This recession has been long on horror stories. From persistent unemployment to crisis-level deficits, there have been very few things to provide us with any sense of optimism, much less cheer about. But Boeing has been the rare glimmer of hope. In the darkest days of the recession they made a decision to invest $1 billion in a new factory in South Carolina. It was a project that employed thousands in the construction phase and now promises to employ thousands more as workers are being trained to build planes in the brand new 1.2 million square foot plant.
Unfortunately, what should have been an American success story, a reminder of the promise of America’s unrivaled free-markets, has instead become yet another depressing episode of government intervention.
The National Labor Relations Board (NLRB), which has taken a decidedly pro-union turn under the Obama Administration, filed a complaint in late April over its decision to open the plant in South Carolina rather than Washington State where it has operated a production facility for the last 20 years.
At issue is whether Boeing acted in a “retaliatory” manner in deciding to expand production in South Carolina, which is a right to work state, versus union-friendly Washington. Admittedly, Boeing has had significant trouble in their dealings with unionized workers. In the past 20 years, Boeing union workers have gone on strike four times, the longest being 69 days. Analysts estimated that the most recent strike in 2008 costs the company as much as $120 million per day. What the NLRB is labeling “retaliation” most would consider sound business judgment.
As Boeing CEO Jim McNerney explained in an op-ed in today’s Wall Street Journal,
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.
The move did nothing to eliminate or even reduce production in Washington’s Puget Sound area. In fact, Boeing continues to add jobs in Washington. The New York Times reported that Boeing has increased its unionized employment by 2,000 workers since its decision to expand to South Carolina. Furthermore, within the past year Boeing has added another manufacturing facility in Illinois, a pro-union state.
The NLRB’s complaint is nothing more than a naked assault on America’s free market heritage. Such unprecedented legal action attempts to insert the pro-union desires of the Obama Administration for the economic and financial sense of the company when making business decisions. The end result of such blatant overreaching will be to further push economic growth overseas.
Our corporations are already laboring under the second highest corporate tax rate in the world and an antiquated “worldwide” tax system that double-taxes their repatriated earnings. Is it wise to now intimidate them into only locating in union-friendly states which may demand uncompetitive wages or benefits? As Senate Republicans stated in their letter to President Obama, “America will not win the future if Washington penalizes workers in states that have discovered winning economic strategies.”
Sadly, it appears Obama’s vision for winning the future has little to do with fostering economic growth, and a lot to do with placating his union friends.