Beebe: NLRB ruling could be ‘detrimental’

Arkansas Gov. Mike Beebe said Wednesday (May 11) that a National Labor Relations Board (NLRB) ruling against Boeing could be “detrimental” to Arkansas’ economic development efforts.

In 2008 and 2009, Boeing searched for potential new manufacturing locations at which to build the company’s new 787 Dreamliner. The new plane uses advanced composite materials and new engines to build a large commercial plane significantly more fuel efficient than other planes in the industry.

But union leaders objected when Boeing decided to build a $1 billion plant — the first large airplane manufacturing plant built at a new location in about 40 years — near Charleston, S.C.

UNION OBJECTION
Officials with the International Association of Machinists and Aerospace Workers District Lodge 751 filed in March 2010 a complaint with the NLRB. They alleged that Boeing made the decision to locate in South Carolina because, as a right-to-work state, it is difficult for workers to unionize. Further, they alleged that the move was a signal by Boeing to its union workforce in Seattle, Wash., and Portland, Ore., that union strikes and other disruptions could push more production to other right-to-work states.

On April 20, NLRB Regional Director Richard Ahearn agreed with the union allegations, saying the Boeing decision to locate a plant in South Carolina was made to “discourage” union workers from engaging in protected union activities. Evidence cited in the NLRB ruling included several news reports in which Boeing officials said part of the decision was based on fear of future union strikes disrupting Dreamliner production.

“As part of the remedy for the unfair labor practices alleged above in paragraphs 7 and 8, the Acting General Counsel seeks an Order requiring Respondent to have the Unit operate its second line of 787 Dreamliner aircraft assembly production in the State of Washington, utilizing supply lines maintained by the Unit in the Seattle, Washington, and Portland, Oregon, area facilities,” Ahearn wrote in the ruling.

A hearing on the ruling is set for June 14 in Seattle.

ARKANSAS IMPACT?
Arkansas, also a right-to-work state, was active in attempting to recruit Boeing’s Dreamliner plant. State and chamber officials in Arkansas often use the right-to-work issue as a selling point.

“It could be detrimental to Arkansas’ economic development efforts if that is carried to some extreme conclusion,” Beebe said Wednesday in a “Talk Politics” interview with Roby Brock. (Link here for more on the interview.)

Beebe said he is not fully versed on the “legal background” cited by NLRB in the ruling, but said it “undoubtedly is raising questions about a company’s ability to move plants to different parts of the company for competitive reasons.”

“It bears watching by Arkansas because it could have an effect on Arkansas,” he added.

Cheryl Garner, vice president of economic development with the Fort Smith Regional Chamber of Commerce, said the ruling could take away one of the state’s selling points when recruiting manufacturers and other large employers.

“We would be losing one of the many advantages that this area has, but it is not a deal killer,” Garner said. “We do market ourselves as a right-to-work state and it is an advantage, certainly. … But I think there are many factors that go into moving a location, in addition to that.”

NATIONAL OPPOSITION
The NLRB ruling is opposed by the U.S. Chamber of Commerce, the Business Roundtable, National Association of Manufacturers, the HR Policy Association and other national business groups.

“It is disturbing that at a time when companies doing business in the U.S. are engaged in intensive competition on a global scale, a company would be sanctioned for engaging in open and honest discussions with its union about economic realities,” Dan Yager, chief policy officer & general counsel for the HR Policy Association, said in a statement released by the U.S. Chamber. “If anything, the NLRB should seek to ensure that employers and unions are able to speak freely with each other, consistent with their rights under Section 8(c) of the National Labor Relations Act. Any failure by the Board to protect those rights can only further harm the larger economic interests of all Americans.”

Jim McNerney, chairman, president and CEO of Boeing, wrote in a May 11 opinion piece in the Wall Street Journal, that the NLRB ruling fails to recognize that the company’s union contracts allow Boeing to “locate new work at our discretion.” He also noted that no union jobs have been lost in existing plants as a result of the South Carolina expansion.

“In fact, we’ve since added more than 2,000 union jobs there (Everett, Wash.), and the hiring continues,” McNerney noted.

The Boeing chief also said the NLRB action could backfire on unions if business owners decide to not locate plants in pro-union states for fear of not then being allowed to expand to right-to-work states.

“U.S. tax and regulatory policies already make it more attractive for many companies to build new manufacturing capacity overseas. That’s something the administration has said it wants to change and is taking steps to address. It appears that message hasn’t made it to the front offices of the NLRB,” McNerney concluded.

LABOR FOCUS
Beebe, in the “Talk Politics” interview, also said assumptions about unions can “go both ways.”

He said when Cooper Tire announced it would close two of its four manufacturing plants, the initial fear in Arkansas was the unionized Cooper Tire plant in Texarkana would be lost. At the time, two of the Cooper Tire plants were unionized. But Beebe reminded that the Texarkana plant remained open because of the union’s willingness to work with management. And, according to Beebe, “the trump card” was the quality of the workforce and quality of production at Texarkana.

“It doesn’t always follow that if you’re non-union you are going to get the business,” Beebe said.

But Garner said global competition to locate operations has created more focus on labor costs — a trend she predicts will continue.

“As the competition gets tighter and tighter globally, companies will continue to look for that low-cost labor. That’s a trend that will not go away,” she said.