Pro-Union Overreach?

Business and HR associations are outraged by the NLRB's attempt to prevent Boeing from opening a new airplane-assembly plant in a nonunion state. Should the Board's complaint be upheld, the groups say it would prevent U.S. companies from competing in the global marketplace and would prevent companies from "engaging in open and honest discussions with its union about economic realities."

Friday, May 6, 2011
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Employment lawyers and business groups continue to reel over an April 20 complaint filed by the National Labor Relations Board against Chicago-based Boeing Co.'s plans to open a new airplane-assembly plant in Charleston, S.C.

Opponents to the complaint -- many of whom are very outspoken -- view the move by the NLRB as a political, pro-union overextension into areas of business where it doesn't belong, such as attempting to prevent companies from setting up shop in states they deem best for their shareholders, customers and bottom lines.

"The NLRB is dramatically over-reaching ... ," says Lawrence Z. Lorber, a Washington-based partner in the law firm of Proskauer. "Whether the facts even lead to a sustainable complaint is a strong question ... ."

An April 21 Wall Street Journal editorial states that, "Beyond labor politics, the NLRB's ruling would set a terrible precedent for the flow of jobs and investment within the United States. It would essentially give labor a veto over management decisions about where to build future plants. And it would undercut the right-to-work statutes in 22 American states -- which is no doubt the main union goal here."

The NLRB, in announcing its complaint, however, says Boeing "violated federal labor law by deciding to transfer a second production line to a nonunion facility in South Carolina for discriminatory reasons."

Boeing announced in 2007 that it planned to assemble seven 787 Dreamliner airplanes per month in the Puget Sound area of Washington state, where its employees have long been represented by the International Association of Machinists and Aerospace Workers.

In 2009, the company later announced it would create a second assembly line to handle three planes a month to handle a growing backlog.

Stung by a 58-day strike in 2008 that cost the company $1.8 billion, Boeing leaders engaged in extensive, candid discussions with the IAM to see if some of the union's concerns could be addressed so the work could be located in Washington, according to various news accounts.

In return, Boeing was "met with demands that would have damaged the company's ability to compete in an increasingly competitive global marketplace," Joe Trauger, National Association of Manufacturers vice president of human resources policy, blogged on

As the WSJ editorial states, the "talks broke down because the union wanted, among other things, a seat on Boeing's board and a promise that Boeing would build all future airplanes in Puget Sound."

In announcing its complaint, however, the NLRB maintains that "in repeated statements to employees and the media, company executives cited the unionized employees' past strike activity and the possibility of strikes occurring sometime in the future as the overriding factors in deciding to locate the second line in the nonunion facility."

The NLRB is seeking an order that would require Boeing to maintain a second unionized production line in Washington, though it says it does not seek closure of the South Carolina facility.

(According to Boeing, the new factory's construction is nearly complete, more than 1,000 new workers have been hired there and final assembly of the first airplane is slated to begin in July.)

"A worker's right to strike is a fundamental right guaranteed by the National Labor Relations Act," says NLRB Acting General Counsel Lafe Solomon. "We also recognize the rights of employers to make business decisions based on their economic interests, but they must do so within the law."

According to Solomon's announcement, the NLRB launched an investigation of the plant transfer in response to charges filed by IAM and found reasonable cause to believe that Boeing had violated two sections of the NLRA "because its statements were coercive to employees and its actions were motivated by a desire to retaliate for past strikes and chill future strike activity."

Solomon declined further comment and the IAM also did not respond to requests for comments.

IAM Vice President Rich Michalski was quoted on the website of the Geneva-based International Metalworkers' Federation, however, saying that, "Boeing's decision to build a 787 assembly line in South Carolina sent a message that Boeing workers would suffer financial harm for exercising their collective-bargaining rights."

"Federal labor law is clear," he told the IMF. "It's illegal to threaten or penalize workers who engage in concerted activity. Boeing's current management needs to rethink its strategy of repeatedly alienating its most valuable asset: the highly skilled workers who build Boeing aircraft. We will not allow our members to be made scapegoats for any purpose."

Boeing Executive Vice president and General Counsel J. Michael Luttig calls the NLRB's claim "legally frivolous," saying it represented a "radical departure from both NLRB and Supreme Court precedent."

"Boeing has every right under both federal law and its collective-bargaining agreement," he says, "to build additional U.S. production capacity outside of the Puget Sound region."

In Lorber's estimation, the NLRB's case against Boeing is dubious.

There is "no assertion," he says, "that this is a 'runaway plant' where an existing plant was closed and re-opened to avoid a union-organizing effort. This is a new plant manufacturing new products. The Puget Sound [Wash.] plant is still open, and I believe employs more employees now than it did when the decision to open a new plant in South Carolina was reached."

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(Boeing confirms that, saying IAM employment in Puget Sound has increased by about 2,000 workers since the decision to expand in South Carolina was made.)

"For the type of alleged violations, there are ample remedies," says Lorber, "including access to the plant, access to the names of production workers who are hired, etc. There is no precedent for this type of draconian remedy -- which, even if upheld by an administrative law judge and the Board, no court would enforce."

He calls it a "strange use of limited resources."

Meanwhile, the HR Policy Association in Washington has sent a letter to Congress urging key committees to press Solomon "to either provide an adequate explanation as to why his decision is fully consistent with existing law, or withdraw the complaint."

The letter, from HRPA Chief Policy Officer and General Counsel Daniel V. Yager, describes Solomon's decision as "an unprecedented departure from long-standing law in this area."

It is "disturbing," he writes, "[that] at a time when companies doing business in the United States are engaged in intensive competition on a global scale, a company would be sanctioned for engaging in open and honest discussions with its union about economic realities."

"If anything," Yager writes, "the NLRB should seek to ensure that employers and unions are able to speak freely with each other, consistent with their rights under ... the National Labor Relations Act. Any failure by the Board to protect those rights can only further harm the larger economic interests of all Americans."

U.S. Chamber of Commerce Senior Vice President for Labor, Immigration and Employee Benefits Randy Johnson is equally forceful in his condemnation of the complaint.

"We would rarely comment on the merits of a case still in its earliest stages," he says. "However, the precedent that the NLRB is attempting to establish here is so fundamentally unsound and troublesome that it cannot be ignored."

Johnson says the company's actions "were well within the bounds of the NLRA, and the Board appears to be simply attempting to create new rules that would put unions on a pedestal above all other entities in the United States to insulate them from the economic pressures that characterize our marketplace."

The NLRA, he says, "never contemplated this type of surreal special status and this case appears to be uniquely driven by an agenda directed at promoting the union agenda at all costs. It is a short-sighted philosophy which, if allowed to prevail, will ultimately lead to the demise of many of our companies and the jobs they produce."

The move by the NLRB, writes attorney Jonathan H. Adler on The Volokh Conspiracy website, "sends a message that if a company does not like the economic consequences of work stoppages ... they're not allowed to take this into account when making investment decisions."

"And perhaps the unintended message to future Boeings," he writes, "is not to invest in non-right-to-work states in the first place."

A court date has yet to be set.

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