Ozark Steel Fabricators, Inc.

OZARK STEEL FABRICATORS Ozark Steel Fabricators, Inc. and United Steelworkers of America, AFL-CIO. Case 14-CA-6228 October 19, 1972 DECISION AND ORDER On December 16, 1971, Trial Examiner Morton D. Friedman issued the attached Decision in this pro- ceeding. Thereafter, the General Counsel and the Charging Party filed exceptions and supporting briefs. The Respondent filed an answering brief. The Board has considered the record and the Trial Examiner's Decision in light of the exceptions and briefs and has decided to affirm the Trial Examiner's rulings, findings,' and conclusions 2 as herein modified, and to adopt his recommended Or- der. The Trial Examiner found and concluded that the Respondent did not violate Section 8(a)(3) and (1) of the Act by locking out its employees following a bargaining impasse, and by thereafter continuing lim- ited business operations with the use of management personnel. While we agree with the Trial Examiner's conclusions that the lockout and subsequent continu- ation of operations with management personnel in the circumstances here did not violate Section 8(a)(3) and (1) of the Act, we do so only for the reasons fully discussed in our recent decisions in Ottawa Silica Company and Intercollegiate Press, et a1.3 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Rela- tions Board hereby orders that the complaint herein be, and it hereby is,, dismissed in its entirety. MEMBERS FANNING AND JENKINS, dissenting: Contrary to our colleagues, we would find in ac- cord with our dissenting opinions in Ottawa Silica, supra, and Intercollegiate Press, et al., 199 NLRB No. 35, that Respondent violated Section 8(a)(1) and (3) of the Act by operating its plant with replacements for' its locked-out employees from February to August 1971. We would find in line with the court's reasoning in Inland Trucking Co. v. N.L.R.B., 440 F.2d 562 (C.A. 7), to which Chairman Miller still apparently sub- scribes, that Respondent's use of replacements for a prolonged period was inherently destructive of the rights of its locked-out employees and therefore viola- tive of Section 8(a)(1) and (3) of the Act without re- gard to any claim that such conduct was motivated by business considerations. However, even if the test of business justification is applied, it is evident from the record that Respon- 847 dent has not succeeded in presenting evidence of legit- imate and substantial business justification for its continued operation during the lockout . Although Respondent contends it had a reasonable apprehen- sion of a strike by the Union, it is clear that, when Respondent announced the lockout and its plan to operate with replacements, it made no mention of any concern about a possible strike . Nor did Respondent at any time ask the Union for assurance that it would not strike. Moreover, the Union had not even taken a strike vote prior to the lockout. As we believe that Respondent's conduct was destructive of protected employee rights and that, in the absence of any clear evidence of the Union's in- tention to strike, Respondent did not have a legit- imate and substantial business justification for its conduct, we would find that Respondent violated the Act. i In the absence of exceptions thereto, we adopt pro forma the Trial Examiner's statement that David Laut, son of the Respondent's president and coowner, William D Laut, is a member of the bargaining unit repre- sented by the Union In addition to being its president , William D Laut is one of Respondent's two stockholders and founders. See, e g, Foam Rubber City #2 of Florida, Inc, 167 NLRB 623. The names of William D. Laut and David Laut are incorrectly spelled in the Trial Examiner's Decision as William D. and David "Laud." 2 The Charging Party has excepted to certain credibility findings made by the Trial Examiner It is the Board's established policy not to overrule a Trial Examiner's resolutions with respect to credibility unless the clear preponder- ance of all the relevant evidence convinces us that the resolutions were incorrect Standard Dry Wall Products, Inc, 91 NLRB 544, enfd . 188 F.2d 362 (C A. 3). We have carefully examined the record and find no basis for reversing his findings. 3 197 NLRB No. 53, and 199 NLRB No 35 The issue as to the "offensive" or "defensive" nature of the lockout, which is dealt with extensively by the Trial Examiner and which is treated at some length in the briefs submitted to us by both General Counsel and Charging Party, is not, in our view, controlling or even materially relevant to the issue of the legality of the lockout Members Kennedy and Penello would also find it unnecessary to resolve this issue in order to determine the legality of the use of temporary replacements, since, as they have previously indicated , they would in any event overrule Inland Trucking, 179 NLRB 350 On this latter issue, however, Chairman Miller continues to be of the view that N.L RB v. Brown Food Store, 380 U.S. 278, requires an examination of the several factors referred to in the Court's opinion in that case in order to determine whether the use of replacements in any given case is violative of the Act He would, therefore, concur in the Trial Examiner's analysis with respect to the use of the replace- ments, including affirming his finding that the defensive nature of the lockout here is one of several relevant factors weighing in favor of the legitimacy of the use of replacements in the particular circumstances of this case. TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE MORTON D. FRIEDMAN, Trial Examiner: Upon a charge filed on April 30, 1971, and an amended charge filed on June 28, 1971, by United Steelworkers of America, AFL-- CIO, herein called the Union, the Regional Director for Region 14 of the National Labor Relations Board, herein called the Board, issued a complaint on July 21, 1971, against Ozark Steel Fabricators, Inc., herein called the Re- spondent or the Company, alleging violations of Section 199 NLRB No. 136 848 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 8(a)(1) and (3) of the National Labor Relations Act, as amended (29 U.S.C. Sec. 151, et seq.), herein called the Act. In its duly filed answer to the complaint, the Respondent, while admitting certain allegations of the complaint, denied the commission of any unfair labor practices. Pursuant to notice the hearing in this case was held before me at St. Louis, Missouri, on September 30 and October 4, 1971. All parties were represented and were af- forded full opportunity to be heard, to introduce relevant evidence, to present oral argument, and to file briefs. Oral argument was waived. Briefs were filed by all parties. Upon consideration of the entire record, including the briefs of the parties, and upon my personal observation of each of the witnesses as they appeared before me, I make the following: FINDINGS OF FACT I THE BUSINESS OF THE RESPONDENT During the year immediately preceding the issuance of the complaint herein, the Respondent purchased and caused to be transported and delivered to its place of busi- ness in the State of Missouri steel and other goods and materials valued in excess of $50,000, of which goods and materials valued in excess of $50,000 were transported and delivered to its place of business in Missouri directly from points located outside the State of Missouri, or were trans- ported and delivered to said place of business in Missouri, and received from other enterprises located in the State of Missouri, each of which other enterprises had received the said goods and materials delivered to it directly from points located outside the State of Missouri.' It is concluded, and I find, that the Respondent is an employer engaged in commerce within the meaning of Sec- tion 2(6) and (7) of the Act. 11 THE LABOR ORGANIZATION INVOLVED It is admitted, and I find, that the Union is a labor organization within the meaning of Section 2(5) of the Act. III THE ALLEGED UNFAIR LABOR PRACTICES A. Introduction and Issues After the certification of the Union in October 1970, the parties began bargaining negotiations in November 1970, which negotiations continued in an on-and-off fash- ion until January 8, 1971. Thereafter on February 12, 1971, the Employer locked out its employees when no contract was reached and continued production in a limited fashion with supervisory personnel. The complaint alleges and the General Counsel and the Union contend that the lockout was discriminatory and therefore violative of Section 8(a)(3) and (1) of the Act. Among other items which the General Counsel and the Charging Party claim made the lockout unlawful was the fact that the Respondent continued production after the lockout by utilizing supervisory personnel and officers of the Respondent. The Respondent, in its answer, denies the commission of any unfair labor practices and contends that the lockout was defensive and undertaken for purposes which were entirely lawful. Accordingly, the central issue presented by the plead- ings and the contentions of the parties is whether Respon- dent, by locking out its employees and thereafter continuing production dung the lockout period by utilizing superviso- ry personnel, discriminated against its employees in viola- tion of Section 8(a)(3) and (1) of the Act. B. Background The Respondent is engaged in the fabrication and fur- nishing of structural steel for warehouses, churches, schools, and like structures. The Corporation was organized in 1963 with a capitalization of $10,000 furnished by its two stock- holders, William D. Laud, its president, and Norman L. Canon, its secretary-treasurer and shop superintendent. Since its inception, and because it is undercapitalized, the Respondent has had difficulty in procuring the basic steel required for its business. Thus, the Respondent has been unable to establish lines of credit and has had to pay cash on delivery for its steel. Only one supplier has extended a 30-day credit to Respondent and because the supplier is located in Pennsylvania, the Respondent has had to pay a 5-percent freight premium for its products. Additionally, the Respondent carries a large indebtedness in the form of a loan from the Small Business Administration. The amorti- zation of this loan, which is secured in part by Respondent's inventory, must be paid in regular installments. Thus, from its inception, the Respondent has never been in a good, sound financial position. As noted above, the Respondent is engaged in the con- struction industry. According to Respondent's president, William Laud, most of the orders the Respondent receives are on contracts or subcontracts which include completion dates for which there is some sort of penalty clause incorpo- rated in the event that the work is not completed by the date set forth in the agreement. Thus, it is essential, according to Laud, that once a contract is made, the work not be inter- rupted by strikes or other impediments to production be- cause such events can cause delays which, in turn, will cost the Respondent penalties for failure to complete on time. In addition to the foregoing, the construction industry in which the Respondent is engaged has its busiest season during the good weather periods of the year, namely the spring and summer months, at which time production in the Respondent's plant is at its peak. Contracts are normally bid in the winter months for completion with penalty claus- es in the summer and other good weather periods. Thus, a strike during the summer season when production is at its peak could seriously effect the Respondent financially. The Respondent would be thus strapped with its heaviest inven- tory and its largest outlay of cash at a time when it was under duress to fill the orders placed with it by completion date. A strike would thus put it in,a bad financial situation in view of the fact that most of its contracts contain penalty clauses.2 1 This material is alleged in an amendment to the complaint dated Septem- ber 22, 1971 2 All of the foregoing from the testimony of Laud and Carron which is OZARK STEEL FABRICATORS It is with this foregoing situation concerning the Respondent's operations that the unionization and the ne- gotiations for a union contract must be viewed. Insofar as unionization of the Respondent's plant is concerned, during 1967, the Iron Workers Union, not to be confused with the current negotiating union, was certified as the bargaining representative of Respondent's employees. The Respondent met with the Iron Workers a few times subsequent to certifi- cation to negotiate a contract but when no agreement was reached after a short period of time, the Iron Workers evi- dently gave up and disappeared from the scene. In October 1970, the current union, the Steel Workers, was certified as the bargaining representative of Respondent's employees after a consent election. The Respondent in no way inter- fered with the election and did not oppose the Union in any way. Thereafter, on November 12, 1971, the parties held their first negotiation meeting. C. The Bargaining At that session of November 12, 1970, the Respondent presented a complete proposal to the Union in the form of a written agreement. The proposed written agreement was discussed item by item and portions of it were either accept- ed or rejected by the union representatives who consisted of a shop committee under the leadership of Robert McVay, a business representative of the International Union. The Respondent was represented by its two principals, William Laud and Norman Carron, but most of the negotiating was done by Raymond R. Roberts, counsel for the Respondent. At that meeting McVay for the Union orally presented cer- tain union demands. The next meeting took place on November 17. Al- though the Respondent's witnesses, Laud and Carron, in- sisted that the Union had promised to submit at this meeting, and at later meetings, a full written proposal, this was denied by McVay, the Union's business representative. In any event at the meeting of November 17, the Union did submit a hand written proposal for wages which also con- tained proposed classifications of the various employees in the Respondent's shop. That there was discussion with re- gard to wages and classifications at that and at later meet- ings is verified by a letter from Roberts, Respondent's counsel, to McVay dated December 11, 1970, concerning the various employees and their classification.3 Again, at this meeting of November 17 the various contract proposals of the Respondent were gone over and some language was changed to meet the approval of both of the parties. Howev- er, no final agreement was reached. The next meeting was held on November 19, 1970. Again the various proposals were discussed and Laud testi- fied that the parties went through Respondent's initial bar- credited in this respect. Although there was some indication on cross-exam- mation that probably less than the stated number of contracts were let with penalty clauses, I find that for the most part the Respondent's officers' testimony in this regard is reliable 3 The recollection of Respondent's witness with regard to some of these meetings is rather vague. For instance, Laud testified that there were meet- ings proposed for both November 17 and 19 . However the record establishes that only one meeting was held during that period of time and this was on November 17 Also, Carron testified that this meeting was held on November 19. 849 gaining proposals item by item. The Respondent's witnesses insisted that the next meeting was scheduled for December 1, 1970. At that time both the bargaining committee and the Respondent's repre- sentatives appeared, but McVay did not. According to Mc- Vay, the reason for his nonappearance was that Roberts stated at the November 19 meeting that he would not be able to meet on December 1, inasmuch as he had a court engagement for that day. According to McVay, McVay did not place in his appointment book the date of December 1 as a definite date for the meeting to occur. On the other hand, Roberts testified that between November 19 and De- cember 1 he was under the impression that the meeting date was definite and, accordingly, adjourned his other matters in order to meet on December 1. Whatever actually oc- curred is unclear. However, it is apparent that McVay's reason for not appearing that day was due largely to a misunderstanding. The parties did meet on December 3 but only for a half-day session. This was due to the fact that McVay had commitments elsewhere for the afternoon of that day. Again the Respondent's witnesses testified that the session was originally scheduled for a whole day and Roberts, Respondent's counsel, claimed that McVay should have scheduled the entire day because Roberts had canceled de- positions scheduled for that afternoon. However, Roberts admitted that he had mentioned at the prior meeting that he had legal depositions scheduled for that afternoon. Mc- Vay testified that he believed conflict existed and, because he did not know of the fact that Roberts had cancelled the depositions, made other plans for that day and time. How- ever, in any event, whether McVay's absence on December 1 and his appearance for only half of the day on December 3 may have been excusable under the circumstances due to the misunderstanding, it was reasonable for the Respondent to believe that, under these circumstances, the Union was engaging in dilatory practice and refusing to sit down to bargain in earnest. Nevertheless, on December 3 negotia- tions did take place and the Respondent presented what it called its "final proposal." This was admitted by Canon in his testimony. Moreover, it is apparent that during this half- day session the entire proposals were once again discussed with the parties going over the contract from beginning to end. Also at this December 3 meeting the parties discussed the scheduling of future meetings, McVay indicating that he had the dates of December I 1 and 12 open. However, Rob- erts stated that he could not meet on that day and instead suggested December 14, at which time McVay could not meet. McVay then testified that he suggested later days in December such as December 17 and 28. However, Roberts indicated that he would not be available during that period of time as he planned to go hunting. No alternate dates were offered by the Respondent. That the foregoing is the se- quence of events at the December 3 meeting with regard to furture meetings is indicated by Roberts' letter to McVay dated December 11 in which Roberts refers to the Respondent's "final proposal" and sets forth the classifica- tions of the various employees. In closing that letter, Rob- erts wished McVay a Merry Christmas. This would indicate that the parties had no intention of meeting for the balance 850 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of December. In any event, it is entirely believable that from the succession of events as they occurred the Respondent could have believed that the Union was not overanxious to reach final agreement. As a result of the Respondent's final proposal pre- sented at the December 3 meeting, a meeting of the mem- bership among the Respondent's employees of the Union was held on December 27, 1970. McVay was present and presented to the membership present the contract proposal as it was given in final form by the Respondent. However, no actual vote was taken on the contract. During that meet- ing, and probably at other meetings, there was talk among the Respondent's employees who were members of the Un- ion about possibly going out on strike. At this suggestion, according to David Laud, a member of the bargaining unit but also the son of William Laud, Respondent's president, McVay told the employees that "the winter was no time to strike." According to McVay and Peterson, who was presi- dent of the Local, what McVay stated was that this was no time to strike because the Company needed a contract to msure its sales. In any event, young Laud reported to his father that McVay had stated that this was no time to strike. It should be noted that young Laud further admitted on cross-examination that no strike vote was ever taken nor did McVay tell the assembled employees that a strike would take place at some future date. The next and final meeting between the parties took place on January 8, 1971. At that meeting the parties again went over the contract proposals and at the end of that meeting it was clear that no agreement could be reached. This impasse was brought about by several factors. During the entire period of the negotiations, the Union had insisted that the Respondent sign an agreement containing a 30-day union security provision. The Respondent adamantly re- fused to consider this stating that they would not sign a contract agreeing to a "closed shop." In addition, the Un- ion's money demands were always far too excessive in the Respondent's estimation for the Respondent to agree to them. At the January 7 or 8 meeting, the Union proposed what it called an "economy package" which lowered the percentage of the Union's monetary demands but included the union-security clause. This the Respondent refused to accept. However, it should be noted that on almost all other items that parties were in agreement. But the refusal by either of the parties to move from the point on union securi- ty and on the money demand resulted in a breakup of the meeting. Thus, an impasse was actually reached by the par- ties on that day. Neither of the parties would move from their final positions on union security and on the monetary package. According to Laud, whom I credit in this respect, at this point in the meeting McVay appeared to be angry, muttered something about closing the "sweat shop," and stated that the parties were at an impasse and there was no further purpose in their meeting. However, aside from this one alleged remark about closing the "sweat shop," Laud and Carron both admitted that McVay said nothing about a strike nor did he make any overt threats of any other type. According to McVay, Carron affirmed this testimony, on January 8 when McVay left he stated there appeared to be no point for the parties to stay there and get mad at each other and he-thought that he might as well break it up and wait until somebody changed his position before setting up another meeting. I find and conclude that at that point regardless of what McVay said, an impasse had been reached. No further meetings were held during the month of January. On January 15, 1971, Roberts wrote McVay a letter sent by ordinary first class mail, in which Roberts reiterated the positions of the parties. In this letter he stated that the principal unresolved issue remaining at the end of the session was union shop and security; that the Union insisted upon the inclusion of these provisions and the Com- pany would not accept them. At that time McVay stated that they apparently reached an impasse. However, Roberts firmly stated also in that letter that the Company remained willing to meet at any time. He reminded McVay that very few meetings had actually occurred. Roberts went on to state that McVay must have been aware that the Company did work with mandatory delivery dates and penalty clauses and that this condition of uncertainty of no contract and no future meetings placed the Company in a very difficult posi- tion in making commitments on future work. The letter ended with a plea by Roberts to McVay for the Union to give the Company specific dates for further meetings. According to McVay, he never received this letter. The Union in its brief implies that the letter was written at a later date for the purposes of the hearing and was never actually sent by Roberts. Under the circumstances, however, it does not have to be resolved as to whether McVay ever received this letter. I find, nevertheless, that the letter was written and posted on the date it bore, January 15, 1971. The letter clearly shows the Respondent's corporate state of mind as of that date.4 D. The Lockout and Subsequent Events On February 8, 1971, Roberts again wrote McVay a letter. In this letter he stated that he had been instructed by the management of the Respondent to advise McVay that the plant "will be closed to further work by members of the bargaining unit at the end of the shift on Friday, February 12, 1971, and until such time as the contract or other reso- lution of the differences between the Company the Union shall be achieved. An announcement to this effect will be made to the hourly employees Thursday, February 11, 1971, at the end of the shift." The letter goes on to state that the Company regreted the necessity of the action and hoped in the past that the differences would be resolved without re- sort to strike or lockout. Roberts further wrote that a further reason for the lockout was that the Company had heard nothing from the Union in more than a month since the last offers by the Company were made and that in light of the ° This irreconcilable difference in testimony between Roberts and McVay is pointed by the Union as showing that Roberts "invented" the letter at a later date The Union supports this allegation by the insinuation that Rob- erts, in testifying at the hearing, breached the professional Canon of Ethics in that he represented the Respondent at both the negotiations and at the hearing herein and yet called upon himself to testify as to certain events which occurred. It is not for the trier of fact in this instance to condemn Roberts for testifying. Nor do I believe that Roberts is necessarily untruthful merely because of the fact that he possibly violated the Canon of Ethics in testifying OZARK STEEL FABRICATORS 851 uncertainty left by the state of affairs between the parties the Company could not continue to operate until the differ- ences were resolved. The letter stated that this uncertainty left the Company unable to guarantee delivery dates on construction jobs soon to be bid and left the Company unable to determine its costs so that it could not determine if it could bid competitively. The letter further stated that these elements were more critical in the operations of the Respondent with its type of fabrication than the types of firms presently represented by the Union. The letter ended with assurances that the Company would try to maintain itself in a position to resume production when the settlement of the problems permitted. There is no contention that Mc- Vay did not receive this letter. Both Carron and Laud testified that because of the precarious financial position of the Company and the ne- cessity for having firm costs upon which to figure its bids the necessity of taking the action became very apparent. This was doubly true because of the Respondent's state of mind that the Union would strike the Respondent at the height of its production schedule at which time all of the consequences of the type of work that the Respondent bid on, with penalty clauses in most of its contracts, could lead to a disastrous situation for the Respondent. Canon also testified that a purpose of the lockout was to bring the Union back to the bargaining table. As announced, on February 12 the plant was closed down to members of the bargaining unit. However, the plant was not closed down completely. The Respondent continued to perform some work, completing its present contracts and accepting small jobs from various customers through the utilization of supervisory personnel and man- agement personnel. For these purposes, the foreman and the officers of the Company performed production work. Thus, the plant was never fully closed down during the entire period of the lockout and as of the date of the hearing herein the lockout continued. The work continued in the shop after the lockout but at a drastically reduced level. From August 1970, through January 1971, invoices ranged from $210,779 in August to $92,693 in January. However, in February, March and April of 1971 the total invoicing was only $18,256, demonstrating that production was severely cur- tailed. Thus the Respondent as well as the employees suf- fered hardship. Moreover, during the same periods of time from August 1970, through February 1971, before the lock- out, the total average man hours of work per month was 3,953 whereas during February, March and April 1971, the average man hours per month of production was only 160. Finally, in April 1971, at the behest of the Union, a bargaining session was held before a Federal mediator. Sev- eral such sessions were held but no agreement was reached. According to McVay, when he received Roberts' letter of February 8 he called Roberts by telephone on February 10, and asked if there was not some way to settle the matter. McVay testified that in that telephone conversation he told Roberts that with as much experience as they had had to- gether they ought to be able to avoid a lockout. He informed Roberts that the lockout was an unjust act. McVay testified further that Roberts answered he did not know what the Respondent would do; that they did not have an agreement. McVay testified additionally that Roberts did not ask Mc- Vay for any assurances with regard to possible strikes. In fact, during the entire conversation the word "strike" was not mentioned. Roberts gave no explanation at that time as to why the Company was going to lock out the employees. Roberts testified with regard to this conversation stat- ing emphatically that no such conversation ever took place. Roberts further testified that on February 10 he was in court on another case. Upon my observation of the demeanor of both McVay and Roberts and upon the fact that Roberts had specific recall as to his whereabouts on the date in question, but admitted being in his office at times during that day, I credit Roberts' denial that he received a telephone call from Mc- Vay. Had Roberts been inclined to bend the truth he could have denied he was in his office at any time during February 10, 1971. E. Discussion and Concluding Findings As heretofore set forth , the General Counsel and the Union charged that the Respondent, in locking out its em- ployees and continuing its production activities by utiliza- tion of management and supervisory personnel, has demonstrated antiunion bias and that the objective of the lockout was to destroy the Union as the representative of the Respondent's employees. They fault the Respondent's failure to seek to obtain from the Union an interim agree- ment not to engage in a strike, which agreement would have protected the Respondent from the consequences of which it contends it was fearful. They argue that the failure to seek such agreement discloses the Respondent's real purpose in the lockout was to nd itself of an obligation to bargain with the Union thus undermining union support among the Respondent's employees. The Respondent, on the other hand, maintains that the lockout was purely defensive . Respondent argues that, un- der the peculiar circumstances of this case, the failure to ask for an interim agreement not to strike is not fatal as claimed by the General Counsel because the Union walked out of the January 8 meeting, broke off negotiations, and declined to communicate for over a month , during which time on January 15, 1971, the Respondent wrote to the Union and asked that further meeting dates be set. The Respondent further maintains that even if the Union did not receive the January 15 letter, as the Union claims, the Respondent did not know this and was forced to act upon the situation as it appeared to the Respondent at the time . Respondent's only recourse, in view of the fact that the time of the year had arrived when bidding on jobs for spring and summer had arrived, was to lock out to protect itself from what it had reason to believe was a threatened strike at the height of its busy season when commitments in the form of con- tracts with penalty clauses would be outstanding and when Respondent's inventory would be at the high level of the year. Before discussing the impact of the continued produc- tion during the lockout, the relative positions of the parties and the true objective of the lockout must be determined. That the Respondent had a basis for belief that the Union was engaged in a dilatory maneuver is well within the bounds of probability . Whether McVay's failure to be 852 DECISIONS OF NATIONAL LABOR RELATIONS BOARD present at the December 1 meeting and his presence for only one half day at the December 3 meeting was purposeful or due to misunderstanding is not here important. The failure to be present at two full-day sessions could well have given the appearance that McVay was playing a cat-and-mouse game. The failure to meet during the balance of December, although partly the fault of Roberts, Respondent's counsel, was equally attributable to McVay's inability to come forth with other dates for meetings during the month. Then, when the parties reached an impasse over union security on Janu- ary 8, McVay made a statement to the effect that he would close the "sweat shop." While, again, this might have been uttered in frustration and not meant as a threat, to Respon- dent it could have had only one meaning. In light of the fact that a few weeks before this Respondent's president Laud's son had reported to him that McVay had said that "winter was not the time to strike," and even though such report might not have been strictly accurate, the threat to close the "sweat shop" could have had an impact upon the Respondent's management that a strike was in prospect in the spring. Then, following this final meeting came a period of silence during which the Union failed to respond to Rob- erts' letter of January 15 asking for further meeting dates. In consequence of all the foregoing, the Respondent, acting reasonably under the circumstances, could have found itself in a situation of a seasonal business in which a strike at any time from spring into summer would leave Respondent unable to pay for inventory and unable to meet completion dates under threat of operation of penalty claus- es, all of which would alienate customers. The Respondent's management could, therefore, reasonably have been appre- hensive of a pending strike. In these circumstances, the decision to lock out the Respondent's employees to protect itself from such Union action was defensive in nature and initially lawful. In arriving at the foregoing conclusion, consideration has been given to the argument offered by the General Counsel and the Union that not once in Roberts' February 8 letter to McVay announcing the lockout, or in the an- nouncement to the employees, did Respondent specifically spell out its apprehension of a possible strike as the reason for the lockout. But, the letter does mention the lockout would be in effect "until such time as a contract or other resolution of the differences" between the parties shall be achieved. Certainly, such contract or resolution would elim- inate the threat of a strike. The failure to spell out the exact cause of the lockout does not eliminate from consideration the Respondent's reasonable apprehension. Also considered in arriving at the conclusion that Respondent's initial action in effectuating the lockout was defensive and lawful is the lack of an overt threat to strike by the Union. But, as set forth above, no overt threat was needed under the circumstances to create in the Respondent's officials' minds concern over a possible un- timely strike. Additionally, the fact that the Union was new in Respondent's plant has been considered. It is accepted, as argued by the General Counsel and Union, that a newly certified union is weak compared to an established union with an extensive history of bargaining. But the fact that the Union is seeking its first contract does not render any less consequential a threat of a strike at a time of the Union's choosing. The Respondent's shop crew is small, no more than 15 to 18 employees being on the work force at any time. Even if only some of the men walked out at the height of Respondent's busy season, such walkout could have very considerable consequence with regard to Respondent's en- tire future as a going concern. Furthermore, the General Counsel argues that Carron, in testifying, stated that the objective of the lockout was to get the Union back to the bargaining table. The General Counsel contends that this is not consistent with a defensive lockout posture nor is it consistent with the Respondent's claim that the lockout was for the purpose of avoiding a strike at the height of the Respondent's busy season. This argument is without merit. If the Union could have been gotten back to the bargaining table and the parties could have resolved their differences, the apprehension of the strike at the height of the Respondent's busy season would have been dissipated. Thus, I find and conclude that the initial lockout action taken by the Respondent was for the purpose of defense and that the lockout was therefore lawful under Board and court precedent .5 We come now to the effect, if any, of the additional fact that the Respondent kep its plant operating during the lock- out period. Whether this fact alters the impact of the lockout on the employees sufficiently to render what would other- wise to be lawful action to action so destructive of employee rights that it violates the Act remains for discussion. Other- wise put, did the continuation of production change the nature of the lockout to an offensive, unlawful one? In N.L.R.B. v. Brown Food Store, 380 U.S. 278, the Supreme Court found nonviolative the locking out of em- ployees by several members of an employer association and the continuation of business using temporary replacements. However, that case involved a lockout by the association members undertaken to meet the whipsaw-strike tactics of the union representing their employees where the union struck one of the association members who then continued his business with temporary replacements. The Court held that, under the circumstances, the lockout was reasonably adapted to achieve legitimate business ends. But the cited case cannot be precedent setting in the situation presented in the case at bar. In the instant case there is no employer association and no whipsaw-strike tactic by the Union. On the other hand, in the case at bar the Employer did not hire temporary replacements but continued operating, on a very limited scale, with management and supervisory personnel. Indeed, the Respondent here did not go out into the labor market to seek temporary replacements but rather contin- ued operations in such a manner as only to pay its fixed overhead which consisted, in major part, of an outstanding indebtedness in the form of a loan from the Small Business Administration. Cf. Oshkosh Ready-Mix Co., 179 NLRB 350, enfd. 440 F.2d 562, where the Board held at page 358: However, where the employer, as here, locks out his employees with the purpose of forcing them to accede to his terms and at the same time is able to demon- 5 See Darling and Company, 171 NLRB No. 95, affd 418 F 2d 1208 (CAD C ), October 14, 1969 OZARK STEEL FABRICATORS 853 strate, by continued operation through other employ- ees, that resistance to the employer's terms, whatever they might be, is unlikely of success, if not hopeless, and reemployment can be obtained only by concession to the employer's terms, the necessary, if not the almost inevitable, tendency of the employer's conduct would be capitulation. Thus if the employer not only may decide if and when his employees shall be deprived of work, but at the same time replace those employees and continue in operation, making capitulation rather than bargaining the option presented, such action might well be said to have the tendency, which the Court found lacking in American Ship, to "necessarily destroy the unions' capacity for effective and responsible repre- sentation" and be "demonstrably so destructive of col- lective bargaining" (380 U.S. at 309) as to carry its own indicia of illegal motivation in violation of the Act. Indeed, the employer's capacity for achieving this re- sult might well be limited only by the available labor market. Under all of the facts of the present case, and consider- ing the situation presented, it is found that the employment of the supervisory and management personnel to perform production during the lockout was not so destructive of collective bargaining as to carry its own indicia of illegal motivation. As heretofore established, the initial objective of the lockout, without considering, the use of the supervi- sors and management personnel, was defensive only-to prevent a strike at a time of the year when such strike would be destructive not only of the Respondent but of the future employment possibilities of the striking employees as well. The continuation of production at a limited scale by using supervisors to perform the work did not change this objec- tive and did not demonstrate to the employees that capitula- tion to the Respondent's terms would be necessary and inevitable in order for the employees to return to work. Nor did it render capitulation rather than bargaining the only option open to the employees. Indeed, the Respondent de- sired and looked to further bargaining. The fact that limited production continued cannot be considered in a vacuum separate and apart from all of the surrounding factors. Con- sideration of all aspects of the Respondent's conduct does not lead to the conclusion that a purpose of the lockout, by reason of the continued production, was the destruction of the Union as an effective bargaining representative. The Supreme Court was held, "if Employer conduct, has an inherently destructive effect on statutorily guaran- teed employee rights and is not an enhancement of. a sub- stantial employee interest, an unfair labor practice has been committed." N.L.R.B. v. Erie Resistor Corp., 373 U.S. 221. Here, on the facts presented, the Respondent's conduct was an enhancement of a very substantial interest and was not so inherently destructive of the employees' statutorily guaranteed rights as to have constituted an unfair labor practice. Accordingly, I shall recommend that the com- plaint herein be dismissed. RECOMMENDED ORDER It is hereby ordered that the complaint herein be, and the same hereby is, dismissed.