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Boeing and the Machinists: What we have here is a failure to communicate

An Administrative Law Judge will convene a hearing on June 14, 2011 in the highly politicized labor dispute between the Boeing Company (Boeing) and the Association of Machinists and Aerospace Workers (Machinists). In April, the Acting General Counsel for the National Labor Relations Board filed a Complaint against Boeing, alleging that the plane maker’s decision to assemble its 787 Dreamliner aircraft at a new (non-union) facility in North Charleston, South Carolina rather than an existing (unionized) facility in Everett, Washington was in retaliation for a history of strikes by the Machinists at the Washington facility and therefore violative of the National Labor Relations Act. Boeing maintains that the decision to place a second assembly line in South Carolina was based upon the Company’s legitimate interest in seeking out a favorable business environment for new production.

boeing0009 from morgueFile.JPGThe dispute has received wide coverage as a flashpoint between right-to-work advocates, organized labor, and the political actors that represent both constituencies. Management-side advocates have loudly decried the NLRB’s Complaint as “the first time a federal agency has intervened to tell an American company where it can and cannot operate a plant.” The NLRB’s Office of the Acting General Counsel issued a fact sheet countering that Boeing executives have made what the Acting General Counsel views as a series of statements indicating that Boeing was drawing a straight line between the decision to place the assembly line in South Carolina and frequent strike activity at the Washington facility. Machinist members at the Everett, Washington facility have engaged in strike activity regularly and with greater frequency in recent years, including in 2005 and 2008, causing costly delays in production.

Politics aside, the current dispute highlights the importance of message discipline as employers deal with unionized workforces. Neither the NLRB’s Acting General Counsel nor the Machinists have taken the position that Boeing does not have the general right to maintain a production line in South Carolina and, as a practical matter, Boeing will eventually produce Dreamliners in South Carolina. At issue is Boeing’s motivation in assembling Dreamliners in South Carolina. Statements by Boeing management noting the need for production stability due to, at least in part, frequent strike activity by the Machinists have landed Boeing in the NLRB’s crosshairs.

Employers with unionized workforces have broad rights (and, in fact, an obligation) under the law to make business decisions in a company’s best interests. As the Boeing dispute illustrates, compliance with labor laws will often turn on the clarity with which those decisions are communicated to incumbent unions.