backhalf of the year, like Labor Day and Thanksgiving, are impacting that average.
“We’ll be firing blanks through the production line as we normally do to increase surge capacity and just provide some cushion into the production,” Gentile told analysts. “So, that’s why the average is 35 but we are cycling at 42 per month.”
The aerospace industry continues to endure supply chain and labor-related turbulence. In late June, Spirit AeroSystems restored operations at its Wichita plant after a chapter of the International Association of Machinists and Aerospace Workers voted to ratify a labor contract following a worker strike the previous week. Meanwhile, aerospace supplier AeroCision filed for Chapter 11 in late July and received court approval to pay its vendors up to $5 million. Supplier Incora also recently filed for Chapter 11 bankruptcy.
Despite ongoing supply chain challenges, some companies are looking at a smooth landing, with General Dynamics noting that its aerospace suppliers have become more predictable with catch-up schedules.
