Aerospace suppliers are taking different approaches on whether to cut employees as they wrestle with the fallout of the Boeing 737 MAX production halt, with some already doing so while others announce they will not.

In recent days, as public companies began reporting 2019 financial results, top executives from United Technologies and Moog said they do not intend to lay off workers over the MAX halt. UTC is assuming a 90-day halt based on guidance from Boeing, UTC Chairman and CEO Greg Hayes told Wall Street analysts Jan. 28.

We do not anticipate any layoff, Hayes said. I think that would be the easiest thing to do, but quite frankly, given the scarcity of talented aerospace workers out there, were not going to be laying anybody off for a 90-day delay here. I think were going to work on the backlog.

But the day before, Arconic CEO John Plant told analysts he expected to make headcount reductions, as well as to explore partially paid vacations and worker shift changes as his company tries to mitigate the MAX halt. Earlier in the month Spirit AeroSystems announced at least 2,800 layoffs due to the MAX.

Compounding the MAX effect on the supply chain is that several large providers are in the throes of major mergers or divestiturescorporate changes that often lead to workforce reductions by themselves. Arconic will split into twoHowmet Aerospace and rolled-aluminum provider Arconiccome early April.

At the same time, UTC expects to finalize its merger with Raytheon by then, as well as spin off its Otis elevator and Carrier air conditioning divisions. Integration planning is well underway, and were already working a detailed list of items to generate the $1 billion of gross cost synergies that were targeting for the transaction, Hayes said, referring to the to-be Raytheon Technologies.

UTC and Raytheon recently announced the pending sale of GPS and tactical radio businesses that antitrust regulators required as part of their merger, and the new Raytheon Technologies is expected to spin off more.

There will be places where we might elect not to invest and to cash out and other places where we may want to double down, Hayes said. But right now, I cant tell you what thats going to be other than the fact that were going toas we typically do heretake a dispassionate look at the whole portfolio and figure out where we think we can really add value over the long term and where we cant.

Meanwhile, cost-cutting remains a constant driver of workforce turnover. UTCs Pratt & Whitney engine manufacturer cut 1,000 people in the recent fourth quarter under an early retirement program that was well received. Hayes said Pratt had staffed up in the last five years under former head Bob Leduc as the company ramped up Geared Turbofan development and production. With Chris Calio taking over the division this year, streamlining is in order.

The payback is phenomenal on that; in fact, thats whats driving a big chunk of Pratt growth next year, is that restructuring, Hayes said. Chris is looking at a restructuring of some of the other manufacturing operations there, and there will be other things that we can do, I think, to drive efficiency at Pratt.

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Aerospace Suppliers Trim Workforces, Citing MAX, M&A - Aviation Week