Spirit, Textron could face big workforce losses over vaccine mandate – Jefferies

(Reuters) – Spirit AeroSystems and Textron are likely to be the most hit among major U.S. aerospace and defense companies, as they face the loss of several employees once the mandate requiring federal contractors to be vaccinated comes into effect in January, brokerage Jefferies said on Wednesday.

Spirit and Textron would bear the brunt as a big chunk of their manufacturing units are located in Wichita, Kansas, where just 53% of working age individuals are fully vaccinated, Jefferies said.

Gulfstream, General Dynamic’s aerospace unit, is also heavily exposed as only 48% of the working-age population around Savannah is vaccinated, said Jefferies analyst Sheila Kahyaoglu.

The White House earlier this month extended a deadline for federal contractors to get vaccinated from Dec. 8 to Jan. 4. There are concerns that the mandate could compound worker shortages, and alongside there has been a rise in strikes as workers take advantage of the tight labor market to demand more pay and better conditions.

Raytheon Technologies had warned last month that the it will lose ‘several thousand’ employees who refused to take COVID-19 vaccines

However, Jefferies believes Raytheon’s Intelligence & Space is one of those best insulated as its headquarters are located in a region where 79% of the working-age population is vaccinated.

Jefferies analyst Kahyaoglu also said several questions remain around the vaccine mandate, including who would be liable if a supplier does not comply with the mandate and what could be the potential penalties.

“Additionally, it remains unknown whether costs related to vaccine-related loss of workers is an allowable cost for relief from the Federal government,” the analyst added.

Spirit AeroSystems, Textron and GD did not immediately respond to Reuters requests for comment.

(Reporting by Tapanjana Rudra in Bengaluru; writing by Tanvi Mehta; Editing by Shailesh Kuber)

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