War of words: Boeing, NLRB duke it out over second Dreamliner plant

Aug. 2, 2011

Much has been written about the National Labor Relations Board's (NLRB) recent complaint against the Boeing Co. for its decision to build a second assembly facility in South Carolina for its long-awaited Dreamliner 787 commercial jet. The planes currently are assembled in Everett, Washington, by members of the International Association of Machinists and Aerospace Workers (IAM). The union has gone on strike twice ? in 2005 and 2008 ? since Boeing announced in 2003 that it would build the new-generation, fuel-efficient 787s there. Unlike Washington, South Carolina is a right-to-work state, meaning employees' right to work can't be denied because they belong or don't belong to a labor union. That has been the law there since 1954.

The NLRB has charged, based largely on statements by Boeing senior management, that the company decided to locate the second assembly plant outside Washington to punish IAM workers there for their past strikes, which while lawful and protected by the National Labor Relations Act (NLRA) were extremely disruptive and costly.

Boeing's decision on South Carolina, the NLRB says, is an unfair labor practice that warrants strong remedies, and the Board wants to force the company to move all of the work back to Washington. Meanwhile, the South Carolina plant is nearly built, 1,000 workers have been hired, and Boeing is on record as saying it will ship the planes to a customer in Japan by August or September. Talk about a roadblock.

Legal and business analysts have been working overtime to assess the situation. It's far from resolved, but there are important lessons for employers both in the dispute's origin and on what the Obama-era NLRB says about its goals and strategies.

Overriding factor or factors?

First, the dispute originated in simple public communications. After announcing the decision to build the South Carolina plant in 2009, a senior Boeing executive said in a videotaped interview with the Seattle Times, "The overriding factor [in the decision] was not the business climate. And it was not the wages we're paying today. It was that we cannot afford to have a work stoppage, you know, every three years. We can't afford to continue the rate of escalation of wages as we have in the past. You know, those are the overriding factors. And my bias was to stay here but we could not get those two issues done despite the best efforts of the union and the best efforts of the company."

The NLRB's complaint refers generally to the executive's statement that Boeing couldn't afford to have a work stoppage every three years. A fact sheet on the complaint quoted the first three sentences but omitted the last three ? the ones about escalation of wages and being inclined to stay in Everett. (The complaint also referred generally to allegedly antiunion statements by other executives.)

Boeing argues that the quoted executive's comments were mischaracterized. It also is arguing that the South Carolina decision hurt no IAM workers because no jobs were lost in Washington and in fact the company has added jobs there. Finally, Boeing argues that it has the sole right to decide where work will be performed and that in the collective bargaining agreement, the IAM waived any rights it might have had on the issue.

Regardless of how the NLRB characterized what the Boeing executive said, the fact remains that he did say the company couldn't afford future work stoppages, and that was an overriding factor in deciding to build planes in South Carolina. If the executive had stuck to a message that didn't mention work stoppages or unions at all, the NLRB wouldn't have had that particular ammunition to use against the company. The lesson is to be careful what you say and stay on message, despite what reporters ask. That's hard, and managers want to be responsive and accommodating to reporters, but this case shows the downside of responsiveness.

It's harder to nip trouble in the bud

In addition, NLRB Acting General Counsel Lafe Solomon, who filed the complaint, is interested in cases in which employers act preemptively to cut off the possibility that workers will exercise their protected rights under the NLRA, such as the right to strike or the right to join a union. Remember that employees need not join a union to exercise protected rights ? namely, the right to take concerted action to help themselves and coworkers. If you're mulling over any actions that could be viewed as intended to nip union or union-like activities in the bud, talk it over first with experienced legal counsel.

Solomon also is suspicious when employers seem too kindly. "[A]n employer's sudden solicitude toward employee needs ? especially where they previously were ignored ? demonstrates to employees the extent to which an employer is willing to avoid unionization" and may constitute an impermissible threat, he has said. Solomon says the coercive effect of conduct may be greater if a high-ranking official is acting and the conduct occurs quickly after hints of union activity. So in a way, you're damned if you do and damned if you don't when it comes to making nice with employees. Some have said Boeing's only sin in dealing with the IAM in this case was to talk with the union beforehand about the possibility of opening a second production facility in South Carolina when it wasn't legally required to do so.

Solomon also is interested in breaking new legal ground with test cases and in seeking innovative remedies to problems. All of this should caution you to talk with experienced counsel when making business decisions involving union-represented employees. They can help you craft a message you can stick with in public communications. Remember: What you say can and will be used against you. Copyright 2011 M. Lee Smith Publishers LLC