The answer to Boeing’s labor dispute

Steven Pearlstein
Columnist April 26, 2011

For high-stakes legal drama, it doesn’t get much bigger than last week’s filing by the National Labor Relations Board charging that Boeing’s decision to open a big new production facility in union-phobic South Carolina was motivated by a desire to punish and intimidate the strike-prone union at its long-established plant in Seattle.

If the NLRB decides to pursue the case through the federal courts and loses — a real possibility given the inclinations of the federal appeals courts — it would effectively eviscerate what is left of workers’ right to strike, at least against large multinational companies.

Steven Pearlstein is a business and economics columnist who writes about local, national and international topics. View Archive

However, if the agency prevails and is able to force Boeing to open an additional production line for its new 787 Dreamliner in Seattle, it could finally put a brake on the steady flow of manufacturing jobs to “right to work” states in the South.

“Runaway companies,” of course, have been a feature in American business ever since the first New England textile mill shut its doors and moved to the more hospitable labor markets down South. But since the National Labor Relations Act was passed in 1935, companies have had to be careful not to expressly link their production and investment decisions to union activity, lest they be judged to have crossed the line into union busting.

Indeed, the decision to move production to anti-union states has become so commonplace that Boeing could be excused for finally joining the procession after a costly two-month strike in 2008, following an earlier one in 2005. Boeing had other legitimate business reasons for creating a second, $750 million production line in South Carolina for its rapidly growing 787 production, including lower labor costs and several hundred million dollars in subsidies from a state eager for 4,000 new factory jobs.

But the NLRB’s general counsel says that Boeing stepped over the line when its top executives said out loud what most companies only whisper in the sanctity of the boardroom — namely, that a significant factor in the move was the desire to reduce Boeing’s vulnerability to delivery disruptions caused by repeated strikes. The NLRB cited interviews with local newspapers, memos to Boeing managers and statements made by top executives to investors and Washington state politicians.

You can imagine the political ruckus this has caused in South Carolina, where voters have already approved a constitutional amendment meant to thwart union organizing and the AFL-CIO has filed suit against Gov. Nikki Haley for public statements that unions were not welcome in the Palmetto State. Business groups in Washington also went on high alert, accusing the Obama administration of using its new majority on the NLRB to push a radical pro-union agenda. (Small detail: White House Chief of Staff Bill Daley is a former Boeing director.)

Given the public statements of Boeing officials, there is nothing radical about the NLRB’s decision to hold a hearing based on the complaint filed by the International Association of Machinists. Lafe Solomon, the acting general counsel who made the decision, is a much-admired career lawyer who is prohibited from talking with board members about the case. Solomon spent several months trying to broker a settlement, but ran up against a company and union that are fed up with each other and stubbornly determined to teach each other a lesson.

Although Solomon was right to initiate the proceedings, it is anything but clear that he will prevail in court.

It is ridiculous for Boeing to deny that it wants to send a strong message to workers that they will now pay a price for future strikes in terms of where the company decides to produce its planes. At the same time, it is equally clear that Boeing also has other legitimate business reasons for opening a second line in South Carolina.

The view of NLRB lawyers seems to be that as long as there is a demonstrable intent on the part of the company to move production in order to punish workers for past strikes and discourage them from future ones, Boeing’s behavior is illegally coercive despite other legitimate motives or rationales that might exist.

Boeing’s view is that avoiding production disruptions is a legitimate business reason for making investment decisions, irrespective of other motives, and that its lack of animus toward its union is amply demonstrated by the 2,000 jobs that have been created in Puget Sound since its decision to expand to South Carolina.

You see the problem: The “right” for workers to strike without undue coercion from the company is hard to square with the “right” of the company to protect itself from the consequences of production disruptions. Both “rights” seem to have ample support in the case law.

The answer, I would suggest, is to be found not in the case law but in the clear and unambiguous words of the National Labor Relations Act and the history behind it. In a 1993 law review article, New York University law professor Cynthia Estlund wrote that in passing the act, Congress sought to restrain corporate power and tilt the economic playing field in favor of workers. The idea was to outlaw union-avoidance strategies that, while economically rational for any one firm, would be economically harmful for the nation as a whole if widely adopted.

Today, we may find all that quaintly — or menacingly — socialistic, but it is still the law of the land, one that Lafe Solomon and his NLRB colleagues have a duty to enforce. If Boeing or the Chamber of Commerce or the South Carolina political establishment want to change or repeal the law, it is certainly within their rights to try. After 75 years, it would be a useful debate for the country to have again. But given the further consolidation of corporate power and two decades of stagnant wages, I’m not sure they’ll like how it turns out.

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