NLRB SEEKING TO STOP BOEING FROM MANUFACTURING IN NON-UNION PLANT
Alfred T. DeMaria
The current National Labor Relations Board (“NLRB”) recently issued a complaint against the Boeing Company for making a sound business decision to “dual source” its airplane production to its nonunion plant in a right to work state, South Carolina. This decision to issue a complaint can be viewed as the current NLRB siding with unions on matters of interpreting the National Labor Relations Act (“NLRA”) and revising existing precedents in order to assist unions to organize.
Though its union contract did not require it, Boeing executives negotiated with the IAM to build its planes at its existing union plant in Washington State. When union talks broke down, management decided that it would be in the best interests of its shareholders and customers to decide to build at its plant in South Carolina, a nonunionfacility which had recently decertified the union, and a Right-to Work state having friendlier labor laws than Washington State.
In explaining the move to the public, Boeing chief executives noted that the company could not afford to have “strikes happening every three to four years,” that its commercial aircraft production had been shut down due to labor disputes four times since 1989 including a fifty eight day strike in 2008 that cost the company 1.8 billion dollars. The decision to invest 2 billion dollars in South Carolina creating more than 1,000 jobs was deemed by the company to be a reasonable exercise of management discretion and did not result in any loss of employment of union workers in Washington State.
In its startling move, the NLRB, acting on an IAM complaint, sided with the IAM which charged that the decision amounted to retaliation for past strikes—strikes which were legal, and which union members had every right to exercise. The NLRB asked an Administrative Law Judge for an order to return the work to Washington State alleging that by referring to the work stoppages, the company acted out of “anti-union animus” and its decision to move had the effect of “discouraging membership in a labor organization,” thus violating federal law.
The company called the NLRB’s complaint “legally frivolous” and a “radical departure” from precedents,” and will contest the complaint at a hearing.
While Boeing executives did cite the truthful past strike activities of its employees and the possibility of future strikes as significant factors in deciding to locate the second production line at the nonunion facility, the Board found the comments to be coercive and motivated by a desire to retaliate against workers while attempting to discourage future strike activity. The NLRB’s view was that a worker’s right to strike is a fundamental right guaranteed by the NLRA and that while employers have a right to make business decisions based on their economic interests, they may not do so in retaliation for legal union activity. The remedy sought by the Board and its unusual theory puts all companies in the position where they will not be safe from having the NLRB stepping in to second guess its business decisions on where to expand. Despite the fact that Boeing held extensive talks with the IAM about where to place the additional work, and notwithstanding that building the planes in Washington would have hampered the company’s competitiveness in the increasingly competitive global market for large commercial airplanes, the Board sided with the union. It has signaled by its complaint, that where there is tension between management prerogatives and the exercise of employee rights, the latter will prevail.
An adverse decision could set a terrible precedent for the flow of jobs and investment within the US and would essentially give labor a veto over management decisions about where to build future plants having a chilling effect whenever a company decides to build “union-free”. The issue to be decided at the hearing will be whether or not Boeing has the right to build additional US production capacity in a non-union plant, or whether the company’s comments about seeking to avoid strikes were “inherently destructive” of rights guaranteed by the NLRA. Also at issue is the right of management to consider the potential for work stoppages as any part of a decision on where production should take place.
Meaning for Management
The question presented by this stunning NLRB move is: Was the company’s decision to locate production in South Carolina an illegal reprisal, punishing its employees for engaging in a past, legal strike, or, was it a legitimate strategic choice, designed to avoid future production interruptions which management can expect in a union-free environment? According to Boeing, the decision had everything to do with being a reliable supplier, and was not a reprisal for past activities. One lesson for union management seeking to locate production in a nonunion environment would obviously be to base all decisions on cost and production reliability issues, and avoid any references to potential work stoppages.
This Update is not intended to be legal advice, but rather is intended to inform the reader of problem areas and recent developments in labor and employment law. If legal advice is required concerning a particular matter, your attorney should be consulted.