How could the production halt of the Boeing 737 Max affect the economy?

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WICHITA, Kan. (KSNW) – Many questions remain after Boeing announced on Monday (Dec. 16) that it plans to halt the production of the 737 Max in January.

Some Kansas are left wondering how this could affect their jobs and the local economy.

The production halt will continue until regulators can approve the plane to return to the skies.

Governor Laura Kelly said the Kansas Secretary of Labor, as well as the Secretary of Commerce, are already meeting to discuss what the state will do to help in the coming months.

“We may need to partner with them on some unique arrangements that allow for them not to lay people off,” said Gov. Kelly.

Since the first issues with the 737 Max earlier this year, there has been a decrease in aerospace conditions.

Courtesy: Wichita State University-CFDBR
The red circle indicates the decrease in aerospace conditions after the issues with the 737 Max

Wichita State University’s Center for Economic Development and Research pays close attention to the data associated with aerospace conditions in Kansas.

While aerospace has been thriving for the last several years, it took a dip as soon as the first 737 Max crash.

Economic expert Jeremy Hill said smaller supply companies around the country will be the first the feel the impact of the production halt.

“That is who is going to be directly impacted right now,” said Hill, director of WSU’s Center for Economic Development and Business Research. “They’ve already been struggling, they’ve been pushed pretty hard in the last few years to try to keep up with demand and cut out costs. Then, you have something like this.”

Boeing and Spirit Aerosystems said layoffs aren’t expected at this time.

Hill said this is a wise choice for companies who will likely need their talent once production resumes.

He said Kansas could feel a slow down in the economy, but this announcement won’t be detrimental.

“Just over 4% of our economy is related to the transportation equipment and aerospace,” said Hill. “So, is it going to derail our economy? It won’t. Even if you shut down all of aerospace. Demand for commercial aerospace is not going away.”

Spirit is expected to release more in the next few days. KSN has reached out to Boeing for additional updates but has not yet heard back.

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