HomeMost PopularThe Problems with Spirit AeroSystems's (SPR) Layoff Announcement

The Problems with Spirit AeroSystems's (SPR) Layoff Announcement

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I am a supporter of capitalism. The system is not perfect, for sure, but all the evidence points to it being the most successful one devised, the best way of producing the most wealth for the greatest number. There are times, though, when its modern iteration frustrates me when it seems as if business leaders are determined to prove the critics and predictions of Karl Marx and the far left correct.

The news today from Spirit AeroSystems (SPR) that they are cutting 400-450 workers from their Wichita, Kansas plant that makes airplane fuselages, is a case in point. It may make sense from an economic perspective, but it is tone deaf and will, in the long-term, do far more harm than good.

Having grown up in London during the 1970s and early 80s, I am all too familiar with the thinking of the far left. By β€œfar left” I mean actual socialists and not mainstream liberals. This far left believed in clause four, part four of the early Labour Party constitution, which called for β€œcommon ownership of the means of production, distribution, and exchange.”

They believed that capitalism was unjust and unfair and that even though it was clearly successful in most of the world, they would ultimately be proven right because it contained the seeds of its own failure. That was the view of Karl Marx, in that capitalism has led to a small number of people amassing so much money and power that eventually, the proletariat would have no choice but to revolt. To get to that point, though, the capitalists had to become completely unaware of anything except profit, endangering workers and the general public along the way.

That may not be what Spirit AeroSystems is intentionally doing here, but it is how it will look to a lot of people.

On some level, the company’s decision to announce big cuts makes perfect sense. TheΒ safety issuesΒ at Boeing (BA)*, the company that Spirit was once a part of and their biggest customer, and the general slowdown in the aviation industry as the post-pandemic boom fades, has led to a slowdown in aircraft production. That has resulted in less orders for Spirit’s parts, so cutting back seems like the right thing to do.

The problem, though, is one of optics.

Spirit has allegedly supplied Boeing with faulty parts that have resulted in plane doors blowing out and other problems with 737 Max jets. That implies a lax quality control system at Spirit and, if that is the case, should the company be cutting back on staff? The workers being laid off are hopefully not quality control inspectors, if Spirit has such a thing, but as I said, this is about optics.

It suggests that Spirit is concerned only with their bottom line and is acting to protect their shareholders regardless of what that means for their workers and for the safety of the general public. It looks like exactly the kind of thing that the socialists of my youth said was inevitable and would lead to the overthrow of capitalism: naked greed without concern for anyone but the bosses and shareholders.

Again, to be clear, I am not saying that this is the case here. I am simply pointing out that this action gives capitalism’s detractors an opportunity to paint it that way and create a convincing argument that the modern version of the long-established system is broken, that bosses and shareholders will place profit above safety, even above human life. It is a move that demonstrates either a stunning lack of appreciation of the optics of the situation or, even worse, a lack of concern for them.

In the age-old battle over private versus public ownership, optics matter.

*The author currently owns Boeing stock

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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