Boeing troubles could touch Wichita, subcontractors not worried

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Workers at McGinty Machine manufacture parts for the 737 MAX 8 and other Boeing planes in Wichita on Monday, March 11, 2019. Workers at McGinty Machine manufacture parts for the 737 MAX 8 and other Boeing planes in Wichita on Monday, March 11, 2019.
WICHITA, Kan. (KAKE) -

"We've been through it with other companies and it really hasn't affected production or any slowdown," said Don McGinty, owner of McGinty Machine in Wichita.

Several countries have grounded Boeing 737 MAX 8s and it's stock is only slowly recovering from a 13.5% dive after a deadly crash in Ethiopia Sunday.  

Some investors are worried but contractors in Wichita say they'll keep right on building Boeing's planes.

Investigators are searching for clues in the latest crash of a 737 MAX 8.  They've already found the plane's black boxes.  It went down just six minutes after take off Sunday in Addis Ababa, Ethiopia.  It's the second 737 MAX 8 to crash in the last five months, killing everyone on board.

Several countries Monday ordered all 737 MAX 8s grounded, including China, adding up to about a third of the worldwide fleet.  Boeing's stock had its worst opening Monday since September 11th.

While there are rumblings more countries will ground the MAX8's for the duration of this investigation, Boeing is standing behind its plane.  Monday afternoon, ABC News obtained a copy of a memo Boeing's CEO Jeffrey Cook sent to employees.

It reads in part:  "Since its certification and entry into service, the MAX family has completed hundreds of thousands of flights safely. We are confident in the safety of the 737 MAX and in the work of the men and women who design and build it."

It also warns against the ongoing speculation about the cause of the crash.

"Speculating about the cause of the accident or discussing it without all the necessary facts is not appropriate and could compromise the integrity of the investigation." 

Local subcontractors tell KAKE News they don't expect the investigation to cause any slow down in the rapid pace needed to fill Boeing's hundreds of orders for the plane.

"They're not going to put the brakes on, I can tell you that," said McGinty.  "They're going to fix the problem and keep on moving."

McGinty knows.  He's been providing Boeing with machined parts for its planes for decades.  He says even when there's a problem with one of Boeing's planes the company finds a solution.

"The 787 with the battery problem, it was fixed pretty fast. and Boeing's a great company.  If there's a problem, they're going to take care of it and make sure everybody's aware of it," he said.

"Last February, Boeing delivered its 10,000th 737," said Jerry Siebenmark, a Wichita journalist who covers the aviation industry for Aviation International News.  

He says Boeing is a big player in the Wichita economy,both directly and indirectly.

"If you look at Spirit's most recent annual report, Boeing alone acounts for 79% of its $7 billion in revenue in 2017," Siebenmark said.  "

That's employment for more than 12,000 Wichitans.

"All of the 737 work that they do is done here in Wichita, or the majority of it," Siebenmark said.  

Meaning any problems that might slow production will hit the city.  So when a fatal crash in Ethiopia has countries around the globe grounding the MAX 8 and sending Boeing's stock tumbling, Wichitans pay attention.

But McGinty says, experience has shown him, Boeing will not only survive, but keep right on growing.

"Everybody worries," McGinty said.  "And there's nothing to worry about cause we know nothing. We just have to wait and see what happens.  And then Boeing will do the right thing.  I mean, it's terrible what happened and I think everybody is saddened by it.  But we'll figure out what happened and get a resolution to it."

Spirit Aerosystems, which assembles the fuselages for the 737 MAX 8 from parts like the ones McGinty makes, says it's willing to help with the investigation as needed.  

In a written statement the company said: "The safety of the flying public is always top-of-mind at Spirit.  We're aware of the incident in Ethiopia from media reports, and we're prepared to support the investigation and our customer.  Our thoughts and prayers are with all of those affected by this sad event."

Aviation analysts say any hits Boeing takes from this crash and the subsequent investigation are likely to be temporary.

Derek Keller with Bank of America/Merril Lynch told customers in a newsletter, "While it is too early to know the impacts of the incident on Boeing (ticker: BA), we recognize that the company has the financial wherewithal (through a strong balance sheet and cash flow) to weather and fix any potential issues or liability that may arise."

Cai von Rumohr, analsyt with Cowen, said in the Cowen Report, "The near term could look worse for Boeing depending on what the FAA does. But we don't see this as a long term problem; and the traveling public has had a very short memory of previous catastrophic crashes, e.g. the 1989 DC-10 crash in Iowa due to failure of its tail-mounted engine."