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Will Boeing Blink in Labor Battle?

Stocks in this article: BA

EVERETT, Wash. ( TheStreet) -- Boeing (BA) could resolve a conflict with the National Labor Relations Board if it built 10 787s a month in Everett, but the company has already invested $750 million in a new 787 line in South Carolina.

But compromise is possible in the festering conflict over the NLRB general counsel's April 20 ruling that Boeing's decision to build in Charleston, S.C., represented an illegal retaliation for a 2008 strike by the International Association of Machinists. The general counsel said Boeing should put the work in Everett.

In a recent interview with TheStreet, NLRB spokeswoman Nancy Cleeland clarified that the ruling, which has provoked a hysterical reaction reflecting intense competition between states for manufacturing jobs, is limited in scope. She said it relates specifically to the production of three airplanes a month, the initial quota in Charleston.

Boeing already has the capacity to build up to 10 787s a month in Everett, seven on a regular line and three on a surge line. At the company's investor day presentation on Tuesday, Jim Albaugh, CEO of Boeing Commercial Aircraft, said the company is potentially looking beyond its planned ramp to production of 10 787s aircraft a month by 2013.

"If we get to 10, we can probably get to 11, and if we can get to 11, we can get to 12," Albaugh said. "We're probably not done on this program yet."

Also at the investor day session, CEO Jim McNerney said Boeing and the IAM are engaged in a relatively high level of early meetings preceding a Sept. 8, 2012, contract expiration. "Believe it or not, I'm hopeful we can find a way to avoid a work stoppage," McNerney said. "We're not going to try to squeeze the union to death and hope they don't try to do the same with us."

The NLRB ruling followed a complaint filed by the IAM, which represents about 35,000 Boeing workers. On Wednesday, IAM spokesman Frank Larkin said, "It's premature to discuss specifics, but we've always been willing to discuss possible remedies with Boeing."

Meanwhile, The Seattle Times reported Sunday that Washington Gov.r Chris Gregoire "pointedly chose not to take sides, saying she hopes Boeing and the union can settle it out of court."

Referring to the barrage of politicians who have denounced the NLRB ruling, Gregoire said: 'The politicians ought to get out of the way and be quiet -- the politicians are becoming the problem."

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