Boeing looks to nonunion Southern plant

August 13, 2009

Darrin Hoop looks at Boeing’s efforts to roll back union gains at a key South Carolina plant as the company weights a much bigger move into the anti-union South.

THE FUTURE of unionism is in doubt at a South Carolina plant that supplies parts for Boeing's next-generation aircraft, the 787 Dreamliner.

On July 30, Boeing finalized the $580 million purchase of a Vought Aircraft Industries plant near Charleston, S.C. On the same day, a worker at the same plant filed a request with the National Labor Relations Board (NLRB) to decertify the International Association of Machinists (IAM) as the workers' representative.

According to the NLRB regional office in Winston-Salem, N.C., this means at least 30 percent of the workforce signed a petition indicating they no longer wanted to be represented by the IAM. The plant was first organized back in October 2007, when, by a 67 to 60 margin, the workers voted to join the union. More than a year later, the workers' first contract was ratified by 92 percent of the workers, according to the IAM.

However, anti-union workers claim that only 13 workers attended the vote to ratify the contract. While the IAM won't comment on the turnout, the Charleston Regional Business Journal reports that the union held the vote at the last minute because Vought had announced it would be idling the plant for several months. The company was about to lay off most of its workers the day after the ratification vote. The contract was management's proposal, but it contained a key element that the union had fought for --the right to be recalled from layoffs based on seniority.

Normally, there can only be a vote to decertify a union between 60 and 90 days before a contract expires. In the case of Vought, anti-union workers would have had to wait until 2011 to try and oust the union. However, all that changed when Boeing bought the plant. Now the NLRB has to rule on whether it will allow an election to take place and, if so, when.

The North Carolina plant is important for both Boeing and the IAM's future in the South. An essential component of the 787, the future Boeing cash cow, is assembled there. Vought and Global Aeronautica produce 60 percent of the plane's aft fuselage at the plant near the Charleston International Airport. Last year, Boeing acquired Vought's 50 percent stake in Global Aeronautica for $55 million.

IN ADDITION, Boeing is in the process of selecting a site to build a second assembly line for the 787 in addition to the current location is in Everett, Wash. The thousands of workers in that plant are IAM members who have struck Boeing four times since 1989. The most recent was a two-month strike that ended in victory on November 1 of last year. It's quite possible--even likely--that Boeing may choose to expand the former Vought facilities in anti-union South Carolina, which raises the stakes in the decertification fight.

In Washington State, local Democratic politicians and Boeing management are using the threat of building the second 787 assembly line in South Carolina as way to pressure IAM District 751 to agree to a "no-strike" clause that would prevent the union from striking when its current deal expires in 2012.

On August 4, Seattle Times columnist Bruce Ramsey wrote:

Rep. Norm Dicks, a Democrat, said that if a no-strike deal is not reached between the Machinists and Boeing, the jobs on a second 787 line "are going to leave" Everett.

"The host of the conference (Saving Washington Aerospace conference held in Lynwood, WA on August 3), Snohomish County Executive Aaron Reardon, also a Democrat, said, "We must be judicious in how we execute the responsibilities the law gives us." He was talking about the right to strike.

The politicians would like Boeing and the IAM to agree to a third-party arbitration to solve any future contractual disputes. For its part, the IAM is saying no.

"They aren't offering anything" IAM President Thomas Buffenbarger told reporters. "This is all a drama being played out for the benefit of the politicians and the Boeing Company. We're not going to agree to a no-strike agreement. They had their chance."

In the midst of all the talk of a possible "no-strike" clause, Boeing and the IAM agreed on July 28 to a voluntary layoff package. According to IAM District 751 President Tom Wroblewski, the union had been pressing for such a deal since Boeing announced it was going to cut 10,000 jobs companywide this year. Washington State has already lost 3,000 Boeing jobs this year.

The voluntary layoff incentives include up to 13 weeks of severance pay and continued health benefits for six months. In addition, workers 49 and older who volunteer will be eligible for a company pension when they turn 55.

Will the IAM, facing layoffs and the threat of the second 787 assembly line being built in South Carolina, be able to withstand this pressure?

IT IS true that Washington State has much to offer Boeing: billions of dollars in tax breaks, a highly skilled workforce, a massive amount of existing aerospace plants and infrastructure, access to an ocean port, an extensive railway system, and many aircraft parts suppliers throughout the Puget Sound area. All these are real factors Boeing will consider in determining where the second assembly line will be located.

However, the most enticing factor that would lure more Boeing business to the South is cheap labor costs. South Carolina currently has the third-lowest unionization rate in the U.S. at 3.9 percent (behind only North Carolina and Georgia). According to the Bureau of Labor Statistics, the median weekly earnings of a union member in the U.S. in 2008 were $195 more than a non-union member. That adds up to more than $10,000 a year more. Once other compensation like health benefits and pensions are factored in, it's easy to see why both U.S. and foreign industry have increasingly set up shop in the South over the last couple of decades.

Machinists both in Washington and South Carolina would be wise to take this threat seriously. Boeing has already moved its headquarters to Chicago. There's no reason to believe that it couldn't invest in a long term plan to move an increasing amount of its manufacturing to the South.

Besides, Boeing is flush with cash. Its second-quarter profits were up 17 percent. It posted income of $998 million, up from $852 million a year ago.

So Boeing has the money, competition from Airbus, corporate arrogance and disregard for workers' well-being, all creating a very realistic likelihood it will continue investing in the South.

The question is: Does the IAM have the ability to defend its territory in its old-guard stronghold in the Northwest while defending its recent gains in South Carolina? Can the IAM sinking much deeper roots in the South?

The future of the union hangs on the answer.

Further Reading

From the archives