On the Job Hunt: Union Exporting Jobs
Boeing V. Union
When Boeing recently decided to build the second assembly line for its 787 Dreamliner plane in Charleston, South Carolina, the politicians and union members in Washington State howled in protest. ‘How could they?’ ‘Was there no loyalty to Seattle?’ Boeing explained the decision by saying it came down to labor stability and long-term competitiveness. Translation: No more costly strikes and more flexibility from its labor force. Company officials decided that those goals were not attainable as long as the jobs were held by members of the International Association of Machinists. And after getting huge tax breaks from the South Carolina Legislature, Boeing bolted.
The IAM says the company was only negotiating with the union in order to get a sweeter deal from Charleston. They point to the fact that Boeing hired a lobbyist months ago and bought land adjacent to an existing facility where the new plant will be built. The union, however does not acknowledge that it would not give Boeing everything it wanted in exchange for the 3,000 jobs. The company wanted a 10-year, no strike contract. IAM offered an 8-year contract. Boeing wanted to give 2% annual pay raises. The union wanted 3% plus $15,000 worth of bonuses over the next 6 years. Also, the IAM was asking for a guarantee from Boeing that it would build all future new planes in Washington state and demanded that Boeing remain neutral when the union tried to organize in plants that are currently non-union. In other words, the union wanted to tie the company’s hands for years to come. Boeing would have none of it.
And so a trend that we have seen in the auto industry and the aerospace industry continues … manufacturing jobs leaving strong union states for the non-union South. Did the union shoot itself in the foot? Perhaps. The new assembly line in South Carolina makes it more likely that when Boeing has to build a replacement for the 777 or the 737 it will leave Seattle for Charleston or elsewhere.
The move by Boeing does come with substantial risk, however. While it would not have to build much in the way of new infrastructure in Seattle, Boeing does have to construct a 600,000 square foot plant for the 787 assembly. That will cost an estimated $1.5 billion. In addition Boeing will have to train a whole new workforce to build it’s most important new plane in over a decade and a plane that is already 2 years behind schedule.