So Blatantly Harmful That Even the Grey Lady Understands

by Don Boudreaux on August 23, 2011

in Business as usual, Regulation, Seen and Unseen, Work

Here’s New York Times columnist Joe Nocera on the N.L.R.B.’s enterprise-dousing effort to prevent Boeing from manufacturing some jetliners at a facility in South Carolina:

But a fair-minded person would have to acknowledge that the N.L.R.B.’s action is exactly the kind of overreach that should embarrass Democrats who claim to care about job creation. It’s paralyzing, is what it is.

The law, to be sure, forbids a company from retaliating against a union. But the word “retaliation” suggests direct payback — a company shutting down a factory after a strike, for instance. Boeing did nothing like that. It not only hasn’t laid off a single worker in Washington State, it has added around 3,000 new ones. Seven out of every 10 Dreamliners will be assembled in Puget Sound.

Before expanding to South Carolina, Boeing asked the union for a moratorium on strikes — precisely because it needed to get the airplane into the hands of impatient customers. The union said it would agree only if Boeing promised never to manufacture anywhere but Puget Sound. Boeing refused — as any company would.

It is a mind-boggling stretch to describe Boeing’s strategy as “retaliation.” Companies have often moved to right-to-work states to avoid strikes; it is part of the calculus every big manufacturer makes. The South Carolina facility is a hedge against the possibility that Boeing’s union work force will shut down production of the Dreamliner. And it’s a perfectly legitimate hedge, at least under the rules that the business thought it was operating under.

That is what is so jarring about this case — and not just for Boeing. Without any warning, the rules have changed. Uncertainty has replaced certainty. Other companies have to start wondering what other rules could soon change. It becomes a reason to hold back on hiring.

Ya think?!

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{ 72 comments }

Dan H August 23, 2011 at 9:40 am

If I were the CEO of Boeing, I would have run out of patience by now. I would have closed up everything in the US and opened shop in South Korea.

EG August 23, 2011 at 10:10 am

The costs of doing even 1/10 of that would be astronomical for Boeing. Ultimately, Boeing has won a minor victory over the Union…NLRB or not (and this NLRB thing is not going to go anywhere. It will go down as one of the ugliest episodes of Obama’s run-away government, but it won’t pass anyone’s smell-test) It has forced some pretty big concessions from the Union which would have been inconceivable by the time of the last strike. And it has turned a good chunk of the membership to reconsider the effects the Union has on their jobs…

Kirby August 23, 2011 at 9:42 am

That union needs to be trust-busted for attempting to hold 100% market share of Boeing. They should be prevented from doing competitive things.

Economic Freedom August 24, 2011 at 5:59 pm

Unfortunately, I believe unions are legally exempt from antitrust laws.

Justin P August 23, 2011 at 9:58 am

This coming from the guy that calls anyone not towing the Democratic line of debt a “terrorist.” I wonder what the Democrats are calling him, since he is a union traitor now?

Even though I think Nocera is slim, it’s good to see that even partisans can see the NLRB for what it is.

Don Lloyd August 23, 2011 at 10:04 am

The NLRB is doing nothing more than carrying out Obama’s wishes, whether implied or explicit.

Regards, Don

Whatta August 23, 2011 at 10:23 am

Didja see that Obama saw at least a glimmer of light? An article in the WSJ:

“White House to Scale Back Regulations on Businesses
The Obama administration will release final plans Tuesday for ending or cutting back hundreds of regulations, an effort to reduce the burden on business and counter criticism that the White House is tone-deaf to business concerns. ”

Hey, its a start.

But the real question is…with this move is the Administration not admitting that the government is fact in the way?

SweetLiberty August 23, 2011 at 11:20 am

We have a bingo!

rbd August 23, 2011 at 1:31 pm

Will never happen. Sure, the White House can say it’s rolling back regulation, it’s can’t and won’t happen. That would be tantamount to the Pope renouncing religion.

Obama is regulation. He lives it; he breathes it; he eats it. It cannot be separated from the man.

Curse the Obama experiment!

Seth August 23, 2011 at 1:41 pm

“We are the” bureaucrats “we’ve been waiting for.”

T Rich August 24, 2011 at 8:16 am

SL,
Full points if you are referencing this scene from Inglorious Basterds.

http://www.youtube.com/watch?v=7duP4d9ZziY

Ken August 23, 2011 at 2:40 pm

I suspect it’s a product of Immelt’s outfit. Remember Immelt talking about the need to do away with “outmoded regulations?” We’re about to see the ending or cutting back of hundreds of regulations that no longer confer entry barriers to GE’s erstwhile competitors.

Richard Stands August 24, 2011 at 12:48 am

It’s “move to the center” rhetoric for campaign season: Sound and Fury, signifying a desire for reelection.

Doc Merlin August 23, 2011 at 10:51 am

The more this sort of thing happens, the more businesses will try to move to right to work states. The Unions are eating their seed corn.

Anotherphil August 23, 2011 at 12:34 pm

Or right to work nations.

There used to be tons of domestic garment manufacturing plants, no more thanks, primarily to the IGLWU..

Invisible Backhand August 23, 2011 at 11:06 am

“We are witnessing a case in point, in the recent investigation by the National Labor Relations Board (NLRB), which charges that Boeing threatened and intimidated its unionized workers in Washington State. The intimidation and punishment are well documented. Boeing executives repeatedly threatened to move assembly work for the new 787 airplane from Washington State to South Carolina, pointing to strikes over the years by the Machinists’ union.

In labor law, this is a textbook example of “runaway shop.” It is illegal. Workers’ right to strike is protected by law, and employers cannot punish or threaten workers for exercising that right. The National Labor Relations Board has a duty to protect that right.”

http://www.huffingtonpost.com/stan-sorscher/can-big-companies-pick-wh_b_923795.html

Dan H August 23, 2011 at 11:09 am

It’s illegal only because some bureaucrats made a law that says it’s illegal. If I own a company, it is my property and therefore my right to move my operation wherever I choose.

Invisible Backhand August 23, 2011 at 12:27 pm

It’s illegal only because some bureaucrats made a law that says it’s illegal.

That’s how everything becomes illegal.

Dan H August 23, 2011 at 3:21 pm

Just because something is made legal/illegal at the whim of your bureaucrtic masters doesn’t make it right or wrong.

The consumption of alcohol was once made illegal in the United States. Is drinking alcohol immoral? Marijuana is illegal. However, I do not consider smoking marijuana immoral. I have to wear a seatbelt BY LAW. Am I somehow immoral if I don’t?

Furthermore, confiscation of wealth is legal so long as it is done by the government. Just because it is not illegal does not make it immoral.

Ken August 23, 2011 at 11:18 am

IB,

Does Verizon have the right to force me to continue to use their cable and internet services, instead of say Comcast’s? Does AT&T have the right to force me to continue to use their wireless phone service, instead of say Sprint’s? Does Shoppers have the right to force me to continue to buy groceries from them, instead of say Giant’s? Should I be forced to continue to go to the same barber or the same gym?

If not, why not? After all they are workers I’ve hired to perform services and provide products to me, in the same way that business owners hire workers to perform services or provide products to them.

Regards,
Ken

Ike August 23, 2011 at 11:33 am

Ken, you’ve got it all wrong.

You’ve never signed a collective bargaining agreement with those service providers, so they can’t legitimately claim that you are harming them by shopping for services elsewhere.

If they want to railroad you, they would need the Federal Government to mandate that you must do business with them. (Which, according to this administration’s interpretation of the Interstate Commerce Clause, it has the means and the ability to do.)

Ken August 23, 2011 at 1:04 pm

Show me the clause in any agreement where Boeing agreed to never open a plant anywhere other than in Washington ever and your first statement might make sense.

Regards,
Ken

Ike August 23, 2011 at 5:14 pm

I was being sarcastic.

Ken August 23, 2011 at 6:24 pm

Right-o.

Invisible Backhand August 23, 2011 at 12:01 pm

You can always be relied to provide the non sequiturs. Have any well informed thoughts on NLRB & Boeing?

Ken August 23, 2011 at 1:02 pm

IB,

Yes. Fuck the NLRB. They can’t provide as quality product at as good a price as those in SC. Now they’re pissed because they’ve been called on it.

Regards,
Ken

Invisible Backhand August 23, 2011 at 1:18 pm

Knowing your history of making up a Thomas Jefferson quote, next you’ll be Mises claiming said “Fuck the NLRB”.

Ken August 23, 2011 at 1:26 pm

Please show me where I ever made up any quote.

Regards,
Ken

Fred August 23, 2011 at 1:36 pm

That was NWA, not von Mises.
Though I see how you could get them mixed up.

J. W. August 23, 2011 at 5:47 pm

IB, it seems that you’re the one on whom we can rely for a non sequitur.

Ike August 23, 2011 at 11:19 am

I.B. —

Do you mean to tell me that Boeing can’t fire up another plant to speed up the schedule, so it can catch up on missed deadlines?

Really?

Invisible Backhand August 23, 2011 at 12:05 pm

The could have fired up another line at the existing plant. Have you informed yourself on issue at hand, Mr. Spokesman for Alabama Power?

Jim August 23, 2011 at 12:18 pm

You didn’t answer Ike’s question completely. Sure they could have fired up another line in Washington, but if it was far more effective to fire up a new one in S.C., why shouldn’t they be allowed to? What if setting up a new line in S.C. vs. Washington was the difference between the Dreamliner being below cost and being above cost and causing Boeing to lose money on each Dreamliner? What then?

Invisible Backhand August 23, 2011 at 12:29 pm

but if it was far more effective to fire up a new one in S.C., why shouldn’t they be allowed to?

You can read the answer for yourself right here:

https://www.nlrb.gov/news/national-labor-relations-board-issues-complaint-against-boeing-company-unlawfully-transferring-

Fred August 23, 2011 at 12:30 pm

close italics

PrometheeFeu August 23, 2011 at 12:53 pm

Let’s see if we can close the italics.

PrometheeFeu August 23, 2011 at 12:54 pm

Let’s see if this will work… here?

PrometheeFeu August 23, 2011 at 1:01 pm

OK, last try:

Ike August 23, 2011 at 5:19 pm

This isn’t working well.
Really.

Ike August 23, 2011 at 5:20 pm

What is your point regarding my profession?

Invisible Backhand August 23, 2011 at 9:12 pm

That it is spokesmanning 101 to know WTF you are talking about.

Chucklehead August 23, 2011 at 11:19 am

Since the Washington plant is not closing and workers in Washington are not being fired, are you saying that a new plant built somewhere else is intimidation? How is the union workers right to strike in Washington infringed by a plant in South Carolina? Are you saying the right to strike includes the right to prevent any production?

Invisible Backhand August 23, 2011 at 12:06 pm

You are the third person in a row now who has made no effort to inform yourself on the issue.

Xmas August 23, 2011 at 11:20 am

Backhand,

Wow…that’s a great article you linked to. I like how they called the replacement air traffic controllers “scabs”. Yep, that is a completely unbiased piece of reporting there.

Of course, the workers have a right to strike. But Boeing is being honest with the workers when they say, “We cannot sell these planes if you even think of going on strike.” Is that a “threat” or is that honesty. Will the NLRB come back and save jobs when 787 get dropped because Boeing can no longer guarantee a timely delivery of already delayed planes?

Invisible Backhand August 23, 2011 at 12:22 pm

It’s a threat, and you are the fourth person in this thread I’ve responded to that hasn’t bothered to inform themselves of the basic facts of the case.

“The NLRB launched an investigation of the transfer of second line work in response to charges filed by the Machinists union and found reasonable cause to believe that Boeing had violated two sections of the National Labor Relations Act because its statements were coercive to employees and its actions were motivated by a desire to retaliate for past strikes and chill future strike activity.”

(watch this comment get held for moderation)

https://www.nlrb.gov/news/national-labor-relations-board-issues-complaint-against-boeing-company-unlawfully-transferring-

Fred August 23, 2011 at 12:29 pm

I other words, the NLRB has declared Boeing to be guilty, and unless Boeing can prove their innocence that is how they will remain.

Nice.

Invisible Backhand August 23, 2011 at 12:33 pm

Fred is 5th on the list who hasn’t informed himself about the case.

Fred August 23, 2011 at 12:41 pm

VM – there is a difference between being uninformed and not accepting what the government says as the word of God.
Yes, the government has said that Boeing’s actions were in retaliation to the union.
I am aware of this.
That doesn’t mean I have to accept it just because someone in government says it is so.
My mind is not so feeble that I turn off all critical thinking faculties when something is declared by government, and simply accept it as if it came from God.
Government is not God.

Fred August 23, 2011 at 12:42 pm

VM means Visible Moron btw

Justin P August 23, 2011 at 2:26 pm

Your confusing this blog with the likes of Krugman and DeLong, who routinely “moderate” comments they don’t like or hurts their case.

Hasdrubal August 24, 2011 at 10:45 am

The NLRB’s complaint says:

Boeing announced in 2007 that _it planned to assemble seven 787 Dreamliner airplanes per month in the Puget Sound area of Washington_ … The company later said that it would create a second production line to assemble an additional three planes a month to address a growing backlog of orders. _In October 2009, Boeing announced that it would locate that second line at the non-union facility._

The NLRB never claimed that Boeing moved production from a union shop to a non union shop, though their rhetoric makes it very easy to come to that conclusion. How can the opening of a completely new site be retaliation? There are no workers to retaliate against at a non-existant factory. They certainly weren’t retaliating against the workers they already employed, since the business decision didn’t impact them in the slightest. Not one job was lost, no paychecks were reduced, etc.

In fact, if you read the actual complaint, you’ll see that every “coercive” statement mentioned also happens to be completely sound business practice:
a.)”…quoted in the Seattle Times, made an extended statement regarding “diversifying [Respondent's] labor pool and labor relationship,” and moving the 787 Dreamliner work to South Carolina due to ‘strikes happening every three to four years in Puget Sound.’” (previously noted that “…IAM engaged in strikes in 1977, 1989, 1995, 2005, and 2008.”)
b.)”its decision to locate the second 787 Dreamliner line in South Carolina was made in order to reduce Respondent’s vulnerability to delivery disruptions caused by work stoppages.”
c.)”attributed Respondent’s 787 Dreamliner production decision to use a “dual-sourcing” system and to contract with separate suppliers for the South Carolina line to past Unit strikes.”
etc. etc.

Sounds like management is doing their fiduciary duty to shareholders and locating a completely new production line in a place less likely to cause harm to the company. Is it illegal for companies with unions at any of their factories to make sound business decisions now?

Brad Petersen August 23, 2011 at 4:47 pm

Boeing has the right to put its plants anywhere it wants, period. And it only makes good business sense to operate those plants in places where the employees want to work rather than strike. If you, the NLRB or some union lackey at the Huffington Post don’t like it, too damn bad. You’re always free to open your own company and operate it any way you want.

Invisible Backhand August 23, 2011 at 9:15 pm

How about Yellowstone Park?

Chris August 24, 2011 at 8:53 pm

Very clever Backhand. If Brad had known you would be incredibly dense for the sake of being incredibly dense, he would have said, Boeing has the right to put its plants wherever the owner of the land will voluntarily sell or lease them the rights to the land for the purpose of manufacturing planes.

You are a tool. It’s amazing how you manage to type as you simultaneously pat yourself on the back and jerk off to your own smugness.

Chucklehead August 25, 2011 at 3:32 am

Touche. That comment compensated my suffering reading IB drivel. I just wonder what utility he gets from this. Kind of like being a rabbit in a shooting gallery.

Justin P August 23, 2011 at 11:20 am

To paraphrase; “The more you tighten your grip, Obama, the more businesses will slip through your fingers.”

SweetLiberty August 23, 2011 at 11:25 am

The definition of retaliation in this case is precisely and exactly what our current government says it is – nothing more and nothing less. It should come as absolutely no surprise that a government that can redefine the meaning of the Constitution to suit its whim will define this case however this administration wants it to turn out.

Political Observer August 23, 2011 at 12:30 pm

What I find troubling about the NLRB action is that it is re-creating law without any change in the basic statute. How can an agency determine that after 30 or 40 years of interpreting a law one way that it can suddenly on the political whim of some new appointees, redefine the law to mean something else -even when the underlying law to this regulatory change has not changed.

Businesses are not willing to take risk and invest in large part because of the uncertainty that this administration is creating with every regulatory move (such as this) that either reinvents the law to serve their interest or attempts to legislate where the Congress has chosen not to.

For Whata – don’t hold your breath on this one. How many times has this administration held out a promise or announcement about how they “get it” and then do just the opposite. They still think we are all a bunch a rubes who continue to fall for their line ….”but I will still respect you in the morning.”

Ken August 24, 2011 at 8:54 am

What I find troubling about the NLRB action is that it is re-creating law without any change in the basic statute.

It has worked well enough for BATFE and EPA.

Invisible Backhand August 23, 2011 at 12:31 pm

Among the many faults of the Disqus commenting service, I just discovered another: if you don’t close the italic tag you turn everyone else’s comments to italics too.

PrometheeFeu August 23, 2011 at 12:52 pm

Thankfully the bold tag does not extend beyond your own comment.

PrometheeFeu August 23, 2011 at 12:44 pm

The whole italics thing is really annoying. Does it work with other tags? Let’s see.

SweetLiberty August 23, 2011 at 12:45 pm

Invisible Backhand,

The argument isn’t whether or not the union is legally correct – they may well be depending upon how the lawyers, courts, and lawmakers decide to interpret this case – the argument is against the philosophy that union employees should be able to prevent their employer from expanding how they wish.

IF what Boeing is doing is out of pure retaliation, then why would they do so? Because they want less (or preferably no) union. Why wouldn’t they want a union? To be more profitable (if you’re a liberal, I apologize for using such a profane word), flexible, and better equipped to meet their consumer’s needs.

Boeing doesn’t need unionized employees to be successful: there would be a plethora of employees who would gladly take the open positions at a market salary were the union dissolved tomorrow. But the union needs Boeing to be forced by government to comply to salaries, benefits, and often ridiculous union rules Boeing would otherwise not agree to in order for the union to survive.

So your union may indeed win this case, but that doesn’t mean they hold the moral high-ground – just a legal victory.

rbd August 23, 2011 at 1:40 pm

Invisibrain’s presupposition is that all laws are just and, therefore, legitimate. Not so. Case in point: DOMA. Obama announced he won’t be enforcing this one. Why? Doesn’t like it. That’s just fantastic.

In fact, many regulations (which carry the same force and law) regarding businesses date back to the middle to late 1800s and have virtually no application to today’s culture.

So, just because some harebrain at NLRB declares a company in violation, doesn’t make it so.

Invisible Backhand August 23, 2011 at 9:17 pm

I invite you to go enforce your opinion.

PrometheeFeu August 23, 2011 at 12:51 pm

After reading the press release by the NLRB, it is ever so slightly less egregious. Why should Boeing be required to keep the Puget Sound plant open? I don’t know whether Boeing’s actions are legal or not. But this definitely does not fit the common understanding of the word retaliation. When I retaliate against you, I am trying to harm you in response to past perceived harms. It is not the same thing as taking actions to protect myself from past perceived harms. It seems what Boeing was doing was trying to pull its production away from the control of those unionized workers who caused so much trouble in the past. That’s not the same thing as trying to punish the workers for what they had previously done.

Also, even if they were trying to punish said workers, I don’t think it makes much sense to make that illegal. It seems much better to let Boeing manufacture where it wants to and to deal only with the people it wants to deal with.

EG August 23, 2011 at 11:10 pm

“Why should Boeing be required to keep the Puget Sound plant open? ”

Boeing isn’t trying to close anything in Puget Sound (considering that they still make the 737, 767, 777, and 747 here). It isn’t trying to lay off a single worker. But the Unions realize that in the long run, they will lose if they allow Boeing to slip into another state.

PrometheeFeu August 24, 2011 at 12:56 pm

I understand that the unions will lose something in the long run. I understand why they might want some sort of guarantees. But why should the NRLB force such guarantees?

JWH August 23, 2011 at 7:43 pm

I have had experience with NRLB and capricious is too mild to describe them. Companies that are unionized spend large parts of their HR resources complying with their edicts and defending cases in front of them. They lean almost entirely union even in Republican admistrations. They are a wet blanket that dampens expansion of hiring and meeting customers expectations. The Boeing ruling is new ground for them and I think they believe it will help stem the tide of jobs leaving unionized states and thus protect their own pathetic bureaucratic jobs. Of course they are mistaken. If there was ever a case for sun setting an agency, this is it.

ArrowSmith August 23, 2011 at 11:25 pm

I still can’t believe we have the government telling a private business where they can locate their factories. Might as well just call ourselves the Soviet States of America, because the game’s over.

vikingvista August 24, 2011 at 2:39 am

That is the natural ratcheting tendency of Monopoly. When the Monopoly is small and weak enough, the character of the population can be a drag on its progression. But once it achieves a critical mass of power, the only opinions that matter are of the few in charge. It is the goal if the state to achieve such independence.

That being said, my sources tell me this country is nowhere near Soviet scale oppression yet.

Jacobite August 24, 2011 at 3:16 pm

No need for bogus anti-trust laws. At Common Law a union is a conspiracy to commit extortion (a strike is extortion). The only reason unions aren’t outlawed today is the series of New Deal laws exempting unions and union members from prosecution, even when they commit criminal acts. Repeal these laws, and put union members in prison where they belong. But, you have to elect Rightists, not Conservatives to accomplish this. Remember your history. Conservatives were the dipsticks sending petitions to the King and Parliament protesting tyranny (recall that things like the Boeing plant case are so extreme that George III couldn’t have even dreamt of it). Rightists were the guys who said: “Screw this; let’s get our muskets and start killing people.” America is decadent because the allowable political spectrum today runs from moderate (i.e., non-serious; i.e., non-violent) Conservative to far-Left/Communist. Anybody who thinks Patrick Henry could get elected to any public office in Virginia today, please explain your reasoning. Absent Patrick Henry and Tom Paine, we are left with those old humble petitioners and their Politics of Onan.

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