By Jim McNerney
Washingtons actions have assaulted the capitalist principles that have sustained Americas competitiveness since it became the worlds largest economy nearly 140 years ago.
Deep into the recent recession Boeing decided to invest more than $1 billion in a new factory in South Carolina. Surging global demand for our innovative new 787 Dreamliner exceeded what we could build on one production line and we needed to open another.
This was good news for Boeing and for the economy. The new jetliner assembly plant would be the first one built in the U.S. in 40 years. It would create new American jobs at a time when most employers are hunkered down. It would expand the domestic footprint of the nations leading exporter and make it more competitive against emerging plane makers from China Russia and elsewhere. And it would bring hope to a state burdened by double-digit unemploymentwith the construction phase alone estimated to create more than 9000 total jobs.
Eighteen months later a North Charleston swamp has been transformed into a state-of-the-art green-energy powered 1.2 million square-foot airplane assembly plant. One thousand new workers are hired and being trained to start building planes in July.
It is an American industrial success story by every measure. With 9 unemployment nationwide we need more of themand soon.
Yet the National Labor Relations Board (NLRB) believes it was a mistake and that our actions were unlawful. It claims we improperly transferred existing work and that our decision reflected animus and constituted retaliation against union-represented employees in Washington state. Its remedy: Reverse course Boeing and build the assembly line where we tell you to build it.
The NLRB is wrong and has far overreached its authority. Its action is a fundamental assault on the capitalist principles that have sustained Americas competitiveness since it became the worlds largest economy nearly 140 years ago. Weve made a rational legal business decision about the allocation of our capital and the placement of new work within the U.S. Were confident the federal courts will reject the claim but only after a significant and unnecessary expense to taxpayers.
More worrisome though are the potential implications of such brazen regulatory activism on the U.S. manufacturing base and long-term job creation. The NLRBs overreach could accelerate the overseas flight of good middle-class American jobs.
Contrary to the NLRBs claim our decision to expand in South Carolina resulted from an objective analysis of the same factors we use in every site selection. We considered locations in several states but narrowed the choice to either North Charleston (where sections of the 787 are built already) or Everett Wash. which won the initial 787 assembly line in 2003.
Our union contracts expressly permit us to locate new work at our discretion. However we viewed Everett as an attractive option and engaged voluntarily in talks with union officials to see if we could make the business case work. Among the considerations we sought were a long-term no-strike clause that would ensure production stability for our customers and a wage and benefit growth trajectory that would help in our cost battle against Airbus and other state-sponsored competitors.
Despite months of effort no agreement was reached. Union leaders couldnt meet expectations on our key issues and we couldnt accept their demands that we remain neutral in all union-organizing campaigns and essentially guarantee to build every future Boeing airplane in the Puget Sound area. In October 2009 we made the Charleston selection.
Important to our case is the basic fact that no existing work is being transferred to South Carolina and not a single union member in Washington has been adversely affected by this decision. In fact weve since added more than 2000 union jobs there and the hiring continues. The 787 production line in Everett has a planned capacity of seven airplanes per month. The line in Charleston will build three additional airplanes to reach our 10-per-month capacity plan. Production of the new U.S. Air Force aerial refueling tanker will sustain and grow union jobs in Everett too.
Before and after the selection we spoke openly to employees and investors about our competitive realities and the business considerations of the decision. The NLRB now is selectively quoting and mischaracterizing those comments in an attempt to bolster its case. This is a distressing signal from one arm of the government when others are pushing for greater openness and transparency in corporate decision making.
It is no secret that over the years Boeing and union leaders have struggled to find the right way to work together. I dont blame that all on the union or all on the company. Both sides are working to improve that dynamic which is also a top concern for customers. Virgin Atlantic founder Richard Branson put it this way following the 2008 machinists strike that shut down assembly for eight weeks: If union leaders and management cant get their act together to avoid strikes were not going to come back here again. Were already thinking Would we ever risk putting another order with Boeing? Its that serious.
Despite the ups-and-downs we hold no animus toward union members and we have never sought to threaten or punish them for exercising their rights as the NLRB claims. To the contrary union members are part of our companys fabric and key to our success. About 40 of our 155000 U.S. employees are represented by unionsa ratio unchanged since 2003.
Nor are we making a mass exodus to right-to-work states that forbid compulsory union membership. We have a sizable presence in 34 states; half are unionized and half are right-to-work. We make decisions on work placement based on business principlesnot out of emotion or spite. For example last year we added new manufacturing facilities in Illinois and Montana. One work force is union-represented the other is not. Both decisions made business sense.
The world the NLRB wants to create with its complaint would effectively prevent all companies from placing new plants in right-to-work states if they have existing plants in unionized states. But as an unintended consequence forward-thinking CEOs also would be reluctant to place new plants in unionized stateslest they be forever restricted from placing future plants elsewhere across the country.
U.S. tax and regulatory policies already make it more attractive for many companies to build new manufacturing capacity overseas. Thats something the administration has said it wants to change and is taking steps to address. It appears that message hasnt made it to the front offices of the NLRB.
Mr. McNerney is chairman president and CEO of the Boeing Co
