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Originally published Tuesday, June 14, 2011 at 4:56 PM

Judge urges Boeing, NLRB to settle dispute

Boeing and the Machinists were urged to settle a dispute over a new, nonunion 787 Dreamliner plant in South Carolina by the administrative-law judge who began hearing the case Tuesday.

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Boeing and the Machinists were urged to settle a dispute over a new, nonunion 787 Dreamliner plant in South Carolina by the administrative-law judge who began hearing the case Tuesday.

"Settlement always needs to be considered, particularly when the parties have an ongoing relationship," Judge Clifford Anderson said in Seattle.

The National Labor Relations Board (NLRB) claims that Boeing violated Machinists' rights to strike by building the company's first commercial plant outside the Seattle area to avoid future work stoppages.

The case may take four to six months and extend to five years if either party appeals the decision, Anderson said.

"All it generates is acrimony," he said.

Boeing cited a need for production stability in choosing North Charleston, S.C., in 2009 for the plant, which will replicate 787 work already begun in Everett. The decision came after the Machinists' 26,000 members stopped work for two months in 2008, their fourth strike since 1989.

Michael Luttig, the Chicago-based company's general counsel, has said he expects to lose the labor case initially and will appeal to the Supreme Court if needed. Boeing, which filed a motion to dismiss the case Tuesday, rejected a settlement proposal from the union at the end of May as unreasonable.

That offer sought guarantees including a commitment to build Boeing's next new jet in the Puget Sound region, the plane-maker said. The company plans to decide this year on a new narrow-body jet that could replace the 737 by 2020.

"Boeing is always open to a settlement," William Kilberg, an attorney for Boeing with the Washington, D.C., office of Gibson, Dunn & Crutcher, told reporters outside the courtroom after the judge called a recess. "What Boeing is not open to is commitments with regard to our guarantees and how it will place work in the future."

The plane-maker moved to dismiss the case because "no one was hurt in Washington state," where the company has added jobs since 2009, Kilberg said.

The case "makes life very difficult for Boeing" because it will cast a shadow over investment decisions during the proceedings, Kilberg said. Boeing has spent about $1 billion on the South Carolina plant, which opened last week and is scheduled to produce its first 787 next year.

"After 787 production execution, labor issues pose the single biggest risk to our positive Boeing thesis," Kenneth Herbert, a San Francisco-based analyst with Wedbush Securities said Tuesday. "We still feel a settlement is the most likely scenario."

Boeing has said there will be a maximum of 1,200 machinists working on the 787 line in Everett once it's fully up and running, and efficiencies might bring that number down to 800, said Connie Kelliher, a spokeswoman for the Machinists in Seattle.

There are 3,300 working there now, preparing for a temporary surge line and doing work left undone by suppliers, and that means at least 2,100 would lose their jobs, she said.

Many of the workers Boeing has hired in the region have been to support the production increases planned for the 737 and 777 programs and to replace retiring machinists, not for the 787 line, Kelliher said.

Lawyers for the NLRB and Boeing largely dealt with administrative matters before the judge and did not make their opening arguments.

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