In a rally to support the ongoing challenge by the National Labor Relations Board to ’s opening of a 787 factory in North Charleston, S.C., members of the International Association of Machinists and Aerospace Workers (IAM) say the company’s own documents show building the plant was “the highest-risk option.”
Using Boeing documents revealed during a current hearing before an administrative law judge in Seattle, the union’s District Lodge 751, which prompted the NLRB complaint, says Boeing’s “Project Gemini,” the company’s name for finding a second final assembly line for the 787, was shown to have the highest financial and labor risk when compared with the alternative of keeping the line in Everett, Wash., the traditional home for Boeing’s widebody jet production.
Boeing has not put a specific price tag on opening the North Charleston factory—estimates have ranged from $750 million to $1 billion—but in its planning documents, it cites a $1.5 billion figure.
Comparable costs are not presented for developing a second final assembly line in Everett, but they would be far lower since the company already has a plant there. Boeing will develop a 787 “surge” line in Everett as it begins the arduous task of pushing the current two-airplanes-per-month build rate to 10 per month by the end of 2013. The plant floor assigned for that line is now handling out-of-sequence production work because of delays.
“The Project Gemini documents prove what we’ve suspected all along—that Boeing moved to Charleston to punish our members for exercising their union rights,” says District 751 spokeswoman Connie Kelliher.
The documents were presented by Boeing executives to the company’s board of directors in April, August and October 2009. The timing of IAM’s release on Friday comes as Boeing prepares to celebrate the first delivery of the 787 to launch customerSept. 26-27 in Everett.
The union also is fighting efforts by Republican members of the U.S. House of Representatives to strip the NLRB of any power to force Boeing to close the North Charleston factory, as the IAM wants, and return its work to Everett. That move is unlikely to survive in the Democratic-controlled Senate.
NLRB Acting General Counsel Lafe Solomon has charged that Boeing selected the North Charleston location in retaliation to a 2008 IAM strike. Supporting that charge, Solomon alleges, are comments made by Boeing executives complaining about the cost of periodic strikes. Boeing has denied any retaliatory intent in shifting the plant’s location.
A Boeing official could not be reached to respond to the IAM’s latest assertions.
Boeing was already operating two other 787 factories in North Charleston when it began considering the city as an alternative site for the airplane’s final assembly. The Project Gemini documents released by the IAM concern pro and con arguments of cost vs. benefits made by formerPresident and CEO Scott Carson and, later, his successor, James Albaugh. Their findings flowed out of studies by a “Red Team” favoring South Carolina and a “Blue Team” supporting Everett.
Red Team risks included such issues as the capability and capacity of dual source suppliers, training issues of an inexperienced South Carolina workforce, and customer acceptance of the two-plant solution. The Blue Team’s risks included continued dependence on union workers and the higher costs of operating in Washington state.
The evolution of the presentations reflects an original plan that South Carolina would concentrate on producing the stretched. Since then, Boeing has determined that both Everett and North Charleston will produce all models of the airplane.
By Oct. 26, 2009, Albaugh’s presentation was providing more specific cash costs and manufacturing details. Everett’s strengths included the experience of its unionized workforce and the ability to draw on other programs. It also offered the lowest cost of implementation and a simplified supply chain. But its negatives included the perpetuation of “an unbalanced relationship with [the] IAM and out-of-market economics,” as well as the fact that Boeing would not have diversified its final assembly and delivery capability.
Charleston’s strengths were largely the opposite of Everett’s weaknesses. It allowed Boeing to diversify its composite manufacturing and assembly capabilities, created a non-union labor choice and increased options for future workplace decisions.
But Charleston “cost $1.5 billion in cash and reduces earnings on one-third of [the] backlog.” It also raised the potential of labor backlash, including the possibility of a “payback” strike in 2012, work-to-rule slowdowns and the chance that Boeing might lose support for its bid to win the U.S. Air Force’stanker contract. Boeing prevailed in that competition.
Albaugh said other cons included additional supply chain complexity, a stretch-out in management and potential loss of Washington state’s congressional delegation’s support for theprogram.