Republished in the Boulder Daily Camera
In July of this year I wrote that the traditional media had completely missed the importance of the NLRB’s complaint against Boeing for retaliating against its union. Much of the rest of the year the same media and Congress spent arguing over a minor tactical issue – was the NLRB entitled to order a company to relocate a plant as a remedy for publicly retaliating against a union?
While the politicians bickered, Boeing’s stock slid from a high of $80.65 at the time of the Acting General Counsel of the NLRB’s press release confirming he intended to proceed with the case to $56.01 in the fall. At the bottom of that pit Boeing apparently entered serious negotiations to resolve the case. An astonishing loss of $18.5 BILLION in shareholder value.
A loss that was completely and utterly avoidable. A loss that management either negligently or intentionally generated through violating the most basic elements of labor law 101. As a general counsel of two large multi-billion dollar manufacturing companies in the United States with large unions, I remain astonished at CEO Albaugh’s video taped interview repeatedly stating that the work was moved to South Carolina because of the union’s strikes. It is even more astonishing that Boeing’s press spokesman clearly stated that the union’s protected strike activity was the major reason the work was moved.
Every executive with a union knows that you cannot retaliate against a union for striking. You have hours and hours of annual training on how to interact with a union in accordance with the byzantine laws of the NLRB. At times it is not easy to know what you can and cannot say, but the easiest area of compliance is you cannot retaliate for organizing or striking. It may be fun to let off steam, to show your politics, to break out of the NLRB’s straight jacket, but is management really paid to stroke its emotional organ with the lubricant of shareholder value?
Without the video and other public statements of retaliation, Boeing could have simply moved the work to South Carolina without challenge. Even a quick review of the NLRB complaint reveals the agency was not contesting the new plant in South Carolina. Section 6 of the complaint makes it clear that management’s statements confirming their retaliatory intent were the violation, not the move. Hundreds of businesses are relocating or expanding in right to work states. There is nothing new about that. What is new is this one was dumb enough to say why they were doing it!
A common theme regarding the case is that the law regarding union retaliation is ridiculous. No member of management, including myself, ever wants a union between themselves and their employees. But the law is the law. You simply cannot ignore it because it is out of date, inefficient, or you do not agree with it. Certainly, you can lobby Congress to change the law. But prior to Congressional action, you cannot bet $18.5 billion of shareholder value on what in my two decades of experience was a total loser of a case.
Boeing of course mounted a vigorous defense in both the agency, in Congress, and with the public. But you cannot confuse the fact that for enough money you can create a defense strategy with the fact that you made a huge blunder. It is inescapable that a $1.5 billion plant had an uncertain future for years wrapped up in a hopelessly divided agency paralyzed between dysfunctional political parties. That was the headline that dominated the press coverage and ultimately drove down the stock price prior to the announcement of Boeing’s surrender to the union.
A critical sign of leadership is the ability to admit error and learn from it. And as Boeing’s shareholders enter the proxy season in the spring and are asked to vote on board nominees and executive pay will they hold the board and management accountable for the destruction of $18.5 billion dollars of value? If I were a shareholder I would want to hear management indicate they have learned a powerful lesson. Absent such a message, it would be an easy vote against the board slate and for accountability.