By: Carter Copeland
The 737MAX production stoppage and subsequent ramp up will have major implications for the entire aerospace supply chain. The impacts of the stoppage haven’t been fully incorporated into consensus expectations for dozens of companies (many of them not traditional aerospace firms). We laid out the way to think about cost implications in a typical aerospace factory in an analysis on SPR last week, only to have the company’s layoff announcement exceed our expectations.
As a result, we’re taking a deeper look into the impacts for 737MAX suppliers, not just while production is stopped, but in anticipation of rates that are lower for longer. We’ve created a spreadsheet tool that allows for varying content and production assumptions. The output suggests that several companies in the supply chain will surprise the market with EBIT shortfalls in 2020 financial guidance.