A strike against economic sanity

Boeing gets hijacked: A strike against economic rationality
Steve Chapman

May 15, 2011

In 1977, Boeing was the target of a strike by the International Association of Machinists, which represents its workers in Puget Sound, Wash., and Portland, Ore. The aircraft manufacturer had another strike in 1989. In 1995, workers returned to the picket lines. In 2005, they went on strike for 69 days. In 2008 ... well, you see the pattern.

Strikes are an expensive luxury. The last one, which went on for nearly two months, was estimated to cost Boeing more than $2 billion. "Based on previous strike experience," reported The Seattle Times, "Boeing will not recoup that money for many years."

At some point, a light bulb went on in the heads of those running the company: If we can't avoid union walkouts, we can't make aircraft deliveries. If we can't make aircraft deliveries, we don't get paid, we alienate customers and we endanger our livelihood.

After the 2008 walkout, Virgin Atlantic Airways founder Richard Branson voiced exasperation. "If union leaders and management can't get their act together to avoid strikes," he said, "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."

Something had to be done. Boeing tried to address the problem with the machinists, asking for a long-term no-strike agreement, but the union showed no interest, and the idea died.

End of story? Not quite. In 2009, the company had to decide where to open a second production line for its 787 Dreamliner. It could have put it where labor troubles were practically guaranteed. Instead, it built a plant in South Carolina, which is scheduled to go on line this summer with 1,000 nonunion workers.

The state offered tax incentives and a hospitable commercial environment. But a Boeing executive said at the time: "The overriding factor was not the business climate. And it was not the wages we're paying today. It was that we cannot afford to have a work stoppage, you know, every three years."

That may strike you as a blinding flash of the obvious — not to mention a choice fully within the discretion of any company functioning in a competitive marketplace, which penalizes idleness. But apparently not.

Last month, the National Labor Relations Board, a federal agency, filed a complaint arguing that Boeing broke the law by taking account of possible strikes in making its decision. This, it said, amounted to illegal retaliation against the machinists union.

It wants an NLRB administrative law judge to force the company to transfer the production back to Washington. And it may get its way.

No, you are not hallucinating. If the NLRB succeeds, a federal official will command a private corporation it may not produce in one place and must produce in another. Never mind what makes business sense.

This is a radical departure for the agency. "It is highly unusual," noted The New York Times, "for the federal government to seek to reverse a corporate decision as important as the location of a plant."

No kidding. It rests on the premise that this company is obligated to remain hostage to a contentious union. It assumes that government officials are entitled to dictate the choices of people whose capital is at risk. And you wonder why the late Ayn Rand's novel "Atlas Shrugged" is selling briskly?

Boeing adamantly denies moving production because of strikes or unions. But even if it was doing something so vicious as to protect itself against recurring labor disruptions, it ought to have that right.

William Gould, a Stanford University law professor who was appointed to head the NLRB by President Bill Clinton, has his doubts about this complaint. "It's perfectly reasonable for a company to want to avoid strikes," he told me.

In his view, the board's general counsel "is wrong when he says the company can't divert work from a union facility when it can't get a no-strike clause, so long as it offers some other means to resolve differences. I don't infer from that anti-union animus, which is prohibited."

Boeing was merely recognizing economic rationality by locating where it can build planes without the burden of a militant union and frequent strikes. The NLRB may be wrong about some things, but it is right to believe that if the needs of labor unions are to be served, economic rationality will have to take a back seat.

Steve Chapman is a member of the Tribune's editorial board and blogs at chicagotribune.com/chapman.