Boeing NLRB Complaint That Stoked Political Debate Is Withdrawn After Pact

The National Labor Relations Board withdrew its complaint against Boeing Co. (BA) over the opening of a 787 Dreamliner plant in South Carolina, ending a case that exacerbated business-government tensions.

Boeing and its Machinists union have begun a “new relationship” with a contract approved this week that includes promises for assembling a new jet in the Seattle area, Lafe Solomon, the NLRB’s acting general counsel, said today. He said settling the U.S. charge had always been his preferred outcome.

“There is job security in the Washington area, there is also job security in the North Charleston area,” Solomon said on a conference call. “The case is now closed.”

The April 20 complaint, which charged Boeing with illegal retaliation for union strikes, spurred demands in Congress to dismantle the NLRB and spilled into the 2012 presidential election. Even as the Obama administration welcomed today’s move, some Republicans said they would still investigate and try to rein in the board through legislation.

“The need for congressional action has never been more urgent,” Representative John Kline, a Minnesota Republican and chairman of the House Education and Workforce Committee, said today. “It is time for the Senate to stand up for our workforce” with a bill to curb the board’s powers. A Republican-backed measure to do so passed the House on Nov. 30.

Surprise Agreement

A surprise agreement last week on a new contract for Boeing’s Machinists paved the way to end the complaint. The terms include assurances that a revamped version of the 737 jet will be built at a current Seattle-area plant, and union leaders asked that the case be dropped after members ratified the plan on Dec. 7.

“Glad people are going to be working,” President Barack Obama said today outside the White House, responding to a reporter’s question.

“Boeing is grateful for the overwhelming support we received from across the country to vigorously contest this complaint and support the legitimate rights of businesses to make business decisions,” Tim Neale, a company spokesman in Washington, D.C., said in a statement.

Boeing, based in Chicago, rose 2.5 percent to $71.93 in New York trading, the highest closing price since July 22. The shares have gained 10 percent this year.

‘Working Together’

“This is really about the two sides working together for the future of aerospace in Washington state,” said Connie Kelliher, a Machinists spokeswoman in Seattle.

The union asked the NLRB to get involved after Boeing decided in 2009 to build the 787 plant in South Carolina, the planemaker’s first new commercial-jet factory outside the Puget Sound region where the company was founded. The NLRB based its complaint on comments made by Boeing executives about the company’s labor situation.

Boeing won’t have to build more Dreamliners in Everett, Washington, to make up for work placed in South Carolina, as the NLRB had demanded. Union leaders cited the new plant as a reason to ratify the labor accord, saying they knew the company could and would move work again if the relationship didn’t change.

Solomon said he felt the charge still had been successful in promoting the National Labor Relations Act, and that the agency would continue to investigate union complaints of employer retaliation for strikes.

“If faced with a similar pattern, we might well issue a complaint,” Solomon said. “The NLRB does not initiate any action on its own, we only react to charges filed.”

‘Labor Stooges’

The Boeing plant’s location in South Carolina, site of a pivotal Republican primary next month, thrust the labor complaint into the party’s presidential-nominating battle.

Former Massachusetts Governor Mitt Romney visited the factory in September and said Obama had put “labor stooges on the NLRB to pursue a political pay-back strategy.” Former House Speaker Newt Gingrich said today that the outcome is a victory for all 22 states, including South Carolina, that have so-called right-to-work laws letting employees opt out of joining a union.

“The American people will not be dictated to by out-of- control bureaucrats in Washington,” Gingrich said.

Republican support for letting businesses relocate jobs in response to strikes amounts to “signing the death warrant for the NLRB,” said Nelson Lichtenstein, a labor professor at University of California, Santa Barbara.

While the board’s complaint against Boeing was grounded in U.S. labor law, it’s unlikely that Republicans and Democrats in Congress can compromise to keep the NLRB alive as a third vacancy at month’s end threatens to leave it with just two members, not enough for a quorum, Lichtenstein said.

‘In Bed’

The U.S. Chamber of Commerce, the nation’s largest business lobbying group, said the sequence of events in the Boeing case showed “how in bed the board really is” with unions.

“The union brings a complaint, the NLRB brings the charge, and once the union works things out, like a good foot soldier, the NLRB withdraws its complaint,” said Randy Johnson, who handles labor policy at the Washington-based Chamber. The possibility of similar action by the NLRB leaves “a cloud of uncertainty hanging over the business community.”

Boeing had said it expected to lose the case initially and fight all the way to the Supreme Court, a process that could take years. A hearing in Seattle began in June and lawyers had been arguing over subpoenas and public access ever since, and they didn’t expect testimony to begin until 2012.

To contact the reporters on this story: Susanna Ray in Seattle at sray7@bloomberg.net; Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Larry Liebert at lliebert@bloomberg.net

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