Dominic Gates at The Seattle Times has a story that’s important to Washington State and South Carolina: talks between Boeing and the IAM are deadlocked, he writes.

Boeing wants a 10-year, no-strike contract in exchange for putting Line 2 of the 787 in Everett. The IAM wants a promise the 737 replacement will be in Washington, too, Gates writes–but Boeing is unwilling to make this guarantee.

Boeing believes that the $1.5bn cost of putting Line 2 in South Carolina, the risk associated with it (new, untrained workers) and the “modest” inefficiencies of having two lines far apart, will be offset by diversifying its labor force and the stability in the production line. The IAM’s 57 day strike last fall cost the company $2bn.

There are several fallacies in Boeing’s thinking, we and others we have talked to believe. These are:

• If Boeing thinks it will have labor peace by putting Line 2 in Charleston’s non-union shop, think again, say observers. The move will enrage the IAM 751 here, leading to “work-by-the-rules” actions that will slow production; and
• This would likely happen not just on the 787 line at Everett but also the 747, 767 and 777 lines there; and the 737 line in Renton; and
• Parts that come from Charleston to Everett could be tagged as not up to specification by IAM members, leading to disruptions and delays; and
• If management thought 2008 labor negotiations were difficult, wait until 2012. These would make 2008 look like a Sunday picnic; and
• Locating Line 2 in Charleston would do absolutely nothing to prevent future strikes tat in all likelihood would shut down Charleston because of the close production and assembly ties between Charleston and Everett.

We recently met with a major supplier to Boeing on all its 7-Series airplanes with knowledge of operations at Renton, Everett and Charleston. This supplier, who has no love for the IAM or for management’s mismanagement of the 787 and 747 programs, said it would be crazy to put Line 2 in Charleston. It would take at least four years to get the line running smoothly. The IAM’s retaliation in Washington would be a “bloodbath,” this supplier predicts.

That this would certainly lead to Boeing putting the 737 and 777 replacements elsewhere and over the next couple of decades completely wind down operations in Washington is besides the point. The IAM would rather fight than compromise in such circumstances, observers tell us.

Other possible consequences that get little attention are what happens to support for Boeing’s bid for the KC-X contract? The IAM and its parent, the AFL-CIO, have already come out swinging on behalf of Boeing. The engineer’s union, SPEEA, is also supporting the effort, as are Washington’s Congressional delegation and state politicians. Will any or all of this support dry up or at the least become tepid if Boeing locates Line 2 out of the State? We know of one party mentioned here that says it will stop supporting the tanker bid if Line 2 isn’t located in Everett.

CEO Jim McNerney understandably wants stability. But putting Line 2 in Charleston is hardly a guarantee that he will get it. We think quite the contrary. The instability will only get worse.