Boeing Providing Financial Help To Suppliers
There is currently a network of 600 large suppliers along with another substantial network of small suppliers that all produce parts necessary to complete Boeing’s 737 MAX. Two crashes of the 737 MAX that led to the loss of 346 lives has caused regulators to ground the plane and halt production until it has been made safe enough to fly.
Despite the necessity of the action, entire networks of suppliers have now halted production. This is particularly damaging given that many of these suppliers rely mainly on Boeing for their revenue. Boeing worries that as the time in which production is halted lengthens that these suppliers will start looking for work at competitors, such as Airbus.
Prior to the plane being grounded, suppliers had begun to expand their facilities with the expectation of producing 4,500 MAX. Suppliers were trying to reach a capacity of producing 57 planes a month.
Boeing is providing financial support to suppliers to offset economic losses and to ensure that their suppliers are ready to resume production as quickly as possible. More specifically, Boeing is ready to spend $4 billion on expenses related to resuming production. Financial support to suppliers includes cash advances.