There’s never really a good time for the biggest manufacturer in America to halt production of its biggest-selling aircraft. But Boeing, which announced on Monday it’s temporarily halting production on the 737 Max, has chosen a particular inopportune time.
For workers and the U.S. economy, the blow will be softened by the fact that we’re in an uncommon boom time. But for that exact same reason, the consequences of the shutdown for Boeing itself could be even worse. If you’re a big manufacturer who has to put the brakes on a major business line, then — from the standpoint of crass corporate self-interest — you actually want to do it when the economy is in the doldrums.
Eventually Boeing will want to spin production of the 737 Max back up. And America’s ultra-low unemployment rate will make that harder.
The 737 Max was originally grounded by government regulators back in March, after two crashes killed 346, revealing potentially significant problems with the plane — particularly with its flight software.
Boeing repeatedly said it anticipated the 737 Max would be back in the air by the end of 2019, and its Renton, Washington factory kept cranking the planes out accordingly, only slightly cutting monthly production of new planes from 52 to 42. But so far, Boeing’s fixes have left both American and European regulators cold, and the crisis has gone on to become the biggest screw-up in the company’s century-long history. This week, Boeing finally knuckled under to reality and announced it was stopping further production of the planes.
Boeing’s been bleeding cash, both to keep producing the 737 Max, and to reimburse all the buyers who purchased the planes but can’t fly them. Stopping production will allow Boeing to staunch the losses and keep its finances in better balance. But as I said, at some point Boeing will want to start production back up again.
That will require restarting a vast infrastructure of suppliers, workers, and factories. And the crucial bit is, for that infrastructure to be spun back up once the 737 Max crisis is over, that infrastructure will also have to remain in place — effectively in a state of suspended economic animation — during the shutdown. To get even more concrete: all the workers involved in the process will have to remain available.