Boeing Must Add 787 Line After Union Retaliation, U.S. Says

Boeing Co. (BA) should be forced to open a Washington state assembly line after violating workers’ rights by building a 787 Dreamliner plant in South Carolina, away from its Seattle-area union labor force, the U.S. government said.

The National Labor Relations Board said in a complaint today that the planemaker was “motivated by a desire to retaliate for past strikes and chill future strike activity” when it decided in 2009 to construct the new factory. The company said it will “vigorously contest” the complaint.

“This is a very critical, precedent-setting situation,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “This would have been unusual at any moment, but it’s especially unusual with the backdrop where collective bargaining is literally being unwound for public- sector workers in Wisconsin and Ohio.”

Boeing’s choice of South Carolina marked its first departure from the Puget Sound hub where it has built all its commercial jets. Relations with the Machinists union have been strained by four strikes since 1989, including the most recent, two-month walkout at the end of 2008.

A hearing on the labor board’s recommendation, which was issued by its acting general counsel, was scheduled for June 14 before an administrative law judge in Seattle.

Photographer: Ron Wurzer/Boomberg

Boeing criticized the timing of the government’s complaint, more than a year after the planemaker announced plans for the South Carolina plant. Close

Boeing criticized the timing of the government’s complaint, more than a year after the... Read More

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Photographer: Ron Wurzer/Boomberg

Boeing criticized the timing of the government’s complaint, more than a year after the planemaker announced plans for the South Carolina plant.

Boeing’s Response

Boeing said it has the right to build factories outside the Seattle area. The plant in North Charleston is almost done and employs 1,000 workers, who will begin final assembly of their first 787 in July, Chicago-based Boeing said in a statement.

The company’s shares gained $1.92, or 2.6 percent, to $75.07 at 4:15 p.m. in New York Stock Exchange composite trading, extending the gain for 2011 to 15 percent.

Boeing said in October 2009 that the new assembly line would replicate the one in Everett, Washington, making the company more competitive as it tries to recover from a three- year delay to the Dreamliner’s entry into service. The jet has been slowed by redesigns, parts shortages and incomplete work by suppliers who struggled with a new manufacturing system.

Politicians, Union

South Carolina politicians condemned the labor board complaint, with Governor Nikki Haley, a Republican, denouncing it as “an absolute assault on a great corporate citizen and on South Carolina’s right-to-work status.”

The Machinists union, which filed the original complaint in March 2010 that led to today’s ruling, hailed the finding.

“This is a huge victory for all American workers,” Tom Wroblewski, president of Seattle-based Local 751, said in an interview. “It’s about a worker’s legal right to be in a union without retaliation. They broke the law.”

The NLRB cited statements by company executives and spokesmen that the “overriding” factor in Boeing’s decision to open the South Carolina factory was difficulty in reaching contracts with Seattle-area union workers. The move had the effect of “discouraging membership in a labor organization,” which federal law forbids, the labor board said.

Washington Plant

Boeing doesn’t have to shut the South Carolina plant as long as it opens another one in Washington, according to the remedy outlined by the board. Such a factory should use supply lines maintained by Machinists in the Seattle and Portland, Oregon, areas, according to the complaint.

In negotiations with Boeing as the planemaker considered the South Carolina factory before its 2009 decision, the union said it would extend its four-year contract by eight years, ensuring no strikes through at least 2020, to keep the work.

Boeing said it wouldn’t accede to the union’s demand that it not communicate with employees if the labor group tried to organize in any non-union plants.

Unlike workers in Washington, those in South Carolina can’t be forced to join unions. The state is among the least- unionized, with 6.2 percent of workers covered by collective bargaining in 2010, compared with 21.3 percent in Washington, according to U.S. Census data. The national average is 11.9 percent.

Workers at a parts factory Boeing bought in South Carolina, adjacent to where the new 787 plant is being built, dropped their membership in the Machinists union in 2009.

“The new governor of South Carolina has made it very clear that unions are unwelcome in the state, and the Boeing plant is the centerpiece of a non-union industrial development strategy for South Carolina,” said Shaiken, the professor.

Public-sector union employees have been under pressure this year from moves by legislators in Ohio and Wisconsin to restrict collective bargaining by state and municipal workers.

About 36 percent of Boeing’s 157,000-person global workforce belongs to unions. The Machinists’ contract in the Seattle area expires in September 2012.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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