Executive Briefings

Trump Talk Rattles Aerospace Industry, Up and Down Supply Chain

At this small factory south of Seattle, employees make one of the most specialized products in the aerospace industry; the rubber mats that Boeing workers stand on while assembling jets. As long as there are jets and Boeing, business would seem to be steady. But even here workers are bracing for bumps and economic uncertainty over the gritty details of where aviation parts get made and who makes them.

President Trump has talked about border tariffs and new trade deals that many people in aerospace fear could raise the cost of American airplanes bought by foreign airlines or governments. And if Boeing's sales or profits suffer, its nerve-system supply chain — more than 13,000 companies across the United States, and more than 1.5 million jobs — would most likely feel the pain, too. At SmartCells, 50 full-time employees and a few dozen temporary workers stamp out cushion pads on heavy machines. Executives work in a red building everyone calls the barn, and first names are the rule. Washington feels far away, but it is on just about everybody's radar.

“Let’s hit it with a two-by-four and see how it reacts, then get a plan,” said Bob Bishop, the chief operations officer at SmartCells, describing Mr. Trump’s hard-charging style. “That doesn’t always work.”

The anxiety, said Mr. Bishop, 46, a former deputy county sheriff who voted for Mr. Trump, centers not so much on politics as economics, specifically the intense competition with the French airplane maker Airbus, which competes toe to toe with Boeing for jet orders in countries around the world in a delicate game of narrow cost differences and giant contracts.

Mr. Trump has said he would seek a 45 percent tariff on imports from China, for example, to protect American jobs, and a 20 percent tariff on goods from Mexico. If business costs for Boeing go up as a result, the company — the nation’s single largest exporter by dollar volume — probably would not be able to raise prices on its airplanes to make up the difference, because then it would lose customers to Airbus. For workers and suppliers, the fallout could be brutal.

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President Trump has talked about border tariffs and new trade deals that many people in aerospace fear could raise the cost of American airplanes bought by foreign airlines or governments. And if Boeing's sales or profits suffer, its nerve-system supply chain — more than 13,000 companies across the United States, and more than 1.5 million jobs — would most likely feel the pain, too. At SmartCells, 50 full-time employees and a few dozen temporary workers stamp out cushion pads on heavy machines. Executives work in a red building everyone calls the barn, and first names are the rule. Washington feels far away, but it is on just about everybody's radar.

“Let’s hit it with a two-by-four and see how it reacts, then get a plan,” said Bob Bishop, the chief operations officer at SmartCells, describing Mr. Trump’s hard-charging style. “That doesn’t always work.”

The anxiety, said Mr. Bishop, 46, a former deputy county sheriff who voted for Mr. Trump, centers not so much on politics as economics, specifically the intense competition with the French airplane maker Airbus, which competes toe to toe with Boeing for jet orders in countries around the world in a delicate game of narrow cost differences and giant contracts.

Mr. Trump has said he would seek a 45 percent tariff on imports from China, for example, to protect American jobs, and a 20 percent tariff on goods from Mexico. If business costs for Boeing go up as a result, the company — the nation’s single largest exporter by dollar volume — probably would not be able to raise prices on its airplanes to make up the difference, because then it would lose customers to Airbus. For workers and suppliers, the fallout could be brutal.

Read Full Article