Boeing Suppliers Unsure of Next Move

Hundreds of Southern California manufacturers of aircraft parts and supplies were scrambling Wednesday to gauge the fallout from Boeing Co.’s announcement that it may slash as many as 30,000 jobs in anticipation of a sharp drop in deliveries of commercial jetliners.

Of the nearly 1,900 subcontractors worldwide that supply the parts for Boeing’s commercial jets, 500 are based in the state, with most of them concentrated in Southern California.

But many suppliers said it was unclear whether they would need to take a similar work-force action, because Boeing has not yet provided details of which lines of aircraft would be hit the hardest.

Moreover, many subcontractors said that they had diversified operations to include more military work since the last industry downturn, and that any buildup in defense spending in response to last week’s terrorist attacks could soften a falloff in commercial business.

In announcing plans for the layoffs, Boeing said it was lowering projections for aircraft deliveries to 500 from 538 this year and to the low 400s in 2002, down from the 510 to 520 the company had anticipated before last week’s terrorist attacks.

“It’ll really depend on a case-by-case basis,” said Joseph C. Berenato, president of Ducommun Inc., a Los Angeles aerospace manufacturer that makes components for Boeing.

About 50% of its revenue comes from commercial aircraft and 45% from defense-related work. The company, which has 1,650 employees, also does some work for NASA’s space shuttle and the International Space Station.

“If you go to Seattle, you are going to find a whole bunch of suppliers who are 80% commercial, and they are going to get hammered. But the further away you are from there, you’re likely to find businesses with a fair amount of other work,” Berenato said.

Ducommun, for instance, anticipates some drop-off in orders for 737 spoilers and fuselage skins but a possible increase in orders for parts that go into C-17 military cargo planes and Apache helicopters. Work on business jets also could increase as more business travelers wary of commercial flights look to private charters, Berenato said.

Boeing’s decision is particularly worrisome for Washington state, where the bulk of the manufacturing cuts are expected and where many suppliers rely heavily on Boeing’s business.

The state’s chief economist, Chang Mook Sohn, told Associated Press that Boeing laid off a similar number of workers from August 1998 to August 2000, but most of the workers were absorbed by a then-resilient economy. Even with the cuts, the region’s unemployment rate actually dropped a full percentage point.

Boeing also builds the 717 jet in Long Beach, but that business is not expected to be as hard hit with the latest round of cuts. The company had announced it was cutting 1,200 jobs that would reduce work shifts.

“We suspect that the big impact will be in the Puget Sound area,” Boeing spokesman John Thom said.

Alan Mulally, head of Boeing’s commercial aircraft business, said the cutbacks were necessary in light of the dire outlook for the airline industry, which has been hit hard by a slump in air travel since the attacks.