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In perhaps one of the Obama administration’s most transparent efforts to burnish its pro-union credentials for the 2012 election, the National Labor Relations Board (NLRB) is suing the Boeing Corporation, claiming its effort to move some of its 787 Dreamliner production from Everett, Washington to its $750 million aircraft plant in North Charleston, South Carolina represents “unfair labor practices.” South Carolina is a “right-to-work” state, whereas Washington remains a union stronghold of the International Association of Machinists and Aerospace Workers (IAMAW). The NLRB claims Boeing’s move is “retaliation” for a series of IAMAW strikes between 1989 and 2008. Boeing says it will “vigorously contest” the lawsuit, and a June 14th hearing in Seattle has been scheduled.
“A worker’s right to strike is a fundamental right guaranteed by the National Labor Relations Act,” said NLRB acting general counsel Lafe Solomon in a statement released Wednesday. “We also recognize the rights of employers to make business decisions based on their economic interests, but they must do so within the law.” J. Michael Luttig, Boeing’s general counsel disagreed: “This claim is legally frivolous and represents a radical departure from both NLRB and Supreme Court precedent,” he countered.
The NLRB acted on a complaint filed by the IAMAW in March 2010. An investigation ensued, and the NLRB found “reasonable cause” that Boeing had violated two sections of the National Labor Relations Act by picking Charleston Airport as the site of its second Dreamliner assembly plant, instead of expanding its existing facilities in Everett. According to the suit, Boeing did so “to retaliate for past strikes and chill future strike activity,” adding that company officials had made “coercive statements” to unionized employees regarding their intention to move production out of the area. The Board cited internal documents demonstrating those intentions, and as well as several news interviews, specifically one by Jim Albaugh, CEO of Boeing Commercial Airplanes, who told the Seattle Times that while Washington State is his “preferred location” for building future airplanes, the Puget Sound region will only remain favorable if the union “moderates its future wage demands and avoids strikes.” When asked about Boeing’s reasons for picking the South Carolina location for its second assembly line, Mr. Albaugh was blunt: “The overriding factor was not the business climate. And it was not the wages we are paying today,” he said. “It was that we can’t afford to have a work stoppage every three years. And we can’t afford to continue the rate of escalation of wages.”
Unaffordable is an understatement. The last strike occurred in 2008 and lasted for a total of 58 days, reportedly costing Boeing more than $1.8 billion in lost revenue. In an effort to deal with the outrageous burden, Boeing sought to raise worker health care costs, take away their defined benefit pension plan, and outsource more work. This was the fourth IAM strike since 1989, and Boeing began to believe that orders for the 787 Dreamliner were being endangered by a union willing to strike every three or four years.
As a result, in 2009, Boeing bought the former Vought aerospace manufacturing plant in North Charleston, South Carolina. Before Boeing announced its North Charleston plant, it attempted one more round of negotiation with the IAM, during which the union offered the company an “unprecedented 11-year agreement” to maintain the labor “stability” the company had requested. Yet union demands in return were far too extensive, as revealed in a statement released by the company after talks broke down:
Boeing had hoped to secure a long-term agreement with a no-strike clause that would ensure production stability for its customers and be cost competitive for the future. In exchange, however, the IAM insisted upon terms unacceptable to Boeing, including a guarantee that Boeing would place all future commercial airplane production in Puget Sound, and a promise from the company to remain neutral in all IAM union organizing campaigns nationwide. When an agreement with IAM leaders could not be reached, Boeing opted to build the new facility in North Charleston.
Not mentioned in this release is the fact that the union had also demanded a seat on Boeing’s board.
Boeing then signed an agreement with South Carolina, which included $900 million in incentives and tax relief to sweeten the deal. IAMAW Vice President Rich Michalski was critical of the deal. “Boeing’s current management needs to rethink its strategy of repeatedly alienating its most valuable asset: the highly-skilled workers who build Boeing aircraft,” he said. “We will not allow our members to be made scapegoats for any purpose.”
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