787 assembly
Anthony Bolante  /  Reuters
A 787 Dreamliner being manufactured for customer Japan Airlines  is seen on the production line at the Boeing manufacturing facility in Everett, Wash., in February.
By Allison Linn Senior writer
updated 6/6/2011 7:30:15 AM ET 2011-06-06T11:30:15

It started as bad blood between aerospace giant Boeing Co. and its unionized production workers.

But now a feud over Boeing’s decision to assemble some of its 787 jetliners at a new, non-union facility in South Carolina has mushroomed into a very public and highly political fight over outsourcing, right-to-work states and the future of the National Labor Relations Board.

The clash's outcome could hinge on whether Boeing executives publicly said more than they should have about their motivation for opening the new plant in South Carolina.

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“This is a unique case,” said Ross Runkel, professor of law emeritus at Willamette University and an expert in labor law.

The battle centers around Boeing’s 2009 decision to build a second assembly line for its much-delayed 787 "Dreamliner" in North Charleston, S.C. That’s in addition to a 787 assembly line in Washington state, where Boeing also assembles its other commercial jets.

The new factory is set to open in July. But in April the NLRB, a government agency charged with safeguarding union rights, filed a complaint accusing Boeing of violating labor law in its motive for locating the work in South Carolina.

The NLRB isn't asking Boeing to close the new facility, but it does want the company to make a temporary production line in Washington state permanent.

An initial hearing is scheduled for June 14, but already the case is being discussed extensively in the court of public opinion.

Boeing has called the complaint an attack on its ability to do business freely, and Republicans are accusing the NLRB of having overstepped its bounds.

“I do not believe unelected bureaucracies should be allowed to go down the road the NLRB is charting,” Republican Sen. Lindsey Graham of South Carolina said in a statement.

Presidential hopeful Newt Gingrich even called for congressional Republicans to withdraw the NLRB's funding, at least temporarily.

Democrats have accused Republicans of meddling. Democratic Sen. Harry Reid of Nevada called their actions “disgraceful and dangerous.”

“We wouldn't allow threats to prosecutors or U.S. attorneys, trying to stop them from moving forward with charges they see fit to bring to the courts. And we shouldn't stand for this,” he said.

The verbal sparring has been so highly charged that the NLRB recently took the unusual step of defending bringing its complaint.

“Contrary to certain public statements made in recent weeks, there is nothing remarkable or unprecedented about the complaint issued against the Boeing Company on April 20,” NLRB Acting General Counsel Lafe Solomon said in a statement last month.

'It’s really about the motive for the move'
The NLRB says it doesn't object to Boeing's decision to build a second assembly plant in South Carolina. The issue, it charges, is that company executives said publicly, and repeatedly, that a major factor in the decision was two recent strikes, in 2005 and 2008, by the International Association of Machinists and Aerospace Workers, the union representing Boeing production workers.

“If they said, ‘We’re going to move this work to South Carolina because we can’t afford to keep paying the wage in Washington,' even, that would have been OK. But they can’t say it’s because of a strike, because a strike is a legally protected activity,” said Nancy Kleeland, a spokeswoman for the NLRB. “It’s really about the motive for the move, not the move itself.”

Read the NLRB's complaint and Boeing's response

Boeing Chief Executive James McNerney thinks otherwise.

In an editorial in the Wall Street Journal, he called the NLRB’s complaint “a fundamental assault on the capitalist principles that have sustained America's competitiveness since it became the world's largest economy nearly 140 years ago.”

McNerney accused the NLRB of trying to create a world in which companies wouldn’t be allowed to open factories in "right-to-work" states — where union strength is generally much more limited and strikes less likely — if they already had operations in unionized states.

McNerney even hinted that the NLRB’s complaint could cause manufacturers to consider whether to build facilities domestically at all.

“U.S. tax and regulatory policies already make it more attractive for many companies to build new manufacturing capacity overseas. That's something the administration has said it wants to change and is taking steps to address. It appears that message hasn't made it to the front offices of the NLRB,” McNerney wrote.

Boeing spokesman Tim Neale said the editorial should not be read as a threat that Boeing, the nation’s largest exporter and a major domestic employer, will more operations overseas.

“It was a general statement about American industry,” he said.

Kleeland, the NLRB spokeswoman, said the agency is not asking Boeing to shut down the North Charleston facility. But it does want Boeing to keep open permanently a second, temporary production line the company set up in Everett, Wash., to handle some 787 production work while the North Charleston facility gets up to speed.

Neale said that making the temporary line permanent would be costly and impractical, and that if Boeing were forced to do so it would effectively shut down the North Charleston facility.

Despite the complaint, Neale said Boeing still plans to open the $1 billion North Charleston production facility in July as planned, because it is confident it will win the case. Boeing plans to deliver the first 787 to Japanese airline ANA in August or September, years behind schedule. The new model, intended to be more fuel-efficient than similar jets on the market, has been delayed repeatedly because of supply chain snafus and other problems.

Case is unusual for several reasons
Experts say it could take years for the complaint to wind its way through the court system, if the two sides can’t settle before then.

Runkel, the law professor specializing in labor law, said this case is unusual in that Boeing didn’t close a unionized facility to open the non-union one.

“Boeing is not really talking about moving existing work that the union members are doing. They’re talking about starting a new line for this airplane,” Runkel said.

The company says it has added 2,000 unionized workers in Washington state since announcing the decision to open the South Carolina facility in October 2009, plus about 1,000 workers so far in South Carolina. Last week three Boeing employees in South Carolina asked to be part of the proceedings, arguing that they could lose their jobs if the NLRB prevails.

Runkel said it’s also an unusual case because the NLRB has so much documentation showing that Boeing executives cited previous strikes as a major reason in their decision to open the North Charleston facility.

“It’s one of those things that might be in somebody’s mind, and the really smart people don’t say it out loud,” Runkel said.

Runkel expects those statements to become a critical focal point in the case.

Neale said the full context of the Boeing comments shows that executives were simply acknowledging that the economic effects of the strike were part of the reasoning, which the company believes is legal.

Officials with Machinists Local 751, the union that initially petitioned the NLRB to file a complaint, said they expected that the move wouldn’t be popular with politicians such as South Carolina’s Republican Gov. Nikki Haley. But a spokesman said they didn’t foresee such a broad Republican attack on the NLRB itself.

“I don’t think anybody could have anticipated that,” said Machinists spokesman Bryan Corliss.

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