Question-and-Answer Session
Operator
(Operator Instructions) Your first question is from Gary Liebowitz – Wachovia.
Gary Liebowitz – Wachovia
Can you give a little more commentary with respect to the potential for a machinist strike at Boeing? What happened in 2005 to your business when they last went on strike? How long does it have to be before it will materially impact you? And for D3 if there is a [inaudible] strike as well, how would that affect their business?
Ron Saks
There have been a couple of strikes as you know over the last decade and neither operated quite the same way. And this time, our exposure directly to Boeing has been reduced, especially with the sale that Boeing made to Spirit of their Wichita and Tulsa divisions. So I don't know that the past is a prelude to the future.
In the past, and depending on the state of the industry, we've either seen orders begin to decline relatively quickly or in the Aero structures division where we have our experience, and when that has occurred it's had some relatively quick impact. During the last strike, however, we were asked to continue to produce for a period of time, I think right near the end of the strike because it wasn't as lengthy as the one before, but it was relatively lengthy, there was some decline.
So it typically, regarding Aero structures, we may see some decline although it often doesn't happen right away, and then as production resumes, we see a flattening out to a modest reduction in our demand for awhile until the product that we've shipped during the strike is used up. The real caveat for us Spirit for example, was a customer of ours. They were during the last strike, and we had some similar events, although I think they were a bit quicker to reduce demand during the last strike, and I'm not sure what they'll do this go around. And so we're not just dealing with the behaviors of Boeing, we're dealing with those of the tier ones to which we sell Boeing product.
Our winglet products probably won't be impacted. It may be the 737 would be because about 80% to 90% of our production on 737 winglets right now is original manufactured business. The fleet has diminished over the last year or year and a half so that we're not seeing as much of that business, whereas on the 767, that will almost all be existing fleet that will be serviced.
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