Boeing 737 Max Production Halt Is Expected To Slow GDP Growth The aircraft giant is the top U.S. exporter, and its decision to suspend production of the 737 Max is likely to ripple through the supply chain. Several analysts project that the move will cut growth.
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Boeing Is So Big That Its 737 Max Production Halt Will Slow The Economy

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Boeing Is So Big That Its 737 Max Production Halt Will Slow The Economy

Boeing Is So Big That Its 737 Max Production Halt Will Slow The Economy

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NOEL KING, HOST:

Boeing's decision to suspend production of its 737 Max airplanes has hit the airline industry, but it probably won't stop there. Boeing is this country's most important industrial company, so important that the decision to stop making the plane is expected to cut into U.S. economic growth on the whole.

NPR's Jim Zarroli has the story.

JIM ZARROLI, BYLINE: In October, Boeing CEO Dennis Muilenburg appeared before a congressional committee to apologize for the 737 Max crashes in Indonesia and Ethiopia that killed 346 people. And he said government officials should keep the plane on the ground as long as necessary.

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DENNIS MUILENBURG: Regulators around the world should rigorously scrutinize the Max and only approve its return to flight when they are completely satisfied with its safety.

ZARROLI: And that's what regulators around the world have done, refusing to say when the 737 Max will fly again. Throughout this crisis, Boeing has continued to build the planes and parked them in giant facilities in Texas and Washington state. Now it's shutting down production.

Boeing is just one company, but it's an enormously important one. It's the biggest U.S. exporter. And the 737 Max is by far its biggest selling plane, says Gregory Daco of Oxford Economics.

GREGORY DACO: Boeing is a big company, and the 737 is the largest share of its production of aircraft. About 80% of the planes produced by Boeing are the 737s.

ZARROLI: Daco says because of the decision to stop making the plane, U.S. economic growth will tumble over the next few months at an annual rate of half a percentage point. It's a view shared by other economists. The impact will be so great because Boeing has tentacles throughout the manufacturing sector, says aviation consultant Ross Aimer.

ROSS AIMER: There are hundreds of subcontractors whom supply engines and other parts to Boeing. They're going to be affected.

ZARROLI: That includes big companies like General Electric, which makes engines for the 737, and Spirit Aviation Services, which makes assorted aircraft parts. They and many smaller companies will now have to decide how long they can afford to keep their factories open and their workers working.

As for Boeing, it says it won't lay off anyone. With the job market so tight, the company is reluctant to see skilled workers walk out the door. But the company has lost billions of dollars since the plane was grounded. And Gregory Daco says it could be forced to cut jobs as the months drag on.

DACO: Some of these employees will be geared towards other parts of Boeing's production chain. But that being said, I wouldn't be surprised that as we move into 2020, there will be some layoffs announced.

ZARROLI: Daco says that could lead to the loss of thousands of jobs next year alone. None of this includes the potential impact on Boeing's customers, the airlines. Both domestic and foreign carriers have had to reduce flights in recent months because they haven't been able to fly their 737 Maxs, and that's cut into the money they make. One of the worst hit has been Southwest, which operates more of the plane than any other carrier. Yesterday, Southwest said it would have to cancel more flights, at least through April.

Jim Zarroli, NPR News, New York.

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