Does Obama's NLRB Dislike Job Creation?

Can Federal authorities discriminate against states for political reasons? I didn’t think it was possible until I read that Obama’s NLRB was stopping an American company from creating American jobs in an American state, but it is true. reference Obama’s NLRB, at the behest of unions, wants to tell Boeing that it cannot build airplanes in the State of South Carolina. other references.

As my colleague Royal Flush has pointed out, some states are growing more robustly than others and various choices, such as the right to join unions - or not - and reasonable taxes are among the explanations. People are choosing to live in these places instead of the ones with more decrepit rules and more meddling bureaucracies. Of course, this annoys the heck out of the people who benefit from the decrepit rules and meddling bureaucracies. Unable to persuade people to stay, they want to set up a bureaucratic Berlin wall to prevent people from making choices. In essence, those in privileged positions want to freeze in place arrangements made in different times and circumstances because they can squeeze out benefits.

Supreme Court Justice Louis Brandeis called the states the laboratories of democracy. “…a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country," he said in 1932. This has been the fundamental strength of America and one of the reasons why we have adapted so much better than most countries to the changes over the last two and a half centuries. But the experimentation requires freedom to fail as well as freedom to adapt. If the Federal government can impose the less than well-performing rules from one state on others, it creates the opposite dynamic from what Brandeis was praising. To work well, the good habits or rules created by one state should be emulated by others, while the bad habits or rule that have become obsolete will remain localized and eventually disappear. If the Federal government usurps the power to turn this around, it is transformed from a blessing to an albatross hung around the necks of all Americans.

The ironic fact is that an American firm such as Boeing can move operations to a foreign country with less active opposition from the Obama Administration than if it wants to move to South Carolina or any of the other twenty-two states that guarantee workers the choice of joining a union or not (soon to be twenty-three as New Hampshire has just approved right to work legislation). It is simply absurd for the Feds to judge nearly half of our states as somehow unworthy of investment.

South Carolina is a fascinating place. A couple generations ago, it was a decaying backwater, characterized by obsolete industries and old fashioned habits. Today it is one of the leading destinations for foreign investment and has attracted and created the kinds of high-tech, high skill jobs that all the experts say are the keys to the future. Business schools worldwide study the success of cities like Spartanburg and Greenville in attracting investment and good jobs. It is literally a textbook case of how to transition from old to new high tech.

Last spring C&J made a brief tour to look at the power of the America's new industrial heartland. We visited the Carolinas and Tennessee. It doesn't look like the old rust belt. It seems green and rural, but the power is there, the future of America's industry is in places like this.

I guess that success bothers some people who prefer the old plantations and the old closed shops.

Posted by Christine & John at April 26, 2011 6:39 AM
Comments
Comment #322264

C&J: Being from SC, I saw the decline of the old industrial base (textiles) and the start of the new (BMW in the Spartanburg/Greenville area). Small blurb in the WSJ today - the NLRB is planning to sue a couple of states that have passed laws that allow secret votes for forming a union. The person in charge at NRLB was a recess appointment. Couln’t get a confirmation vote in the Senate. He is an ex-union lawyer. The way I see it, the NRLB is selling a product that no one wants, and as result is using the strong arm of the government to get it. I don’t understand on what basis the feds could tell a business where to open. My understanding is that the move to SC was after Boeing tried to negotiate a no strike contract in Washington (state) and could not come to agreement. There had been several (3, I think) strikes in the previous 10 years that had cost Boeing lots.

Posted by: Mike in Tampa at April 26, 2011 9:55 AM
Comment #322265

This is only a complaint filed by NLRB general counsel, not a decision by the NLRB. The complaint will be heard by an administrative law judge in June. If upheld, the decision can appealed to the full NLRB board and then to federal courts if necessary. It is not a final decision.

The issue is not about whether a unionized company can move its production or headquarters to a right to work state to avoid such contracts. It can under federal law. It is perfectly legal for states to offer all sorts of incentives for businesses, union or not, to relocate to their state. Boeing had every right to locate a production plant in South Carolina. That is not in question.

The narrow issue is whether the Boeing company moved a second assembly line for the Dreamliner which had been scheduled to open in Washington to a new assembly plant in South Carolina in retaliation for specific legal union activity (work stoppage in 2008)in Washington. The company opened the door to the complaint by stating that its decision to change the location of its planned second line was not based upon cost or general business factors but union work stoppage concerns. That concern, in of itself, would be insufficient to find a violation. Businesses can use general concern over potential strikes as a factor in location decisions. The factual question here turns on whether Boeing used the change in plans as a retaliation against the union for a recent strike or improperly used a threat of loss of jobs in its bargaining. In my opinion, it is a difficult case to prove.

Posted by: Rich at April 26, 2011 9:57 AM
Comment #322267

IMO this has nothing to do with the union workers and obviously nothing to do with the law. This is just good old fashion political harball being played by the Whitehouse. And other companies that play friendly with this administration (i.e. GE and Wall Street) better take note.

“Have you ever danced with the devil by the pale moonlight?” Boeing is about to meet the real Jack Napier Chicago style.

Posted by: George at April 26, 2011 10:08 AM
Comment #322268

“The person in charge at NRLB was a recess appointment. Couln’t get a confirmation vote in the Senate. He is an ex-union lawyer.”

The chief officer of the NLRB is its General Counsel. The current acting General Counsel is Lafe Solomon. He is not an “ex-union” lawyer. He is a lifelong civil servant who has spent his whole career in the NLRB working for both Democratic and Republican administrations. He is subject to confirmation by the Senate. His recess appointment does not avoid hearings by the Senate. It is not true that he “couldn’t get a confirmation vote in the Senate.” It may be true in the future after the Boeing thing, though.

Posted by: Rich at April 26, 2011 10:34 AM
Comment #322280
The N.L.R.B. asserted that on numerous occasions Boeing officials had communicated an unlawful motive for transferring the production line, including an interview with The Seattle Times in which a Boeing executive said, “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.”
-New York Times

It is against the law to retaliate against a union in that way. The NLRB is tasked with enforcing, executing that law.

Are you saying, don’t enforce the law?

Mike in Tampa-
1) Republicans have denied hundreds of Obama appointees up or down votes, but Obama still has to run the government. Therefore, recess appointments.

2) Interstate commerce is federal. It isn’t a product, it’s the law, and it should be enforced.

Posted by: Stephen Daugherty at April 26, 2011 2:23 PM
Comment #322283

Stephen,

In the same New York Times article, Boeing said the following
“Boeing said on Wednesday that none of the production jobs in South Carolina had come at the expense of jobs in Washington. It noted that its unionized employment in the Puget Sound area had increased by 2,000 since it announced its decision to expand in South Carolina.

The company also said it had decided to expand in South Carolina in part to protect business continuity and to reduce the damage to its finances and reputation from future work stoppages.”

You conviently left that part out.

Posted by: tdobson at April 26, 2011 2:50 PM
Comment #322285

tdobson-
Boeing indeed say that. They left out the part about Unionized labor in Washington not increasing by the amount of people who would be in that factory making the jets that are now instead made in North Carolina.

The folks at Boeing also said pretty much that they were building that factory in North Carolina, not for lower wages or some other reason, but to hit back at the unions for earlier strikes. THEY said that, not me.

The issue is jobs deliberately denied to union workers, specifically because of earlier actions, an act illegal under US laws. The company statement is not an adequate defense, so leaving it out is not dishonest.

Posted by: Stephen Daugherty at April 26, 2011 3:06 PM
Comment #322287

“The folks at Boeing also said pretty much that they were building that factory in North Carolina, not for lower wages or some other reason, but to hit back at the unions for earlier strikes. THEY said that, not me.”

That’s not at all what they said. this is their quote:

““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.”

They cannot AFFORD to have a work stoppage every three years. That sounds financial to me.

They hired an additional 2000 union employees in Washington state and have hired 1000 employees so far in South Carolina. I don’t know how many people it takes to build three planes per month, Do you?


Posted by: tdobson at April 26, 2011 3:52 PM
Comment #322288

Stephen, that’s not even remotely what happened. First, please don’t identify North Charleston as in North Carolina. But anyway….

Boeing did not build a plant in SC; they bought the Voight plant that was already making and supplying 787 fuselages as a subcontractor. Yes they want to expand the operation, but when you are behind schedule for your production orders how can you not look for more capacity?

But again, this is all BS. The NLRB knows there is no case here, but that’s not going to stop them. This is nothing more than politics.

Washington Examiner Article

Posted by: George at April 26, 2011 4:28 PM
Comment #322289

Here’s a Businessweek article at the time of the merger.

For their part, Vought leaders suggest they’ve been financially overwhelmed by the effort and are relieved at Boeing’s takeover. Vought CEO Elmer Doty said in the same Boeing statement that “the financial demands of this program are clearly growing beyond what a company our size can support.”
Boeing has been pressing hard on Vought, an outfit based in Irving, Tex., and owned by private equity firm The Carlyle Group, as the repeated delays in the Dreamliner have cost it orders for the jet and public embarrassment. Vought’s plant assembles structures and installs various systems in aft fuselage sections. Vought in 2007 sacked its top 787 project executive, and Boeing sources told the Seattle Post-Intelligencer that his firing was linked to problems in delivering work on the plane. That same year, analysts complained of “unfinished” facilities. Vought officials say they have “fully facilitated” the factory now.
Posted by: George at April 26, 2011 4:36 PM
Comment #322293

One last link! Unrelated to Boeing, but it shows the level of hardball this Administration is playing.

Using FAR 9.4 against named corporate officials when they can’t prove any link in a court of law. Putting a supplier on the EPLS is an agency level decision and no judge required.

WSJ

Posted by: George at April 26, 2011 5:26 PM
Comment #322295

tdobson-
And you take their word for that? It could just as easily be what they say, strategically, to justify something that is not so necessary. Nobody said that a business has to tell you the truth, especially not when they’re the subject of a lawsuit. Their lawyers, as a matter of fact, would advise them not to say something that would admit the offense by default.

George-
You know what the irony about that merger is? Boeing set about to try and outsource and offload the costs of doing everything. Instead, they got a bloody nightmare because they couldn’t coordinate the parts suppliers. But that, by the way, is still irrelevant to the matter here.

The question is whether this factory shift was just about union-busting, punishing the unions for standing up for themselves.

Posted by: Stephen Daugherty at April 26, 2011 5:39 PM
Comment #322296

Forgive me Stephen for being so dumb. I forgot that liberals can tell what people are thinking even if it’s not what they are saying.

By the way, Didn’t he say that in the same article that you quoted in comment #322280?

Posted by: tdobson at April 26, 2011 5:51 PM
Comment #322304

tdobson,

The quote from Boeing cuts both ways. If it references recent difficulties with the union and is tied to the secret negotiations with the union regarding a ten year no strike clause, the change in plans for a second Washington assembly line could be interpreted as an attempt to retaliate for recent strikes and as a strong arm negotiating tactic. On the other hand, it could mean only a general concern about strikes and disruption of business. That is a question of fact, for which there is a hearing.

Posted by: Rich at April 26, 2011 8:31 PM
Comment #322305

The question is whether this factory shift was just about union-busting, punishing the unions for standing up for themselves.

That might be the question if there was a “factory shift” Stephen, but the plant in S.C. was already working on the plane and the workers in Seattle weren’t displaced (instead they’ve gained employment there). Should the workers in North Charleston lose their jobs because they are non-union in a Republican State?

By the way, I was in Seattle a few weeks ago and saw a Dreamliner during takeoff practice. Massive airplane. The Boeing Museam of Flight is a cool stop and they have a great observation tower.

Posted by: George at April 26, 2011 8:47 PM
Comment #322306

It is interesting to define “retaliation”.

The problem for Boeing is that its union labor is expensive and unreliable. Unreliable because they go on strike.

Let’s think of this in more personal terms. Imagine a man who cheats on his wife and then accuses her of retaliating against him when she wants to leave him. He may well be punished, but he has it coming.

Why would a firm want to keep expanding in a place where the labor force is expensive and unreliable when it can expand in a place where costs are less and labor is more friendly.

Posted by: C&J at April 26, 2011 9:01 PM
Comment #322310

C&J,

Your analogy makes perfect sense if the union was bargaining in bad faith or engaged in unauthorized “wild cat” strikes. But that has not been alleged. It may well be that Boeing has been the party negotiating in bad faith. Nobody has alleged that the strikes were illegal. Both parties appear to be playing hardball with each other. Both parties are subject to liability for their tactics. Boeing will have a full opportunity to dispute the allegations of retaliation and improper job threats. That is the purpose of the hearings.

Posted by: Rich at April 26, 2011 9:31 PM
Comment #322313

Rich

The fact is that strikes and expensive labor is a problem. Boeing wants to find a more reliable and less expensive labor force. They are not shutting down in Washington, just wisely understanding that South Carolina offers better opportunities for growth.

Re “unauthorized” strikes. Who authorizes strikes? Could it be the union. So the union is responsible for strikes.

Posted by: C&J at April 26, 2011 9:51 PM
Comment #322316

C&J,

Who authorizes lockouts? Could it be management? So management is responsible for shutdowns.

Posted by: Rich at April 26, 2011 10:08 PM
Comment #322336

Were there lockouts or just strikes?

In either case, it looks like we have a bad marriage here. Maybe better to split up and move to South Carolina.

Posted by: C&J at April 27, 2011 7:41 AM
Comment #322342

C&J,

After reading a bit about the Boeing controversy, I have come to believe that there is fault on both sides. Boeing initially moved into South Carolina not because it found South Carolina to be a better place to do business, but rather, because a sub contractor in South Carolina (Vaught) was failing to meet its production goals. It bought out Vaught and essentially took over management of the plant. Ironically, the union involved in the NLRB complaint actually represented the workers at the South Carolina plant until very recently. The South Carolina workers voted to decertify the union after it negotiated a lousy contract and rammed it down their throats in a late night vote without notice. I am sure there are other factors (interstate competition for business, etc.) but this seems to be a fight between two struggling entities. It is a bad case for precedent.

Posted by: Rich at April 27, 2011 9:43 AM
Comment #322343

Rich

I am not trying to be truculent, but I don’t see that the NLRB has any case at all.

And it looks from the information you provided that there is even LESS reason for NLRB involvement. It just is none of the Federal government’s business where Boeing wants to expand its operations.

The Obama Administration is heavily supported by union leadership. They are paying back political favors with political favors. The really nefarious part is that the Obama folks have determined that nearly half of our American states are worse than developing countries. Obama’s folks would rather export jobs to China than to Carolina. How rotten is that?

Posted by: C&J at April 27, 2011 9:55 AM
Comment #322347

C&J,

“It just is none of the Federal government’s business where Boeing wants to expand its operations.”

There is no disagreement on that point. In fact, Boeing used a failed worldwide outsourcing model for its Dreamliner production without any Federal government interference.

The issue is whether Boeing in the midst of attempting to correct its outsourcing model while also grabbling with union problems used job displacement or threats of job reduction to leverage its negotiations with the union.

Posted by: Rich at April 27, 2011 10:42 AM
Comment #322353

Rich,
According to the New York Times article linked to by SD earlier in this thread, there were no job displacements in Washington. In fact, they added 2000 new jobs.

Posted by: tdobson at April 27, 2011 3:15 PM
Comment #322361

C&J,

In plain language it goes somewhat like this: you union guys have been a pain in the arse, you struck in 2008 and are reluctant to agree to a ten year no strike clause, so you know what, we are going to put that second production line that was scheduled for Washington in South Carolina. It won’t benefit us economically, but maybe you will get the message that we want concessions or we will move jobs.

Posted by: Rich at April 27, 2011 6:00 PM
Comment #322363

Wouldn’t be the first company to do that Rich.

Posted by: KAP at April 27, 2011 6:05 PM
Comment #322364

C&J-
Refer back to the comments of the executives themselves, who said that labor costs were not a factor.

Posted by: Stephen Daugherty at April 27, 2011 6:05 PM
Comment #322367

Stephen,

As I pointed out in comment #322287 above They can’t AFFORD a work stoppage every three years.
Direct labor costs are not the problem. The possibility of future work stoppages is a problem which will delay production and be expensive. Remember the reason they need another plant is because the current one cannot keep up with production.

Posted by: tdobson at April 27, 2011 6:48 PM
Comment #322371

Rich

I understand the union was a pain. Naturally, anybody would like to avoid such people. Nothing wrong with that.

But it is none of the Federal government’s business. What if they wanted to move to Oregon? Would that be okay?

And maybe the union should be more reasonable anyway. It is part of the problem. Unions helped destroy the auto industry.

I will tell the truth. I do not believe unions are necessary anymore.

Posted by: C&J at April 27, 2011 8:10 PM
Comment #322377

C&J,

Look, lets make this simple. Boeing can move its company to anyplace it wants in the world. The union cannot do anything about that. The federal government cannot do anything about that. However, when it is engaged in a contractual relationship with a union, it cannot use job displacement or threats of loss of jobs as retaliation for union actions or in contract negotiations. That is my understanding of the issue.

Posted by: Rich at April 27, 2011 9:05 PM
Comment #322379

Rich

As others have pointed out, Boeing added jobs in Seattle. Naturally, if the union continues to be troublesome, the firm will not wish to continue. It is not retaliation. It is just factual.

The message is that if the union doesn’t shape up, things will fall apart.

Posted by: C&J at April 27, 2011 9:53 PM
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