NLRB’s Boeing Decision Sparks Senate Response

The decision last month by the National Labor Relations Board (NLRB) to side with a union trying to block Boeing Co. from operating in South Carolina has entered a new stage: the U.S. Senate. And the implications extend far beyond South Carolina. Last week, on May 12, Senators Jim DeMint, R-S.C., Lindsey Graham, R-S.C., and Lamar Alexander, R-Tenn., introduced a bill, the Job Protection Act (S. 964), to bar the board from overriding an employer’s decision to site a facility in a particular state. The measure, which has at least 34 co-sponsors, is a rebuke to NLRB Acting General Counsel Lafe Solomon’s complaint against Boeing on April 20 that the company had acted unfairly against the International Association of Machinists and Aerospace Workers (IAM) in opening a facility near Charleston, S.C. to build its planned “787 Dreamliner” jet.

National Legal and Policy Center reported in detail on last month’s NLRB ruling. Boeing, after extensive and failed negotiations with representatives of IAM District Lodge 751, had announced in October 2009 that it would open its second Dreamliner assembly line in South Carolina rather than build or retrofit a plant in Washington State to produce the 787s. The company, despite its long history of Washington operations, felt the high likelihood of further strikes could trigger prohibitive labor costs and chase away customers. The aircraft, costing an estimated $185 million each, already had generated hundreds of orders. The Chicago-based Boeing selected a site previously occupied by Vought Aircraft Industries Inc. in North Charleston, S.C., adjacent to the local airport. It anticipates three jets per month rolling off the assembly line at that location in addition to the seven to be produced in Everett, Wash.

After hearing union terms of contract it found unacceptable, Boeing announced the purchase of the site for $750 million. The State of South Carolina chipped in another $900 million in tax abatements and other incentives. The company began building a new plant on swampland – a state-of-the-art, green-energy powered, 1.2 million-square-foot facility eventually employing a thousand workers. The plant, the first new commercial airline construction facility in this country in 40 years, is scheduled to open this summer. No union worker in Washington State has lost his job. Indeed, in the year and a half since the deal was sealed, the company has added more than 2,000 jobs there, and has continued hiring.

The Seattle-based Machinists District Lodge 751 notwithstanding believed its members were sold out. The union on March 26, 2010 lodged a complaint with the National Labor Relations Board, claiming Boeing senior executives illegally had retaliated against lawful opposition. The case against the company, however, amounts to little more than a handful of innocuous statements and emails indicating corporate officials’ desire to avoid further strikes. Given that the previous strike, in 2008, lasted almost two months and cost Boeing nearly $2 billion, such a desire was understandable. The two sides will present their case before an Administrative Law Judge in Seattle starting on June 14.

Management insists its focus is on long-term growth, which benefits all workers, unionized or not. In an opinion piece for the May 11 Wall Street Journal titled, “Boeing Is Pro-Growth, Not Anti-Union,” Boeing Chairman and CEO Jim McNerney argued that to meet the projected demand of 10 planes per month, it would be more efficient for all concerned to build seven in Washington State and three in South Carolina. Calling the NLRB action “a fundamental assault on the capitalist principles that have sustained America’s competitiveness,” McNerney stated that his company’s decision was based on reasonable criteria, not hostility toward the Machinists or any other union:

Contrary to the NLRB’s claim, our decision to expand in South Carolina resulted from an objective analysis of the same factors we use in every site selection. We considered locations in several states but narrowed the choice to either North Charleston (where sections of the 787 are built already) or Everett, Wash., which won the initial assembly line in 2003…

Despite the ups-and-downs, we hold no animus toward union members, and we have never sought to threaten or punish them for exercising their rights, as the NLRB claims. To the contrary, union members are part of our company’s fabric and key to our success. About 40% of our 155,000 U.S. employees are represented by unions – a ratio unchanged since 2003.

McNerney isn’t the only official up in arms over the board’s action. Former NLRB Member and Chairman Peter Schaumber, whose tenure expired last August, called the complaint “frivolous,” arguing that Boeing didn’t move any production away from Washington State, but merely expanded it into new territory. Nikki Haley, Republican governor of South Carolina, called the NLRB’s intervention on behalf of the IAM “nothing less than a direct assault on the 22 Right to Work states across America.” As a Right to Work state, South Carolina prohibits unions from inserting “security agreements” into contracts that force private-sector employers to fire employees who refuse to pay dues or agency fees.

Two of Haley’s fellow South Carolinians, GOP Senators Jim DeMint and Lindsey Graham, along with Republican Sen. Lamar Alexander from Right to Work Tennessee, are spearheading legislation to prevent future actions of this sort. Their Job Protection Act would guarantee the right of an employer to locate or relocate a particular facility in any state of its choosing without interference by the NLRB or another federal agency. By framing the issue as protection of Right to Work laws, sponsors hope to attract maximum support – there are 11 senators who hail from 10 Right to Work states. Sen. DeMint explained his position this way:

Right to Work states are winning the future for America’s economy, yet this administration seems intent on stamping out this model of success. Right to Work states have more business growth, more new jobs, and faster rising incomes than forced-unionism states. What the NLRB has done in the Boeing case is a threat to workers and businesses in every state. The NLRB is encouraging companies to take their jobs and investment overseas. This is a reprehensible act and an obvious kickback to union bosses the President is depending on helping his reelection.

Sen. Graham likewise stated: “The foundation of the NLRB complaint against Boeing would destroy the American business community’s ability to negotiate and make rational business decisions. Our legislation prohibits the use of statements made during negotiations – involving legitimate business concerns – to be used as a legal basis for a violation of the National Labor Relations Act.” Senator Alexander exhorted, “This is not just about South Carolina and it’s not just about making airplanes – this is about jobs in every state in the country, and whether or not manufacturers are going to be able to make in the United States what they sell in the United States.”

The International Association of Machinists, which conducted four strikes against Boeing during the course of 1989-2008, believes that building the second final assembly line location in South Carolina represents a suppression of the right to strike. Yet quite aside from the lack of hard evidence supporting this view, the reality is that strikes inject uncertainty into a company’s business relationships and can cost the firm major customers. Following the 2008 IAM strike against Boeing, for example, Virgin Atlantic founder Richard Branson was candid. “If union leaders and management can’t get their act together to avoid strikes, we’re not going to come back here again,” he said. “We’re already thinking, ‘Would we ever risk putting another order with Boeing?’ It’s that serious.” Boeing management knows the situation is serious, too. That’s why South Carolina loomed so attractive. The company’s reputation is on the line.


NLRB Sues Boeing; Seeks End to Commercial Jet Production in South Carolina