Unfair Labor Practices

Boeing gets hauled before the National Labor Relations Board for opening a new plant in a business-friendly state

The National Labor Relations Act of 1935 granted sweeping legal privileges to organized labor, including the right to exclusively represent all workers in a unionized shop and the right to go out on strike without any interference or retaliation from management. Now the government would like the law to go even further.

In April the National Labor Relations Board (NLRB), the federal body tasked with enforcing the 1935 law and its amendments, charged the airline manufacturer Boeing with illegal actions "inherently destructive of the rights guaranteed employees" after Boeing decided to open a new production line for its 787 Dreamliner aircraft in North Charleston, South Carolina, instead of building near its existing Dreamliner production facility in Everett, Washington. A NLRB administrative law judge heard opening arguments in the case yesterday, though the matter isn't likely to be resolved until it reaches federal court.

The key difference between the two Boeing locations is the cost of doing business. The unionized workforce in Everett has walked the picket line five times since 1975, most recently in 2008, where the strike lasted 52 days. As Boeing's Executive Vice President Jim Albaugh told The Seattle Times, "we cannot afford to have a work stoppage, you know, every three years." CEO Jim McNerney made similar comments in a quarterly earnings report posted on the company's intranet, where he mentioned "strikes happening every three to four years in Puget Sound" as one of the reasons for locating new production elsewhere.

Those comments might sound like a lesson from Business School 101, but to the NLRB they are evidence of Boeing's illegal retaliation against its unionized workers in the Evergreen State. Under the government's theory of the case, Boeing is punishing the union for going on strike and seeking to discourage future walkouts. If the NLRB is successful, Boeing would have to shutter its new South Carolina facility—which just opened last Friday with 1,000 newly-hired workers—and "operate its second line of 787 Dreamliner aircraft assembly production in the State of Washington."

Take a moment to let that sink in. The federal government would override Boeing's business decision and force the company to set up shop where it commands. Also keep in mind that Boeing hasn't fired a single unionized employee in Washington or shifted a single piece of existing union work out of state. In fact, the company has added an additional 2,000 union jobs in Washington since announcing its plans for the South Carolina facility last year and says it plans on hiring more. Not exactly an anti-union jihad.

And while those comments from senior management about striking workers were perhaps ill-advised from a public relations standpoint, they were hardly groundless. As Virgin Airlines founder Richard Branson declared after the 2008 work stoppage, "if union leaders and management can't get their act together to avoid strikes, we're not going to come back here again. We're already thinking, 'would we ever risk putting another order with Boeing?' It's that serious."

What business leader wouldn't take Branson's complaint to heart and consider a more attractive location for an additional production line? And South Carolina, unlike Washington, is a so-called right-to-work state, meaning that state law prohibits mandatory union membership as a condition of employment, a tempting proposition for many businesses. Unions aren't forbidden in the 22 states that have such laws on the books, though union organizing has been made more difficult. And that's perfectly legal under the Taft-Hartley Act of 1947, which permits states to pass right-to-work laws so long as other federal labor laws are obeyed. (From a libertarian perspective, both Taft-Hartley and the National Labor Relations Act are problematic, since employers in a free labor market would be allowed to both require and forbid union membership.)

And the government's actions don't only threaten Boeing. As a friend of the court brief submitted last week by the attorneys general of South Carolina, Texas, and 12 other states puts it, "any employer that has ever endured a strike at its unionized facilities could be improperly charged with retaliation simply because the company exercised its discretion to open a new factory in a State with a more favorable business climate."

Even the NLRB's supporters have acknowledged the unprecedented nature of the case—they just happen to think this extraordinary prosecution is a good thing. For example, in an issue brief published last week by the liberal American Constitution Society, left-leaning Penn State law professor Ellen Dannin argued that "the problem is not that the [National Labor Relations Act] is being interpreted too expansively, but rather the opposite—for too long, the Act has been interpreted in a manner that robs it of the flexibility and robust array of remedies intended by those who passed this landmark legislation." Similarly, The New York Times admitted that while "it may be a difficult case to prove," it is still "a welcome effort."

Tell that to the 1,000 workers in South Carolina. Boeing made the decision to open a new facility in a more business-friendly state. That's not a crime—at least not yet.

Damon W. Root is an associate editor at Reason magazine.