Connect with us

Business

Boeing 737 Max Suspension: What Really Happened? – MishTalk

Published

on


Three days ago I noted Boeing Will Suspend 737 Max Production: Thousands of Jobs at Risk.

On the surface the story does not seem to add up.

There were only a few hundred cancellations. And the backlog is over 4,500. To top it off, Boeing insists the 737 certification is on schedule.

Boeing 737 Max Order Backlog and Deliveries

Boeing makes at most 50 planes a month. In December it was down to 42. Thus, there is over a year’s worth of backlogs.

Lead Times

The lead times on orders at Boeing and Airbus stretch out for for years. It’s not as if an airline can cancel a Max and pick up the phone and get an Airbus a month later.

What’s Going On?

Several industry insiders and analysts privately emailed me in response to the article.

It a combination of new certification rules and a shortage of skilled workers on top of storage issues and foreign uncertainty.

1: Shortage of Skilled Labour

The Seattle labor market, especially for aircraft skills, is very tight. The skills needed to fix and deliver the 400 already stored aircraft is not there.

This work requires special FAA licences. Boeing just hired over 200 mechanics and has called back retirees.

What is unusual is that they did so in early December before a 2 week paid holiday. Typically Boeing hires in January. We have not seen December hiring like this this in 50 years. Thus, Boeing is locking down skilled labor.

Boeing’s production worker demographics is such that there is a very high number of older workers who could retire anytime.

2: FAA Certification Delayed

Boeing expected FAA certification of the fix in December. It now looks like April.

3: Individual Certification

The FAA announced it will certify each plane individually.

This takes a huge amount of time compared to mass certification of whatever fix the FAA ultimately accepts. Prior to the crashes, Boeing self-certified and the FAA blessed the process.

4: Storage Issues

Most of the new planes are at Plaine Field, Renton airport, Boeing Field and Moses Lake, WA. All are Boeing facilities. The key is to have aircraft stored as close as possible to Boeing facilities because that is where the skilled labor is. They could store the aircraft in Arizona and elsewhere, but remote storage is already an issue.

Besides the 400 aircraft produced since the crash, there are about 380 MAX aircraft owned by various airlines and stored all over the world. Those aircraft will be fixed on location. Boeing will send mechanics to each remote location when Boeing is already short of skilled labor.

5: Europe

Trump is in a huge tariff dispute with the EU. The WTO ruled against Airbus, but in a separate ruling the WTO is expected to rule against Boeing.

The EU will be in no rush to certify planes if and when the FAA does. And the EU will no longer accept Boeing’s or the FAA certification process. This adds to the uncertainty and the delays.

Ripple Through Impact

The Wall Street Journal reports GE’s 737 MAX Problem Just Got Bigger.

General Electric Co. will likely take a significant hit to its cash flow from Boeing Co. decision to halt production of the 737 MAX jetliner, which has already dented the conglomerate’s finances.

GE makes all of the MAX’s engines through a joint venture with France’s Safran SA . When Boeing in April cut monthly production of the plane to 42 from 52, it reduced GE’s quarterly cash flow by $400 million. The suspension of production Boeing announced Monday, if prolonged, could reduce cash flow by much more as analysts warn that GE won’t receive payments made as the planes are being built.

“It is going to create a significant cash drag for GE,” said John Inch, an analyst at Gordon Haskett. He added, though, that “one engine program cannot make or break the fortunes of this company.”

Southwest Airlines Co. earlier Tuesday said it was removing the 737 MAX from its flight schedule through April 13 as the airline sees uncertainty around the timing of the aircraft’s return to service.

The extended grounding has already strained GE finances, cutting cash flow by as much as $1.4 billion this year as factories produce fewer engines and GE can’t get fully paid for them. The LEAP engine is a major growth driver for the company’s aviation unit, which accounted for $4.8 billion of GE’s roughly $7 billion in industrial profits in the first nine months of 2019. GE has more than 17,000 orders for the engine.

That engine is also used on the Airbus . That is one heck of a lot of orders.

Industrial Production Rebounds after GM Strike Ends

On December 17, I commented Industrial Production Rebounds after GM Strike Ends

Looking Ahead

The current rebound is artificial, but so is the strike that preceded it. Looking ahead, Boeing is going to have a significant impact in the first quarter.

Thousands of jobs and possibly as much as 1/3 of a point of GDP as Boeing Will Suspend 737 Max Production in January.

Mike “Mish” Shedlock

Let’s block ads! (Why?)



Source link

Business

Elon Musk sees 'big target' in mining costs – Kitco NEWS

Published

on


Calling traditional metal refining processes “legacy” and “insanely complicated”, Elon Musk said today his company has re-thought and simplified how lithium and nickel will be processed for his future batteries.

Musk made the comments during a live simulcast presentation of Battery Day held in a parking lot in Fremont, California, near his manufacturing facilities. Musk shared part of the presentation with Drew Baglino, SVP of Powertrain and Energy Engineering at Tesla.

Musk called the traditional cathode process of processing nickel “a big target” due to its high cost.

“It’s insanely complicated,” said Musk. “These things just grow up as legacy. We looked at the entire value chain and asked how can we make this as simple as possible.”

Bagnilo and Musk said many steps in the traditional refining method could be skipped resulting in 66% less investment, 76% less processing cost and 0% waste water.

The CEO of FPX Nickel, Martin Turenne, concurred with Musk: mineral processing can be made cleaner and more economical.

“The current methods of processing [nickel] are generally well established, and they’re done for a reason, because they work and because alternatives would be costly or they’re at an unproven stage,” said Turenne in an interview with Kitco after he watched Tesla’s Battery Day presentation.

At his own FPX, Turenne believes his nickel is in a form that would be suitable for batteries with the potential to skip the smelting step.

Musk and Bragnila imagine Tesla factories processing raw nickel powder for processing.

“Raw materials from a mine go to the plant and out comes a battery,” said Bragnila. “We are just consuming the raw nickel powder. It dramalitcally simplifies the raw nickel refining part of the whole process. We can eliminate billions in battery grade nickel intermediate production. It is not needed at all.”

What struck Turenne during the presentation is the forecast level of demand.

“At three terawatt-hours of battery cells per annum by 2030, that would entail approximately annual consumption of 2 million tonnes of nickel. That’s almost the entire scale of the current global nickel output,” said Turenne.

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Cases could spike sharply if Canadian epidemic stays on current course, Tam warns – The Globe and Mail

Published

on


Hundreds of people wait in line at a COVID-19 assessment centre at St. Michael’s Hospital in Toronto on Sept. 22, 2020.

Nathan Denette/The Canadian Press

Canada is on track to log 5,000 coronavirus cases a day by late October if the country’s epidemic continues on its current course, the Public Health Agency of Canada is warning.

In its first formal projection since mid-August, the agency predicted that if Canadians keep coming into close contact with as many people as they do now, the epidemic curve will rise sharply from the current average of about 1,000 new cases a day to five times that number within a month. That is more than twice the number reported at the height of the spring wave.

individual action: canada Long-range

covid-19 forecast

Reported daily cases

Epidemic trend, if we…

Increase current rate of contacts

Maintain current rate of contacts

Decrease current rate of contacts

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: public health agency of canada

individual action: canada Long-range

covid-19 forecast

Reported daily cases

Epidemic trend, if we…

Increase current rate of contacts

Maintain current rate of contacts

Decrease current rate of contacts

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: public health agency of canada

individual action: canada Long-range covid-19 forecast

Reported daily cases

Epidemic trend, if we…

Increase current rate of contacts

Maintain current rate of contacts

Decrease current rate of contacts

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: public health agency of canada

“My message today is the time is now. We’re at a bit of a crossroads,” Chief Public Health Officer Theresa Tam said. If Canadians retreat to small social circles and avoid large get-togethers, she said, the country “can manage this without a lockdown.”

Story continues below advertisement

Dr. Tam said that although the number of COVID-19 deaths and hospital admissions in Canada remain low relative to the first wave, both figures are beginning to creep up – a signal that the virus is spreading beyond the young people driving the surge.

Still, the situation in Canada remained far less dire than in the United States, where deaths surpassed 200,000 on Tuesday, and Britain, which has imposed new COVID-19 restrictions after a quadrupling of cases over the past month.

How many coronavirus cases are there in Canada, by province, and worldwide? The latest maps and charts

COVID-19 news: Updates and essential resources about the pandemic

Is my city going back into lockdown? A guide to COVID-19 rules across Canada

When it comes to what’s in store for Canada this fall, the public-health agency’s predicative modelling is not a crystal ball, said Caroline Colijn, a professor at Simon Fraser University and Canada 150 Research Chair in mathematics for evolution, infection and public health. She and her colleagues designed the model on which the agency’s latest forecast is based.

“[The models] are tools we use to help us understand the trajectory we’re on. Then we get to choose,” she said. “It’s like having a flashlight. If you see a cliff, you don’t just necessarily walk over it because the flashlight showed you it was there. You do something. You don’t walk over the cliff.”

Prime Minister Justin Trudeau is expected to re-emphasize the urgency of fighting COVID-19 in a television address that follows the Throne Speech on Wednesday.

The public-health agency made its latest forecast as Ontario and Quebec continued to account for the majority of new cases nationwide, and as Ottawa’s Medical Officer of Health, Vera Etches, announced she would charge fines as high as $5,000 a day to anyone who breaks an order to self-isolate.

Ottawa Public Health reported a record 93 cases on Tuesday while Ontario announced 478 cases, the most since May.

Story continues below advertisement

“The goals in responding to the pandemic are to keep the level of COVID-19 transmission in the community from disrupting society in a detrimental way and to limit hospitalizations and deaths,” Dr. Etches told reporters. “This level we’re seeing is too high for these purposes. We need to bend the curve down right now.”

Dr. Etches said people who are testing positive are linked to schools – 34 in Ottawa have had at least one person test positive – and long-term care homes. Eleven of the 29 long-term care homes in Ontario where a COVID-19 outbreak has been declared are in Ottawa and its surrounding suburbs, according to the Ministry of Long-Term Care.

Dr. Etches has asked the Ottawa Hospital to temporarily take over management of two homes owned by Extendicare to get major outbreaks under control. At the for-profit chain operator’s Laurier Manor, a 242-bed home in the suburb of Gloucester, 25 residents have died of the virus. At West End Villa, another 242-bed home in Ottawa, 11 residents have died since an outbreak of COVID-19 was declared on Aug. 30.

Normally, the Ministry of Long-Term Care orders hospitals to assume management of troubled homes. But Dr. Etches said her office could move more quickly than the ministry. “We all agreed using an order like this is more expedient to get the support in right away,” she said.

Quebec, meanwhile, announced 489 new cases on Tuesday, a decline from the 586 it registered on Monday, but Health and Social Services Minister Christian Dubé said it was too soon to celebrate. On Tuesday, two new regions, Outaouais and Laval, were elevated to orange status, the second-highest tier in the province’s COVID-19 alert system, after a spike in cases and outbreaks.

The current wave of the pandemic is markedly different from the first, Mr. Dubé said. This time outbreaks are spread more widely among the province’s regions, rather than concentrated in Montreal, and more likely to involve young people. Cases are also being spread in the community at large, rather than being clustered in the long-term care homes that accounted for more than 80 per cent of Quebec’s COVID-19 deaths.

Story continues below advertisement

In Ontario, Premier Doug Ford announced the first pillar of a broad six-point plan to prepare for a second wave of COVID-19: a flu immunization campaign. Mr. Ford said the province has ordered 5.1 million doses and is working to order more. “Anyone who wants a flu shot can get one,” Mr. Ford said. “Please, please make sure you get yours.”

He said the other elements of the fall plan, which are set to include expanding testing and contact tracing as well as reducing surgery backlogs, will be released over the next several days – a timeline that had the opposition accusing the government of being wildly unprepared.

Mr. Ford said given “the size and scope” of the plan, his government needed more time to roll it out.

As governments in Central Canada grappled with surging case counts, the federal government announced Tuesday that it had secured an agreement in principle for a fifth experimental coronavirus vaccine, a protein-based candidate developed by the pharmaceutical giants Sanofi and GlaxoSmithKline.

Anita Anand, the federal Minister of Public Services and Procurement, revealed for the first time that the government has committed about $1-billion in total to its five vaccine deals, some of it up-front. The remaining payouts will depend on whether any of the vaccines succeed in late-stage trials and win Health Canada approval.

Ms. Anand declined to provide specifics about deals with individual vaccine makers, citing confidentiality agreements and continuing negotiations with other companies.

Story continues below advertisement

She also unveiled a deal with the maker of the antiviral drug remdesivir, the only medication officially approved to treat COVID-19, to bring 150,000 vials of the drug to Canada beginning next month.

With reports from Laura Stone and Eric Andrew-Gee

Canada’s chief public health officer, Dr. Theresa Tam, says there will be a dramatic resurgence of COVID-19 cases in Canada unless people limit contact with others in coming days. The Canadian Press

Sign up for the Coronavirus Update newsletter to read the day’s essential coronavirus news, features and explainers written by Globe reporters and editors.

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Ford Canada, Unifor reach tentative deal that includes $2B in EV contracts – CTV News

Published

on


TORONTO —
Ford Motor Company of Canada Ltd. has agreed to spend nearly $2 billion on its Canadian plants as part of tentative contract deal with Unifor announced Tuesday.

Under the proposed settlement, Unifor national president Jerry Dias said $1.95 billion will be invested in Ford’s Canadian plants, including $1.8 billion toward the production of five electric vehicles in Oakville, Ont., and an engine contract that could yield new jobs in Windsor, Ont.

The 6,300 union workers at Ford will vote on the deal this weekend, Dias said.

Talks between the union and the automaker came to a head on Monday ahead of a bargaining deadline of 11:59 p.m. ET, and talks continued for much of the night before parties settled on a deal around 5 a.m.

Workers had voted to support a strike if a deal could not be reached, with the future of the Oakville plant potentially on the line amid the end of the Ford Edge production.

The plant will now be retooled for electric vehicle production starting in 2024, Dias said, with the fifth and final model of the new deal hitting the assembly line in 2028.

Of the 4,250 Unifor workers at the plant west of Toronto, 3,400 are actively working (and not laid off or on leave.) Dias said he foresees about 3,000 jobs staying in Oakville under the new contract, but said that some of the current workers would be eligible to retire soon either way.

“This is a major commitment from Ford,” Dias said. “This is going to be a key facility, not for the short-term, but for the long-term … this is a decade-long commitment.”

Dias thanked local and federal politicians for support during the negotiations. When asked about government contribution toward electric vehicle production, Dias declined to confirm earlier news reports on the topic, saying the government will have to announce how much they plan to kick in.

Ontario Premier Doug Ford has said that the province is contributing a “massive amount” to “businesses like (Ford Canada) to bring battery manufacturing” to the province, but has not shared a specific amount, citing ongoing negotiations. John Power, spokesman for federal Industry Minister Navdeep Bains, also declined to say how much Ottawa could commit, saying only that electric vehicle production would help meet climate goals and create jobs.

“We have been talking for decades about having a national auto strategy in this country, and for some reason, we can never seem to get everybody in the room at the same time,” Dias said.

“Over the last several months, those walls have really been torn down … I’m really pleased to see that the federal government and provincial government are working hand in hand.”

Dias said that the provincial government’s negotiations encompass the complete, A-to-Z manufacturing of batteries – a process that still requires a major manufacturer. Unifor’s deal with Ford will encompass just the assembly stage of the manufacturing process.

Once agreed to by union members, Ford’s deal on new product lines, shifts, wages, pensions and benefits will set the tone for upcoming talks with Fiat Chrysler Automobiles and General Motors.

Dias said Fiat Chrysler will be next in line for negotiations, as the union plans to go toe-to-toe over shift cuts in Windsor and Brampton, Ont. facilities.

Although the last formal labour negotiations took place in 2016, the union has been in active scrimmages with GM since then, after last year’s downsizing at a GM plant in Oshawa, Ont.

In the U.S., GM’s union workers went on strike last year. Going forward, Dias said the Canadian and U.S. unions will negotiate with the Detroit Three on the same schedule, as both groups try to keep jobs from moving south to Mexico.

That means the 2020 deal will be renegotiated in 2023, amid the expiration of major programs in GM’s powertrain operation in St. Catharines, Ont.

Dias said Canadian natural resources, such as lithium, aluminum and cobalt, put the members in a strong position as more companies move toward electric vehicles.

“It’s an opportunity for our young people that work in Oakville, and frankly in Windsor, as well, and throughout the other operations, to sit back and say, `With this announcement I can buy a house, I can plan my future, I can plan a family,”’ Dias said.

“It really is about young people being able to plan 20 years ahead, which will make a significant difference in their life.”

This report by The Canadian Press was first published Sept. 22, 2020

Let’s block ads! (Why?)



Source link

Continue Reading

Trending