April 26, 2011

Regulatory Thuggery at the NLRB

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 10:02 am

I heard about this late last week, but with this administration, it’s virtually impossible to document all the horrors in real time.

According to the Obama National Labor Relations Board, a unionized company can’t set up a non-union plant in another state, even if doing so will have zero negative effect on employment at unionized plants. The NLRB decided this AFTER aerospace giant Boeing had already invested $2 billion and 17 months in the project.

I’m not kidding.

A Wall Street journal editorial on Thursday called the NLRB ruling “one for the (dark) ages.”

They’re not kidding (bolds are mine):

We knew that Big Labor had political pull at the Obama-era National Labor Relations Board, but yesterday’s complaint against Boeing is one for the (dark) ages. By challenging Boeing’s right to build aircraft in South Carolina, labor’s bureaucratic allies in Washington are threatening the ability of states to compete for new jobs and investment—and risking the economic recovery to boot.

In 2009 Boeing announced plans to build a new plant to meet demand for its new 787 Dreamliner. Though its union contract didn’t require it, Boeing executives negotiated with the International Association of Machinists and Aerospace Workers to build the plane at its existing plant in Washington state. The talks broke down because the union wanted, among other things, a seat on Boeing’s board and a promise that Boeing would build all future airplanes in Puget Sound.

So Boeing management did what it judged to be best for its shareholders and customers and looked elsewhere. In October 2009, the company settled on South Carolina, which, like the 21 other right-to-work states, has friendlier labor laws than Washington. As Boeing chief Jim McNerney noted on a conference call at the time, the company couldn’t have “strikes happening every three to four years.” The union has shut down Boeing’s commercial aircraft production line four times since 1989, and a 58-day strike in 2008 cost the company $1.8 billion.

This reasonable business decision created more than 1,000 jobs and has brought around $2 billion of investment to South Carolina. The aerospace workers in Puget Sound remain among the best paid in America, but the union nonetheless asked the NLRB to stop Boeing’s plans before the company starts to assemble planes in North Charleston this July.

The NLRB obliged with its complaint yesterday asking an administrative law judge to stop Boeing’s South Carolina production because its executives had cited the risk of strikes as a reason for the move. Boeing acted out of “anti-union animus,” says the complaint by acting general counsel Lafe Solomon, and its decision to move had the effect of “discouraging membership in a labor organization” and thus violates federal law.

It’s hard to know which law he’s referring to.

Laws? They don’t need no stinking laws.

Once again, this is what tyranny (“arbitrary or unrestrained exercise of power; despotic abuse of authority”) looks like.


… Beyond labor politics, the NLRB’s ruling would set a terrible precedent for the flow of jobs and investment within the U.S. It would essentially give labor a veto over management decisions about where to build future plants. And it would undercut the right-to-work statutes in 22 American states—which is no doubt the main union goal here.

… (Obama’s) appointees are determined to impose it by regulatory fiat—no matter the damage to investment and job creation.

In my view, this also has important implications for companies considering going public. The best way to get around the NLRB’s ruling for nonpublic companies is to set up a different company with a slightly different ownership structure to do work in more business-friendly states. That option was either unavailable or more difficult to finesse for publicly held Boeing. Sarbanes Oxley has already made going public difficult enough.

Lest we forget, Boeing is headquartered in Chicago, which celebrated like crazy when the company moved its HQ there from Washington State in 2001. Hmm — There’s a potential partial use for that South Carolina building.

Those who ridicule the notion that “It’s the Uncertainty, Stupid,” i.e., that business uncertainty caused by arbitrary government and regulatory action and inaction is holding back the economy, please take note. Nearly three full years after the POR (Pelosi-Obama-Reid) Economy deliberately-induced regime of uncertainty began doing its damage, it is by far THE biggest factor causing the economy to underachieve.

Tennessee Senator Lamar Alexander’s WSJ op-ed today addresses the real implications for another important industry:

… now unions want to make it illegal for a company that has experienced repeated strikes to move production to a state with a right-to-work law. What would this mean for the future of American auto jobs? Jobs would flee overseas as manufacturers look for a competitive environment in which to make and sell cars around the world.

Our goal should be to make it easier and cheaper to create private-sector jobs in this country.

That this is not the Obama administration’s goal could not be more obvious.


1 Comment

  1. [...] there is a legal basis for what the NLRB is doing, the WSJ’s editorialists couldn’t find it. An administration that was serious about improving the economy wouldn’t be doing [...]

    Pingback by BizzyBlog — May 1, 2011 @ 9:51 am

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