Human Resource Management 12th Edition by John Ivancevich,Robert Konopaske

Exercise 11

Boeing's Decision to Build the 787 Dreamliner in South Carolina: Good Business Decision or Union Busting
Background
The Boeing Company is an influential commercial airplane manufacturer that has weathered the many highs and lows of the economy since its inception in 1916. The company currently operates facilities in 34 states, half of which are right-to-work states. In response to the competitive threat created by a new A350 line of planes by Airbus, its industryleading rival, Boeing began producing its latest model, the 787 Dreamliner at its Puget Sound, Washington, facility in 2003. The overwhelmingly positive reaction by the market to the new 787 models, coupled with several union strikes at the Washington plant, caused Boeing to struggle to keep pace with customer demand.
By 2009, Boeing's backlog of orders for the new aircraft was such that the firm decided it needed to open a new plant. After much consideration, North Charleston, South Carolina, was chosen as the location for the new $1 billion facility that would produce 30 percent of the Boeing 787 Dreamliner line. While this was great news for the hard hit economy of South Carolina, the labor union at the Puget Sound facility felt that moving production jobs away from Washington was unfairly punishing its members. As a result, the International Association of Machinists and Aerospace Workers (IAM) District Lodge 751 filed a complaint with the National Labor Relations Board (NLRB) in March 2010 claiming that "[Boeing's] actions were motivated by a desire to retaliate for past strikes and chill future strike activity."
The ensuing legal battle between Boeing and the IAM brought to light questions about how much influence federal agencies such as the NLRB should be allowed, sparking an intense political debate. In 2010, the problems intensified when the agency upheld the IAM's claim and both sides entered legal dispute resolution proceedings in June of that year.
Position of the Union
The NLRB upheld the union's claims that Boeing's actions demonstrated retaliation against the employees at the Puget Sound facility for strikes that had taken place in the past decade. Members of IAM are concerned that jobs will be taken away from them and given to employees in South Carolina, a right-to-work state.
Another key issue is that the influence of their strikes as a bargaining tool will be reduced or eliminated because jobs can be transferred to the new site to make up for lost production in the event of a strike. Union members feel threatened by comments made by Boeing executives and spokespeople that they claim prove retaliation.
This is a unique situation due to the fact that the majority of retaliation cases involve the direct firing of employees as a result of their union involvement. However, Boeing's actions have been interpreted by the IAM and NLRB as indirect retaliation not necessarily because they are firing employees, but because they are failing to create new jobs that could be provided to workers that belong to the union in Washington. Much of the controversy surrounding the case comes from the fact that there is no precedent for lawmakers to use as a basis in making their decision.
Position of the Company
Boeing spokespeople maintain that they are not breaking any laws and that the move is based on solid economic and financial reasons. They argue that the union strikes in Washington not only reduced profits, but also created problems meeting existing demand and securing future orders. Boeing fears that airlines will be hesitant to place new airplane orders because of the possibility that the delivery will be delayed due to strikes such as the one that took place at the Washington facility in 2008. The company's fears may have merit. American Airlines, whose fleet consisted of 100 percent Boeing aircraft until July 2011, recently signed a contract to purchase 260 Airbus planes and 200 Boeing aircraft, the largest order in the history of aviation, citing "flexibility for the future" as a key driver.
Boeing executives point out that rather than taking jobs away from the Puget Sound facility, they have added 2,000 more positions at the Washington plant in addition to the thousands of jobs created by the new South Carolina plant. The East Coast facility has created several thousand production jobs with Boeing as well as many thousands of positions needed to construct the plant.
In addition to financial concerns, Boeing maintains that the NLRB is overstepping its bounds by telling Boeing where it may conduct business. This may set a precedent that could potentially restrict any company that has facilities in a union-friendly state from expanding into a right-to-work state.
Why do companies like Boeing move significant parts of their operations to right-towork states like North Carolina