Last
year the blogosphere saw much chatter and commentary concerning the proposed
opening of a Boeing plant in South Carolina, and the subsequent filing of a
National Labor Relations Board (NLRB or Board) charge, congressional hearings,
etc. The Fall 2011 issue of the ABA
Journal of Labor and Employment, Vol. 27 No. 1, thoughtfully included testimony
of two congressional hearing witnesses. Although the immediate
storm has passed, the parties having settled the charge with the signing of a
new collective bargaining
agreement, it is an issue that could recur with similar responses, so I’d
like to discuss that testimony here.
Labor
professor Julius Getman of the University of Texas at Austin defended the Board
General Counsel’s actions in filing the complaint as “nothing new or
controversial.” He argued it was warranted because the complaint alleged that
Boeing had “transferred work, which would otherwise have been done at its
Washington state facility, to South Carolina in reprisal for past strikes with
the avowed purpose of heading off future strikes.” The
Boeing Case: Creating Outrage Out of
Very Little. However, Getman disregards the facts that this
was to be a whole new facility, to build an additional number of planes that
were not currently being built at the Washington state facility, and that
therefore no work was transferred from the Washington facility, which is the
actual test for illegality. See Textile
Workers Union of America v. Darlington Manufacturing Co., 380 US 263, 275
(1965) (while a company may legally go out of business to thwart union
activity, a partial closing for the same purpose is an unfair labor practice),
and Int’l Ladies Garment Workers’ Union v NLRB, 374 F.2d 295 (DC Cir.
1967) (an employer may not transfer the business situs to deprive the employees
of their protected rights).
Demonstrating
the ignorance of a 30-year academic with no business or industrial experience,
Getman commends “the limited nature of the proposed remedy.” He also wonders rather naively “why the
issuance of a complaint, a preliminary step far less final than a Board
decision,” which if incorrect could be corrected by the courts, “should be
responded to so intensely.”
In
contrast, Philip Miscimarra—a business professor but also a practicing attorney
engaged in representing business—emphasizes the lack of any transfer of work,
and also the incredible investment costs and uncertainties associated with
massive capital investment, particularly when it is subject to a Board
complaint. Miscimarra, relying on the
Board’s complaint, Boeing’s answer, and the parties’ public releases,
acknowledges the new plant is to be built in consideration of past
strikes. Specifically, production of
seven 787 Dreamer a month had periodically been obstructed at the Washington
state facility due to strike activity.
The Charleston plant would thus produce three new 787 Dreamers per
month, in addition to the seven produced in Washington, “to protect the
stability of the 787’s global production system” and “to mitigate the harmful
economic effects of an anticipated future strike.” Id., citing Boeing’s Answer.
However,
this is not illegal and is warranted under prudent business management. The National
Labor Relations Act (NLRA) focuses on employment terms and conditions, not
business judgments involving “the core of entrepreneurial control.” Id., citing Fibreboard Paper Prods.
Corp. v. NLRB, 379 US 203, 223 (1964).
As noted, a firm may even shut down its business to thwart union
activity, provided it is not a partial closure.
Even more analogous to the instant case, in Dorsey Trailers, Inc. v.
NLRB, 327 NLRB 835 (1999), the Board held that an employer can close a shop
and transfer or relocate that preexisting work to a new firm, prompted by past
strike activity and the need to fill backlogged orders. Notably, courts and the Board have repeatedly
affirmed an employer’s right to consider higher hosts and improved bargaining
leverage in future rounds of bargaining.
Similarly employers may make business decisions—including to relocate or
transfer work—based on the higher costs of union representation, and the right
to strike “does not give employees immunity from a strike’s economic
consequences.” Miscimara.
Finally,
it when looking at the big picture, it cannot be said the larger business and
Congressional reaction to the Boeing complaint was surprising. The reaction against the Boeing complaint was
motivated in part by the basic legality of Being’s actions. This raises issues of Board agent’s bias and
fidelity to law. However, the largest
part of the outcry was likely due to business principles, and the incredible
economic risks the precedent could pose for business in the future. As Miscamarra notes, building a new Boeing
plant involves a huge capital investment of more than $750 million, while the
NLRA complaint process is marked by delays, costs and uncertainties. Once the complaint was filed, Boeing’s South
Carolina investment was placed “on a very long NLRB litigation treadmill.” Additionally, the asset is frozen for the
duration; it will be difficult if not impossible to make further investment
decisions; and litigation will additional financial resources itself. Not surprisingly, then, the Boeing complaint
raised the specter of similar dire consequences for other business hoping to
expand and develop their business.
If you have any labor or employment matters
that you would like to resolve privately through a knowledgeable and experienced
arbitrator or mediator, please feel free to contact Pilar Vaile, P.C. at (505)
247-0802, or info@pilarvailepc.com.
