Boeing says 737 MAX crisis could temporarily shut down Renton production
July 24, 2019 at 10:51 am Updated July 24, 2019 at 11:21 am)
By Dominic Gates
Seattle Times aerospace reporter
Boeing CEO Dennis Muilenburg said Wednesday that though the company’s “best estimate” is that the 737 MAX will return to service in October, a slip in that optimistic timeline could mean the Renton 737 production line would be temporarily shut down.
“That’s not something we want to do, but something we have to prepare for,” he said on the second-quarter earnings teleconference call with analysts and the press.
Such a drastic step would mean temporary layoffs at the plant, which currently employs more than 10,000 people.
“A temporary shutdown could be more efficient than a sustained lower production rate,” Muilenburg said. “That’s what we are thinking our way through.”
Wednesday’s call also included worrying news for Boeing’s Everett factory: The new 777X that rolled out of the factory in March will not fly until next year because of delays in fixing a problem with the plane’s GE-9X engine.
Though Boeing says it hopes to deliver the 777X to its first customer by the end of 2020, that’s a very tight and optimistic timeline for a flight test schedule. Until then, Boeing will need to line up new orders for the freighter version of the current 777 model if it’s to maintain the current low 777 delivery rate of 3.5 jets per month.
Following the grounding of the 737 MAX, forced by two crashes of the aircraft that killed 346 people, Boeing cut production in Renton from 52 jets per month to 42 per month to reduce the number of parked airplanes stacking up.
Even so, it maintained the workforce level as it was, hopeful of a quick resolution to the MAX crisis so that the assembly lines could soon ramp back up again.
But clearance for the MAX to fly again from the Federal Aviation Administration (FAA) and other overseas regulators has slipped out over the past months. Approval of Boeing’s software fix for the flight control system implicated in the two crashes — the Maneuvering Characteristics Augmentation System (MCAS) — is taking much longer than anticipated.
And last month, FAA pilots flying a MAX simulator test found a new issue separate from MCAS when a microprocessor in the jet’s flight computer was shown to have a possible failure that could also lead to the airplane’s nose being pushed down uncommanded by the pilot. Boeing is working on a separate software fix for that, and because it’s flight critical software it cannot be rushed.
On the possibility of shuttering Renton, Muilenburg said that lowering the production rate to some lower figure than 42 jets per month “presents some challenges to our supply chain and synchronization of our workforce and how you would consider ramping back up later.”
He said that top management is doing daily scenario assessments of the timing of the MCAS and microprocessor software updates, the status of regulatory approval from the FAA and foreign aviation authorities, and the rate at which the airlines could take delivery of the planes once clearance is given, along with the stability of the 737 supply chain and of the Renton assembly lines.
Everything else depends on that first step: approval to fly again, which the FAA will determine with other regulators.
“We have to go through a multi-regulator approval process,” said Muilenburg, “It’s a complex process.”
Given the significant uncertainty in the timeline, he said, Boeing’s “best estimate” is that it will submit its final software updates and a new system safety analysis for certification purposes in September. That will be followed by an FAA flight test. Boeing then hopes for clearance from the FAA and other regulators in October.
Muilenburg conceded that the period from the FAA test flight to final confirmation of all the flight test data and analysis “is typically a process that’s measured in a number of weeks.” So achieving all that in just a month or so would clearly be the best possible outcome, and may be overly optimistic.
For Boeing, cutting a jet production rate — or worse, shutting down the line — is a much harder and riskier step than ramping up production.
Severely reducing production would mean layoffs not only at Boeing but at suppliers, big and small. Small suppliers who lay off workers may simply lose them as they take jobs elsewhere in the current healthy economy. That could present a serious barrier to quickly ramping up again.
Muilenburg said “there’s no one specific trigger” that would lead to the shutdown of Renton.
“We are going to continually look at this,” he said. “That includes a very close focus on our workforce.”
“We place incredible value on our teammates there, ” he said. “We are working every dimension we can to preserve that workforce and maintain that learning for future production system ramp-up.”
Meanwhile, the 777X program has slipped out further than anticipated.
When news of the GE-9X engine delay broke at the Paris Air Show in June, it was a shock that the jet might not have its first flight until the fall. Now that’s pushed out into next year.
The problem was discovered during the final phase of engine certification testing in May, when GE found excessive wear on small stationary vanes on the perimeter of the engine core that together with the engine’s spinning turbine blades direct and compress the incoming air flow from the big fan at the front. It’s now designing, testing and certifying more robust vanes.
The impact on Boeing is, first, a potential delay in delivering the 777X. Despite the delay to first flight, Boeing is sticking to its projection of delivering the plane next year, which assumes flight test can be completed and certification approved in less than a year.
That’s a rosy projection. On the 737 MAX program, for example, the plane entered commercial service 16 months after first flight.
“The delay in 777X will put pressure on the entry into service,” Muilenburg conceded on Wednesday’s call.
A second impact is that even if the first 777X can be delivered next year, the delay in first flight certainly means there will be fewer 777X deliveries in 2020 than previously anticipated. That means Boeing will have to build more current-model 777s just to maintain the already low 777 production rate in Everett that’s delivering 3.5 jets per month.
Muilenburg said the company is hopeful of selling more 777 freighters to bridge the gap that’s opening wider with the 777X delay.
Dominic Gates: 206-464-2963 or
[email protected]; on Twitter: @dominicgates.