Boeing Is Pro-Growth, Not Anti-Union

By JIM MCNERNEY

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 nation's 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 unemployment—with the construction phase alone estimated to create more than 9,000 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 them—and 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.

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ASSOCIATED PRESS

Boeing employees work on the 787 Dreamliner at the North Charleston, S.C., facility.

The NLRB is wrong and has far overreached its authority. Its action is a fundamental assault on the capitalist principles that have sustained America's competitiveness since it became the world's largest economy nearly 140 years ago. We've made a rational, legal business decision about the allocation of our capital and the placement of new work within the U.S. We're 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 NLRB's overreach could accelerate the overseas flight of good, middle-class American jobs.

Contrary to the NLRB's 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 couldn't meet expectations on our key issues, and we couldn't 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, we've since added more than 2,000 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 don't 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 can't get their act together to avoid strikes, we're not going to come back here again. We're already thinking, 'Would we ever risk putting another order with Boeing?' It's 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 company's fabric and key to our success. About 40% of our 155,000 U.S. employees are represented by unions—a 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 principles—not 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 states—lest 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. That's something the administration has said it wants to change and is taking steps to address. It appears that message hasn't made it to the front offices of the NLRB.

Mr. McNerney is chairman, president and CEO of the Boeing Co.