International Harvester Co.

INTERNATIONAL HARVESTER COMPANY 85 International Harvester Company and Sales Drivers & Helpers, Local 274, affiliated with International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America. Case 28-CA- 3718 December 7, 1976 DECISION AND ORDER BY MEMBERS JENKINS, PENELLO, AND WALTHER On June 2, 1976, Administrative Law Judge Roger B. Holmes issued the attached Decision in this proceeding. Thereafter, the General Counsel filed exceptions and a supporting brief. The Respondent filed an answering brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record and the attached Decision in light of the exceptions and briefs and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge to the extent consistent herewith. We agree with the Administrative Law Judge's holding that Respondent violated Section-8(a)(5) and (1) of the Act by its failure to bargain with the Union regarding the effects on the unit employees of its decision to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work, which was previously performed by employees in the -unit. However, we cannot -agree with his conclusion that Respondent had no duty to bargain over its decision to take such action. As more fully explicated in the Administrative Law Judge's Decision, the record reveals the following facts. Respondent is engaged in the sale and service of trucks through dealers and some 150 branches throughout the United States. The Union was certi- fied in 1975 as the exclusive bargaining representative of the unit consisting of the five retail sales represen- tatives and one fleet account executive at Respon- dent's Phoenix, Arizona, branch. Shortly after the contract negotiations commenced, Respondent's representatives announced that a deci- sion had been made on a nationwide basis to remove fleet sales and used-truck sales from the branch operations and from the domain of the branch managers and place them in a different chain of command through the regional sales managers. It is undisputed that the Respondent's representatives refused at all times to bargain about this decision with respect to the Phoenix branch.' Certain "yardsticks," which had been unilaterally established by the Company, were used to define what constituted a fleet account. It is clear that, by this definition, all, the retail sales representatives and not just the fleet account executive were respon- sible for varying numbers of fleet accounts before the changes. The fleet account executive was in fact removed from the unit and placed under the responsibility of the regional manager rather than the branch manag- er. He continued to use the branch office, but the branch was compensated for the service. Most of the fleet accounts were assigned to him, but the record is clear that the "yardsticks" were not adhered to absolutely and many fleet accounts were retained by the Phoenix branch. Respondent explains that the merger of retail and fleet sales under the same chain of command and accounting books through the branches created a problem of "accountability" wherein company offi- cials could not effectively trace profits and/or losses to their original sources, namely, fleet or retail sales, and they were therefore unable to hold various officials accountable for the respective areas of responsibility. It was necessary to remove the fleet sales from the branch operation. Respondent con- tends that this change involved a substantial, shift in assets away from the branches and therefore was such a fundamental change in the Company's asset struc- ture that to require it to bargain about that decision would significantly abridge-its freedom to invest its capital and manage its business. The General Counsel contends that the so-called shift in Respondent's branch asset base merely amounted to- a change in bookkeeping within the marketing department designed primarily to improve the previous problem of profit-and-loss accountabili- ty and was not a fundamental change in Respon- dent's capital structure. The Administrative Law Judge concluded that Respondent was not required to bargain about its decision to remove the fleet account work and job classification from the unit. Relying on the factors outlined in the Supreme Court's decision in Fibre- board, 2 he reasoned that Respondent had made a "fundamental change in the basic operation of its truck division"; the decision involved a substantial shift in the Company's assets from branch operations and new investment of capital in used-truck centers; and the underlying factors which led Respondent to make the' decision were not factors which could be resolved in the collective-bargaining process. He I The Phoenix branch is one of three at which the employees are 2 Fibreboard Paper Products Corp. v. N L.R B., 379 U S 203 (1964) organized. 227 NLRB No. 19 86 DECISIONS OF NATIONAL LABOR RELATIONS BOARD found the changes here akin to the situation in General Motors Corporation, GMC Truck & Coach Division,3 which involved the sale of a facility to another company. We agree with the General Counsel 'that the changes made by Respondent are accounting and administrative in nature and are at the most wholly internal realignments of capital. They do not involve the termination, relocation, liquidation, closure, or sale of any of Respondent's activities, nor the sale of assets, basic capital reorganization, or significant investment or withdrawal of capital by Respondent such as that in General Motors, supra. In our view, the Administrative Law Judge and our dissenting col- league incorrectly assume that Respondent's decision to remove the fleet account executive and certain unit work from the Phoenix branch was a necessary consequence of the readjustments it instituted on a nationwide basis and that ordering Respondent to bargain about removal of the fleet account classifica- tion and work from the Phoenix branch is tanta- mount to ordering Respondent to bargain over the decision to restructure its national administrative marketing operations. On the contrary, nothing in the record supports the view that retention of fleet account executives in the Phoenix bargaining unit would have precluded the effective institution of Respondent's new marketing philosophy. In fact, the record shows that it is- entirely possible that Respon- dent could have instituted all the accounting and administrative changes which it instituted at the nationwide level, including the creation of used-truck centers,4 from the Phoenix bargaining unit and without the need to remove fleet account activities from the Phoenix branch. This is evidenced in part by the fact that a portion of the fleet accounts continues to be handled by unit employees under the control of the branch manager and is thus carried in the so- called branch asset base. Finally, the Administrative Law Judge assumed that, since the motivating factors behind Respon- dent's changes did not involve labor costs, nothing can be achieved through collective bargaining. On this basis he distinguished Stone & Thomas,5 and Burroughs Corporation,6 which we think are applica- ble to the instant case. In our opinion, the Administrative Law Judge viewed too narrowly the teaching of Ozark Trailers, Inc.,7 that, through bargaining, ideas are born and compromises and accommodations made that might persuade an employer to abandon its plans. The changes made by Respondent, though not motivated a 191 NLRB 951 (1971). 9 The Administrative Law Judge makes much of the shift in assets required to create the new used-truck centers. We note that there is no evidence that the Union sought bargaining regarding the creation of used- truck centers nor does the complaint allege a violation with respect thereto by labor cost- problems, certainly have an impact on the earnings of bargaining unit employees which is clearly the substance of collective bargaining. Accordingly, we conclude that Respondent's failure to bargain as to the decision to remove the job classification of fleet account executive from the bargaining unit and to remove most of the fleet account work constituted a violation of Section 8(a)(5) and (1). THE REMEDY We have found that Respondent violated Section 8(a)(5) and (1) by unilaterally deciding to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed by employees in the unit, resulting in loss of commissions to unit employ- ees on fleet sales. We shall order Respondent to cease and desist from taking the aforementioned action or otherwise making unilateral changes in the employ- ees' terms and conditions of employment without consulting their designated bargaining agent. In order to insure that there is genuine bargaining over its decision to remove the job classification of fleet account executive from the bargaining, unit and, to remove the fleet account work, we shall order the Respondent to restore the status quo ante by returning the fleet account executive to the bargaining unit and restoring the fleet account work to the unit employ- ees, and to fulfill its statutory duty to bargain. We shall further order Respondent to compensate the unit employees for any loss of commissions on fleet account work they might have suffered by reason of Respondent's unlawful refusal to bargain, Compen- sation shall carry interest at the rate of 6 percent per annum as set forth in Isis Plumbing & Heating Co., 138 NLRB 716 (1962). ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, International Harvester Company, Phoenix, Arizona, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Refusing and failing to bargain with Sales Drivers & Helpers, Local 274, affiliated with Interna- tional Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America, as the exclusive bargaining representative of the employees in the unit described below, with regard to the decision and/or 5 221 NLRB 573 (1975). 6 214 NLRB 522 (1974). 7 161 NLRB 561(1966). INTERNATIONAL HARVESTER COMPANY 87 the effects on the unit employees of the Respondent's desire to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed by employees in the unit. The unit found to be appropriate for the purposes of collective bargaining is: All Retail Sales Representatives and Fleet Ac- count Executives employed by the Respondent at 317 S. 9th Avenue, Phoenix, Arizona; excluding office clerical employees, service station employ- ees, truck parts representatives, partsmen, parts delivery drivers, guards, professional employees, supervisors as defined in the Act and all other employees. (b) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of the rights guaranteed them in Section 7 of the Act. 2. Take the following affirmative action which is necessary to effectuate the policies of the Act: (a) Bargain, upon request, with the above-named Union as the exclusive representative of all employ- ees in the appropriate unit described above with regard to the decision and/or the effects on the unit employees of the Respondent's desire to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed by employees in the unit and, if an understanding is reached, embody such understanding in a-signed agreement. (b) Return the fleet account executive to the bargaining unit, restore the fleet account work to the unit employees, and make whole the unit employees for any loss of commissions on fleet account work they may have suffered in the manner set forth in the section above entitled "The Remedy." (c) Post at its Phoenix, Arizona, branch copies of the attached notice marked "Appendix." 8 Copies of said notice, on forms provided by the Regional Director for Region 28, after being duly signed by an authorized representative of the Respondent, shall be posted by the Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are -customarily posted. Reasonable steps shall be taken by the Respondent to insure that said notices are not altered, defaced, or covered by any other material. (d)'Notify the Regional Director for Region 28, in writing, within 20 days from the date of this Order, 8 In the event that this Order is enforced by a Judgment of a United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursuant to a Judgment what steps the Respondent has taken to comply herewith. MEMBER WALTHER, dissenting in part: Contrary to my colleagues, and for all those reasons articulated by the Administrative Law Judge, I find Respondent was not obligated to bargain with the Union over the decision to restructure its national administrative marketing operations, and therefore did not violate Section 8(a)(5) by failing to so bargain. I think there are few decisions which are more at the core of entrepreneurial control, and thus outside the bargaining relationship, than those dealing with a company's consideration of its own marketing struc- ture, as here. Also, as the Administrative Law Judge noted, the underlying factors which contributed to Respon- dent's decision had nothing to do with the Phoenix employees' working conditions. Rather, they deal with the pricing of the Company's product, not labor cost factors, clearly an issue of managerial responsi- bility and thus there would be little if any value for discussions at the bargaining table as the factors involved in Respondent's decision could not be resolved in the collective-bargaining process. Lastly, the fact that some of the transferred-work is still being performed at the Phoenix location does not alter my feelings. It may well have been impossible for Respondent to effect an immediate transition; and in any event such factors would be relevant to bargaining with respect to the effects of the decision, rather than to the decision itself. In essence, I think my colleagues fail to grasp the significance, of Respondent's decision here. As the Board itself noted in General Motors Corporation, GMC Truck & Coach Division: 9 [D ]ecisions . . . in which a significant investment or withdrawal of capital will affect the scope and ultimate direction of an enterprise, are ` matters essentially financial and managerial in nature. They thus he at the very core of entrepreneurial control and are not the types of subjects which Congress intended to encompass within "rates of pay, wages, hours of employement [sic], or other conditions of employment." Respondent's decision is clearly of a type which was to "affect the scope and ultimate direction" of its enterprise. It thus was not a bargainable decision. The effects of that decision are another matter and the Administrative Law Judge properly found the Respondent bound to bargain about them. I fear, however, my colleagues have gravely misconstrued of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " 9 191 NLRB 951, 952. 88 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Respondent's obligation in this matter by implicitly deciding for Respondent the alleged best manner in which Respondent could handle its problem in each location. For such is the upshot of their mandate that Respondent should have bargained here. With the type of decision at hand, however, it is not for the Board to decide now how Respondent should have most effectively proceeded. That decision was for Respondent and , I dissent from my colleagues' contrary conclusion. Accordingly, in agreement with the Administrative Law Judge and for the reasons he notes, I would dismiss that' portion of the complaint alleging an 8(a)(5) violation in Respondent's failure to bargain over the decision to remove certain work from the bargaining unit. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government After a hearing at which all parties had the opportu- nity to present evidence, the National Labor Rela- tions Board found that we violated the National Labor Relations Act and has ordered us to post this notice. We intend to abide by the following: WE WILL bargain, upon request, with Sales Drivers & Helpers, Local 274, affiliated with International Brotherhood of Teamsters, Chauff- eurs, Warehousemen and Helpers of America, as the exclusive bargaining representative of the employees in the unit described below, with regard to the decision and/or the effects on the unit employees of our desire to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed -by employ- ees in the unit. The unit found appropriate for the purposes of collective bargaining is: All Retail Sales Representative and Fleet Account Executives employed by us at 317 S. 9th Avenue, Phoenix, Arizona; excluding office and clerical employees, service station employees, truck parts representatives, parts- men, parts delivery drivers, guards, profes- sional employees, supervisors as defined in the Act and all other employees. WE WILL return the job classification of fleet account executive to the bargaining unit, restore the fleet account work to the unit employees, and make whole the unit employees for any loss of commissions on fleet account work they may have suffered by reason of our unlawful conduct with interest at the rate of 6 percent per annum. WE WILL NOT refuse or fail to do the foregoing and WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of the rights guaranteed them by Section 7 of the Act. INTERNATIONAL HARVESTER COMPANY DECISION STATEMENT OF THE CASE ROGER B. HoLMES, Administrative Law Judge: The charge in this case was filed on December 1, 1975, by Sales Drivers & Helpers, Local 274, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, herein called the Union. The complaint was issued on January 30, 1976, on behalf of the General Counsel of the National Labor Relations Board, herein called the Board, by the Acting Regional Director for Region 28. The complaint alleges that International Harvester Company, herein called the Respondent, has engaged in unfair labor practices within the meaning of Section 8(a)(1) and (5) of the National Labor Relations Act, as amended, herein called the Act. The Respondent filed an answer to the complaint and denied the commission of the alleged unfair labor practices. The hearing-was held before-me on March 25 and 26, 1976, at Phoenix, Arizona. Briefs were timely filed by May 7, 1976, by the General Counsel and by the Respondent and have been duly considered.' i On May 13, 1976, a document entitled "Clarification of Facts" was received from Respondent's attorney who indicated in his letter that service of the document had been made on counsel for the General Counsel. The document pertains to what the Respondent's attorney asserts are certain "serious misstatements of the record" in the brief filed by the General Counsel. On May 21, 1976, a motion to strike and return thedocument,was received from the General Counsel and on the same date a response to General Counsel's motion to strike was received from Respondent's attorney. Sec. 102.42 of the Board's Rules and Regulations does not authorize the parties to file reply briefs with an Administrative Law Judge That section is in contrast to thb provisions of Sec 10246 (d)(1), (2), and (3) and Sec. 102.46(f)(1) and (2) which specifically authorize the filing of answering briefs to exceptions and cross-exceptions, respectively, before the Board. In Joseph E. Cole d/b/a J. E Cote, and Brook Farm Foods, Inc., and Edouard Cole, 101 NLRB 1486, 1487, fn. 4 (1952), the Board affirmed the ruling of the Chief Trial Examiner who had denied a motion for permission to file a reply brief before the Trial Examiner in that case. However, in Coca Cola Bottling Works, Inc , 186 NLRB 1050 ( 1970), the Board concluded "we cannot say that the Trial Examiner abused his discretion in granting the motion" for leave to file a reply brief which was unopposed . In light of the Coca Cola Bottling decision, I view the acceptance or rejection of Respon- dent's "Clarification of Facts" as a matter of discretion . I have decided to reject the document because it deals with matters which were already set forth and extensively argued in Respondent's original brief, and there appears to be no necessity to grant reargument of the matter in light of the General Counsel's brief I am placing that document and the subsequently received motion and opposition in the rejected exhibit file. INTERNATIONAL HARVESTER COMPANY 89 Upon the entire record 2 and based upon my observation of the demeanor of the witnesses, I make the following: FINDINGS OF FACT I. JURISDICTION its effects on unit employees, or whether the Union waived its rights; and (5) after considering the foregoing, whether the Respondent by its actions since on or about November 1, 1975, engaged in unfair labor practices within the' meaning of Section 8(a)(1) and (5) of the Act. The Respondent has maintained at all times material herein an office and place of business in Chicago, Illinois. Among other -facilities located throughout the United States, the Respondent has maintained 'a branch office at 317 South Ninth Avenue in Phoenix, Arizona, where at all times material herein it has been engaged in the sale and service of trucks. ' During 'the 1975 calendar year, which period is represen- tative ofits annual operations generally, the Respondent, in the course and conduct of its business operations, pur- chased goods and materials valued in excess of $50,000 which were used in connection with its sales and service of trucks at its branch office in Phoenix, Arizona. The Respondent caused such goods and materials to be trans- ported in interstate commerce and delivered to its place of business in Phoenix, Arizona, directly from suppliers located in States of the United States other than the State of Arizona. During the same period of time, the Respondent, in the course and conduct of its business operations at its branch office in Phoenix, Arizona, had_ a gross volume of sales in excess'of $500,000. Upon these admitted facts, I find that the Respondent has been at all times material herein an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED It is admitted that the Union at all times material herein has been a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. The Issues The principal issues, presented in this case are: (1) Whether the Respondent had a duty to bargain collectively with the certified Union with regard to the Respondent's decision to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed by employ- ees in the bargaining unit; (2) whether the Respondent had a duty to bargain collectively with the certified Union with regard to the effects on the unit employees of Respondent's decision set forth above; (3) assuming that a duty to bargain existed, whether the Respondent gave prior notice to the Union and an opportunity to bargain regarding the decision and/or its effects on unit employees; (4) assuming that a duty to bargain existed and that the Respondent gave notice to the Union, whether the Union requested the Respondent to bargain with respect to the decision and/or 2 Counsel for the General Counsel filed a motion to correct the record in 14 instances. Because these items appear to be inadvertent clerical errors and because the motion is not opposed, I hereby grant the General Counsel's B.' The Certcation Pursuant to a- Board-conducted election which was held on May 23, 1975, the Regional Director for Region 28 on behalf of the Board issued on June 3, 1975, a certification to the Union in the following unit: All Retail Sales Representatives . and Fleet Account Executives employed by the Respondent at 317 S. 9th Avenue, Phoenix, Arizona; excluding office clerical employees, service station employees, truck parts repre- sentatives, partsmen, parts delivery- drivers, guards, professional employees, supervisors as defined in the Act and all other employees. On the date of the certification of the Union, there were five retail sales representatives and two fleet account executives in the bargaining unit. As of November 1, 1975, there were still five retail sales representatives in the unit, but only one fleet account executive whose name is Bill Topf. The other.fleet account executive, Dick Buettner, had resigned in the interim. A separate election was also held on May 23, 1975, involving a unit of Respondent' s partsmen and parts delivery drivers. A separate certification was issued to the Union as the representative of the employees in that unit. The parts employees, however, are not involved in this proceeding, but negotiations between the Respondent and the Union were being conducted contemporaneously, but separately, in the parts unit and the sales unit. C. The Negotiation Meetings in August and September 1975 At the outset it should be noted that this is not a surface bargaining case and, thus, it is unnecessary to delve into all of the topics which were discussed by the parties during their contract negotiations. The parties stipulated that there was no mention of the removal of the fleet account executives from the Phoenix branch at the first two meetings between the parties. The first negotiation session was held on August 4, 1975, at which time the Union submitted two contract proposals to the Respondent for consideration. One proposal con- cerned the sales unit and one concerned the parts unit. The parties discussed both proposals that day and adjourned with the, understanding that the Respondent would study the matter and prepare counterproposals. On August 11, 1975, Robert Graham, who was the assistant manager of the corporate labor relations department of the Respon- motion except as to the fifth proposed correction in his motion. That proposed correction will be made at p. 29 of the transcript rather than p. 22 as stated in the motion. 90 DECISIONS OF NATIONAL LABOR RELATIONS BOARD dent, wrote a letter to the Union and suggested that the parties meet again on September 4 and 5, 1975.3 The parties did meet as planned on September 4 and the Respondent presented to the Union counterproposals in both units. The unit description in the sales unit counter- proposal was the same as the certified unit, which included fleet account executives. In discussing the sales unit counterproposal, Graham said, among other things, that the truck division of the Respondent was having consider- able money troubles and at that point in time an intense study was going on in Chicago in the truck division concerning new sales and commission arrangements. The parties discussed contract proposals that day and resumed the morning of September 5. The meeting on September 5 lasted only 10 or 15 minutes because the union bargaining representatives walked out of the meeting. D. The Telephone Conversations in October 1975 There were three telephone conversations in October 1975 between Assistant Manager Graham and Anthony Vavrus, who is a representative of the Western Conference of Teamsters in Burlingame, California. Vavrus initiated the conversations on October 16 and 28, and Graham initiated the telephone call on October 31 .4 Vavrus had not previously been a participant in contract negotiations between the parties concerning the Phoenix branch. The Charging Party asked Vavrus for his assistance in trying to get the parties back together and into a meeting. Therefore, on October 16 Vavrus telephoned Graham in Chicago and explained that he was acting as an "intermedi- ary" and that perhaps someone who had not been involved might be more successful in arranging a meeting between the parties. During that conversation Graham and Vavrus agreed that the parties would meet on November 4 and 5, 1975. On October 28 Vavrus telephoned Graham once again and during that conversation they agreed to take up first the parts unit and then the sales unit in November. On October 31 Graham telephoned Vavrus regarding the nationwide corporate decision which would have an effect on the Phoenix branch. That call was precipitated by a meeting which had been held that morning among Benja- min L. Mercer, who was manager of branch operations of the truck division of the Respondent; Graham; the person who was to replace Graham after his retirement from the Company; and one of the Respondent's house counsel in Chicago. Graham gave the following detailed account of the October 31 conversation with Vavrus: I reached Tony on the telephone and I told him that I felt that as one organization we've been dealing with the Western Conference since 1953, in regional contracts and other matters. And I felt that I should tell him that this was a nationwide corporate ' decision. And that it was going to be implemented in November, and that it would affect the branch and the bargaining unit at 3 The findings of fact in this section are based on exhibits, a stipulation, and the account given by Graham, who related these events in greater detail than did Thomas Donnelly, who was one of the assistant business agents of the Union until February 22, 1976 I found Graham's testimony to be the more reliable and more complete account. Phoenix, and also the branches- at Seattle, Tacoma where we had contracts with Local 882. - I wanted to reassure him of the fact that this was not done in some vindictive way to punish anybody in Phoenix. But it was a national program that was being implemented throughout our sales organization, nation- wide. And that one of the by-products of this implementa- tion would be, certainly, the disappearance of the fleet account executive job in Phoenix. And I also told him that it was our intention that Mr. Topf would be offered certain opportunities. I did tell him that I would hope that because this was Friday and we were scheduled to meet on Tuesday, that it would not really be a matter of - I wasn't really asking him to call Mr. Donnelly and shake the trees and get the troops all disturbed. That we could do that across the table. And. that I would make that announcement across the table. But I just wanted to reassure him that this was going to happen. And it was not for a vindictive purpose. As I recall, his comments were something to the effect that your timing is terrible and we'd rather you didn't have to do it. But I assume that you have to do whatever you have to do. And see you in Phoenix. Vavrus' recall of the October 31 conversation with Graham was: I don't recall the exact words, but the gist of it was this: That he was calling me as a courtesy to let me know that effective November 1, it was company policy nationwide to eliminate fleet account executives. He said also- And this is not necessarily the sequence in which he said these things, but this is what he said. He said he believed there would be one person in Phoenix affected and one probably in Seattle. I asked him if fleet account executives were included in the unit in which the election had been held. And he said, yes. My reaction was that this was pretty lousy timing, particularly in view of the difficulties they were having in negotiating the salesmen contract. He also asked me not to mention this to anybody, because I assumed he wanted to make the announce- ment himself on the meeting of the 4th or 5th. And he, I guess because it was effective the next day, November 1st. I don't know what reason. But he asked me not to tell anybody about it and I did not. When he was questioned as to why he did not raise objections with Graham at the time of the October 31 call, Vavrus explained: I suppose the reason I didn't raise more strenuous objections was that I was completely unfamiliar. I was not involved in the negotiations. I had no idea what the 4 The findings of fact in this section are based both on the testimony of Graham and the testimony of Vavrus. There are minor variations in their recall of this senes of events , but as to major points they did not contradict one another. INTERNATIONAL HARVESTER COMPANY 91 issues were, what had been discussed in the prior meetings, what the proposals were from either side, et cetera. I had no idea what had taken place in prior meetings, as far as the negotiations were concerned. That's probably the basic reason why I didn't raise stronger objections. Vavrus explained at the hearing that he had not been authorized in any way to bind the Charging Party to a contract or to make concessions on behalf of the Charging Party. He said that Local 274 had not given a power of attorney to the Western Conference of Teamsters. At the start of the November 4 meeting he explained to the parties that he had arranged the meeting and would attend on November 4 and 5, but that he would not be the spokesman for Local 274. He said that Assistant Business Agent Donnelly would be the spokesman because these were negotiations with Local 274 and not with the Western Conference of Teamsters. I found Vavrus' testimony to be credible in this regard and consistent with the role he played in setting up the November meetings after the walkout by the Local 274 representatives at the September 5 meeting. Accordingly, I have accepted his testimony with respect to his lack of authority in Local 274 negotiations with the Respondent. E. The November 1975 Meetings and Related Events Contract negotiations between the parties resumed as planned on November 4 with a discussion of a contract covering the parts unit. The morning session was devoted to proposals concerning that unit. At the afternoon session on November 4, Graham presented a new contract proposal to the Union. The new proposal from the Company described the bargaining unit as including "all retail sales representa- tives" at the Phoenix branch and did not mention the fleet account executive job classification. Graham explained to the Union that the new contract proposal was based upon a new organization of the Company.5 He said that the national and fleet accounts were being removed from the branches of the Company on a nationwide basis and not just in the Phoenix branch. Graham said that the same criteria would apply to the removal of those accounts from the Phoenix branch as were being used by the Company throughout the United States. As a result of this, Graham stated that the fleet account executive position which was then held by Bill Topf would be eliminated from the Phoenix bargaining unit. There was no vindictiveness in this, Graham emphasized to the Union. He said Topf would be given the opportunity to be 5 1 have credited the testimony given by Graham with regard to the meetings on November 4, 5, and 20, 1975, because he impressed me as the one who was giving the complete and accurate account of these events As I have indicated earlier, I have previously relied upon his detailed accounts of poor events. Graham has many years of experience in labor relations and was planning to retire from the Company within a matter of 35 days after the heating in this case. Perhaps because of his long experience, Graham was able to recall these matters in a clear and coherent manner. Graham, Vavrus, Donnelly, and Jack Schump, the Phoenix branch manager of Respondent, all said that the announcement of the removal of the fleet accounts was made at the November 4 bargaining session. I am not unmindful that Kenneth Nelson and Jack Grossing, two retail sales --'esentatives, placed the announcement as occurring on November 5. 1 interviewed by the Oakland, California, region as to his desire to be a fleet salesman for that region, which might involve a move to Los Angeles, California, or possibly remaining in Phoenix. Graham said that Topf could remain in the bargaining unit as a retail salesman, or he.could retire from the Company since he was eligible to do so. Graham recalled that the Union concurred that this was a decision which Topf would have to make. Graham said that a retail sales representative, Ken Nelson, turned to Assistant Business Agent Donnelly and said, "They can't do that. They can't do this, can they?" Donnelly replied, "You heard the man say it was nation- wide." 6 Graham also testified that at the same meeting that afternoon of November 4 the Union inquired what the "yardsticks" were which Graham had referred to with regard to the removal of the fleet accounts. Graham turned to Bud Farrell, the manager of the branch operations for the western region in Oakland for the Respondent, to reply to the Union's inquiry. Farrell explained what the "yardst- icks" were, but that explanation apparently did not satisfy the union representatives. Graham said that either Kenneth Nelson or Jack Grussing, who were retail sales representa- tives attending the negotiations on behalf of the Union, stated "[W]ell, now that we've heard that, what does it really mean? What is the impact on the Phoenix branch?" Farrell was unable to respond to the Union's request at that time. He explained at the meeting that he would have to go to the branch and go over the records with the branch manager, Jack Schump, and "make a determination." Graham explained to the group that Farrell had just arrived in Phoenix that morning and therefore he had not had any free time. Graham outlined other topics which were covered in negotiations that afternoon which included the new sales commission contract for nonunion salesmen at other branches and the health and welfare plan. Graham said that on November 5 the parties negotiated concerning a contract for the parts unit. The parties stipulated that the decision to transfer the fleet accounts from the branches was a firm decision and that Graham did not come to Phoenix with authority to negotiate that decision. The stipulation specifically per- tained only to the decision itself and not with regard-to any bargaining about the effects of that decision. The parties also stipulated that, as of sometime in early November 1975, the branch manager of the Phoenix branch no longer had any authority over the fleet account operations, that is, the fleet account executives who previously had worked under the branch manager. have credited Graham's version and his statement as to the timing which is consistent with the recall of Vavrus, Donnelly, and Schump. s Schump's account of these remarks is close to the account given by Graham. Donnelly was not positive as to what was said Nelson pointed out that this occurred a long time ago, but his recollection was that he objected: "I said it wasn't right, how can they do ito" Nelson stated that Graham responded that he had sound legal advice that they could do it. Nelson could not recall any comment by Donnelly. Another retail sales representative in attendance at the meeting, Jack Grassing, recalled Nelson's making an objection, but he did not recall any comment by Graham or by Donnelly As indicated above, I have credited Graham's account for the reasons previous- ly stated 92 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Following the November 4 meeting, Schump had a conversation with Topf in Topfs automobile as they rode to the branch office from the motel where the negotiations had taken place that day.7 At that time Schump informed Topf that the Company had a new concept for handling fleet accounts and that the Company was going to separate from the branches the following: all of the leasing dealers; all of the accounts with 100 or more trucks; and all of the accounts engaged in activities in two or more States. Topf testified that Schump told him that this was going to be effective in all of the 48 contiguous States. Schump also advised Topf that Tom Holt, manager of fleet sales in Oakland, California, would like to talk with Topf about the job. In, response to Topf's inquiry, Schump made it clear that he was not offering the job to Topf. Topf said that he wanted more details and would be interested in talking with Holt. Topf did talk with Holt for several hours the next morning. However, prior thereto he advised both Assistant Business Agent ' Donnelly and Retail Sales Representative Grussing by telephone the night before of the offer. Topf did so because he had been scheduled to attend the bargaining session as one of the union representatives and he wanted them to be aware of the -situation. He also discussed it at breakfast on November 5 with Vavrus, Donnelly, Grussing, Nelson, and Ollie Lyons, a retail salesman. Topf said that Holt told him substantially what Schump had told him- the day before and added that he would tentatively operate from his home in Phoenix, but he could not rule out the possibility that he` would work sometimes out of Los Angeles or Oakland. Holt told him that he would work directly under Holt and that his connection with the Phoenix branch would be severed. Topf accepted the offer that same afternoon. Still later on November 5, Schump, Farrell, and Holt met to go over the accounts in the Phoenix branch to see which ones should be assigned to Topf.8 A list was prepared which Schump described as being a worksheet, Schump stated that the list was not fmal. Schump said that "[w]e looked at each customer and decided who was best equipped to handle a customer." The criteria used for the fleet execu- tive's account was one where the customer operates nationwide, a national fleet in two or more States, a leasing dealer, or a large fleet of more than 100 trucks. The worksheet was discussed with Topf on November 6 and discussed with the retail sales representatives on November 7. At the November 7 meeting at the branch the retail sales representatives individually protested the removal from them of accounts which they had previously serviced. The criteria for removing an account from the retail sales representatives and giving the account to Topf as the fleet account executive was not mechanically applied. As Schump earlier pointed out, they also considered who was best able to handle the' customer. Accordingly, Jack Grussing was permitted to retain a large account identified as the, Salt River Project account because Grussing had been the person who had initially sold that account. z The following is based on the testimony of Topf and Schump. The following is based on the testimony given by Schump and by Riley. 9 In an earlier redistribution of fleet accounts after Dick Buettner resigned, Nelson had been the primary beneficiary of that allocation because At the hearing, one of the retail sales representatives, Roy Riley, explained that the salesmen were paid a salary plus commission and he estimated that approximately 10 percent of his earnings had been derived from fleet accounts.9 On November 11 Topf began servicing his accounts as a fleet account executive under the Oakland region.l° His new contract was with the Oakland region rather than the Phoenix branch. Topf said that he worked out of his home in Phoenix and paid the Phoenix branch for the use of an office there and certain services provided to him such as answering his telephone and accounting matters. In his new position Topf said that he began signing bids; passing on warranty work; and making decisions on the price to use in his bids. He began handling matters directly with the Oakland office regarding discounts and special conces- sions. There was still one more meeting in November 1975 which was variously described as an "air-the-gripes" meeting. It was not intended to be a formal negotiation session although the meeting was initiated by a request to Schump from Assistant Business Agent Donnelly to meet with all of the retail sales representatives present. Graham emphasized that it was not a negotiation session, but instead an "air clearing session" with all of the salesmen present. Graham said that Donnelly opened the meeting by saying that "this was a meeting whereby everybody could sit face-to-face and let their hair down. And maybe we could find some solutions by airing our complaints." Several witnesses, including Graham, described what took place at the meeting which was held on November 20, 1975. However, the most reliable and most complete account of that meeting is set forth in the written report which Graham made after the meeting. A copy of that report was introduced in evidence at the hearing. It states: At the request of Teamsters Local 274 we agreed to meet at 1:00 p.m. on November 20. Present for the Union were Tom Donnelly, Business Agent and sales- men Ken Nelson, Jack Grussing, Ray Riley and Ollie Lyons. For the Company was Jack Schump and the writer. Donnelly opened up with a short talk in which he pointed out our inability to reach agreement (areas of earnings, health-security and pension) and felt that if all salesmen had a chance to speak up maybe some clarity could be gained. Then about one hour and fifteen minutes of discussion took place in which the salesmen voiced the following points. Unfair treatment over recent years. - Apparent lack of concern by management based on a do-nothing attitude. (They felt Buettner's he received a majority of the accounts handled by former Fleet Account Executive Buettner. 19 The following is based on the testimony of Topf. INTERNATIONAL HARVESTER COMPANY threatened lawsuit should have brought a Region- al investigation.) Company should have waited at Phoenix until we reached agreement with salesmen before with- drawing "fleet and national accounts." Unfair that one man (Topf) should be withdrawn from unit and have accounts totaling 6000 or more trucks while four salesmen are expected to try and make a living out of about 1200 units apiece. Topf cannot possibly work all of his accounts. Questioned the intelligence of Company manage- ment. What about our Savings and Investment Pro- gram? (I answered that our offer to the Union did not include continuing that program.) Several references to "didn't think we could do this" (referring to SIP and Health-Security and that N.L.R.B. has said we couldn't.) To Jack Schump and the writer these men were expressing their pent up frustrations. In a low key way we tried to bring home to them that the Company also has a right to bargain, that while our offer of the union insurance plan was less than their present plan that the per month benefit under the Teamster pension was greater. We pointed out that the timing of the move on fleet and national accounts was consistent nationwide and that they certainly weren't so naive as to believe that they could stop or impede a nationwide organiza- tional and structural change made for valid business reasons. We pointed out that in our judgment Tom Donnelly was not doing them 'anyfavor when he keeps telling them that Local 274s position is that they should be entitled to retain the same Health-Security Program when he knew full well that the Regional Contract said they were not. We pointed out that if they wanted to talk labor contract, pension and welfare contracts, or the individual account assignments that we were ready, willing and able. If they want to challenge the correct- ness of the Truck Division's new organizational struc- ture then we were just wasting our time. We pointed out that if they were going to challenge the validity of our Regional Welfare Plan Contract through the N.L.R.B. then there was no point in our meeting as we would just let our attorneys handle that problem. There was some antagonism voiced. Ollie Lyons said "Maybe well have to charge the brick wall." Brick wall meaning the Company. One could read into this a strike threat: The Company representatives left and Donnelly stated he would call me tomorrow. 93 F. Changes in the Truck Division The origins of the changes in the Respondent's truck division, which began taking place on November 1, 1975, go back to the Atlanta experiment which the Company undertook in 1974. John Davis, who has been with the Company "for 37 years and who is manager of fleet and government marketing in the truck division, explained: "Prior to the Atlanta experiment, if you will, or the test program in Atlanta, we had no means by which to really account for the result of our fleet activity." Davis said that the one word "accountability" explained the reason for the Atlanta experiment anti eventually the changes which resulted at the Company.11 In Atlanta the fleet sales were separated in 1974 from the retail branch operations. In addition, used truck centers were created apart from the branch where the trade-in vehicles would be marketed. By separating these functions from the Atlanta branch, Davis said that the Company could then know what the costs were of the fleet sales being made and what the end results were of the used trucks which the Company had taken in trade. Finally, the Company for the first time would be able to determine what part the branch operations were playing as distinguished from the fleet sales and used-truck sales. Previously, all of those functions were combined in the branch operation. `Davis said that the Atlanta experiment was successful. Davis described a "dramatic reversal" in the Company's finances in 1975 as the Respondent began losing money at the rate of $8 million to $10 million a month. Davis said that the Company realized that, if it was to continue as an ongoing enterprise, changes would have to be made in the way the Company had marketed its product, including changes in fleet and Government sales and the handling of used trucks. Davis stated: "That's what finally triggered it, we knew we were in trouble. We suspected we were in trouble for a long time. And by mid-1975, we knew we were in deep trouble." Davis estimated that the truck division accounts for between 40 and 50 percent of the total worldwide sales volume of the Respondent. Davis said that each branch now has an asset base or so many capital dollars with which to operate. He said that the return on the assets and the percent of profits to sales are now the measure of a branch's performance, rather than sales volume as in the past. The prior emphasis had been on sales volume with the expectation that increasing the volume of sales would correspondingly generate profits for the Company. Benjamin L. Mercer, who has been with the-Company for 25 years and who presently is the manager of branch operations in the truck division, described the changes which took place on a nationwide basis.12 He said: Prior to August 1st, the regional manager, that's one of any one of the regions, had complete control of all the sales activities within his region. He had complete control of the assets of the branches. He had full and total responsibility for all activities within` his region. 11 The following findings are based on the testimony given by Davis. 12 The following findings are based on the testimony given by Mercer. 94 DECISIONS OF NATIONAL LABOR RELATIONS BOARD When the change was made, the regional manager then had complete sales control. As far as the branches and the dealers are concerned, the regional manager has what would be called contract control. Each dealership is controlled by a contract with the company which is approved by the regional manager. Obviously, the regional manager can only deal with a dealer, through sales efforts, and he can not force the dealer to do anything. But he tries to sell the dealer the various programs. As of the 1st of August, the reorganization - when the reorganization took place, the branches were treated, from that point forward as dealers. The branches have a contract with the region. The regional manager has only sales responsibility at those branches. He does not have profit responsibility. He does not have asset accountability. He doesn't even have people accountability. He is strictly a sales arm. At this point in time, the regions are treating the branches and dealerships identically. When this move was made, it was necessary to set up a separate organization to watch the assets of the company. Mercer also pointed out that the Company's fleet business is now being handled through fleet groups which are controlled by fleet managers within the various truck sales regions. The fleet groups report directly to the regional manager rather than through the branch organization. Mercer has afield organization of eight managers of branch operations. Those managers, in turn, are responsible for more than 140 branch operations which the Respondent has throughout the country. These branch operations managers report directly to Mercer and not through the regional offices of the Company. The branch operations managers have the responsibility for asset control in their branches. The local branch manager, such as Jack Schump in Phoenix, has the responsibility for the operations at the localbranch. The difference between a dealership and a branch was explained by Mercer, who described a dealer as being an independent outlet for the Company's truck line.' It is independently owned and financed and has no ties with the Respondent other than its sales agreement . A branch, of course, is part of the Respondent's business and is financed with the Company's own money. If a particular branch operation does not perform well, then Mercer has the authority to close the branch. He gave two specific examples of branches which he had already closed since November 1, 1975, and also named three other branches which were to be closed in March 1976 . He also named one branch which had been changed to a dealership. He pointed out that there were approximately 149 branches in the United States at the time of the hearing and 11 parts and service stores which had been converted from former branch operations. With regard to the closing of branches, he said that there were "18 more to go." In a similar manner to Davis, Mercer indicated that the Respondent had been a manufacturing oriented company with an emphasis on volume sales. He explained: Prior to the change of November 1st, the company was, well, it really still is; but we are and always have been a manufacturing oriented company with little emphasis placed on the branch operations, as far as profitability is concerned. We wanted them to make a profit, but the prime function for years has to been to push the units and the parts sales through the branch. Since the change, because of the economic conditions that we found ourselves in, a $92 million loss, it became imperative that we change our philosophy. And instead of control- ling our retail operations based on what the factory would produce for us, we now have asset management and accountability. Where, if a branch does not order a truck, the branch will not be forced to take a truck. This is a completely new philosophy in our division. This means that a branch manager today can control or has the ability to control or the authority to control his own destiny. Up to this point, the branch manager was at the mercy of the regional manager who was at the mercy of general office, if you will. So that the branch manager might make a decision that could be reversed immediately by a superior. Today, the branch manager is accountable for the assets of his branch and that branch operation. And if he elects not to stock a truck, that's his business. He will not be criticized for it. He will be criticized severely for losing money, or bad management, not properly han- dling his inventories, not a satisfactory return on the assets employed; but he will not be criticized because he fails to order a truck on a specific program. Retail sales generally have been more profitable to the Company than fleet sales . Mercer stated that most fleet sales require that special equipment be installed on the vehicles and generally there is a time lag between the receipt of the fleet order and the delivery of the trucks. He said that the delay in delivery can be as long as 2 years, which eliminates any profit to the Company in that particular sale. For example, the Company may have to wait on deliveries of equipment from suppliers. Under the old system of emphasis on sales volume and unit sales, a branch manager could even receive incentive pay and a maximum bonus based on the volume of business done at his branch even though the branch itself was losing money. Under the new system, Mercer said this could not happen. He said that the new incentive system is " based on the return on profits, and the return on assets, and his use of those assets. It has nothing whatsoever to do with volume." At the end of the fiscal year 1975, the Respondent had $345 million in branch assets. The Company's fiscal year 1976 began on November 1, 1975. At'the end of the first 4 months of fiscal year 1976, the Respondent had reduced its branch assets to $180 million . Mercer said that a number of factors resulted in the reduction of branch assets. He pointed to the closing of some branches which were not profitable; the disposal of property where some branches were to be relocated; reduction in inventories at the branches; and the elimination of the fleet business from the branches. The financial results had also turned around from the substantial losses of 1975. At the end of the first 4 months of fiscal year 1976, Mercer said that branch operations showed a profit of $925,000. As in the Atlanta experiment, the Respondent has begun establishing used INTERNATIONAL HARVESTER COMPANY truck centers, which are -separate from the branches, to handle those sales. Mercer said that the Respondent still employs about 5,000 retail sales representatives at its branches. G. Analysis and Conclusion The threshold issue is whether the Respondent had a duty to bargain collectively with the Union with regard to its decision to remove the job -classification of fleet account executive from the certified bargaining unit in Phoenix and to remove the fleet account work from the Phoenix branch unit which is represented by the Union. The fact that the precipitating event was a nationwide decision in scope would not necessarily mean that the Respondent was free to make such a decision unilaterally insofar as it applied to the Phoenix bargaining unit: To take a less complicated example, if the Respondent had decided on a nationwide basis to reduce the base salary of its retail sales representa- tives to a lower figure than at present, Respondent would not be free to do so unilaterally with regard to the retail sales representatives in the bargaining unit at Phoenix. The Respondent would still have an obligation to bargain with the Union concerning the wages to be paid to the salesmen at Phoenix. Thus, the fact that the decision was nationwide in scope, standing alone, does not resolve the issue. Both parties cite in their briefs, inter aliq, the landmark Fibreboard decision -from the Supreme Court and analyze the holdings-therem.13 Needless to say, while both parties would apply Fibreboard to this case, they view it from different perspectives and therefore reach opposing results. While Fibreboard involved the subcontracting of unit work to another employer, which is not the case here, I agree with the parties that the rationale and principles of Fibreboard are applicable to this case. In that decision the Court stated: The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company's decision to contract out the maintenance work did not alter the Company's basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those. of an independent contractor to do the same work under similar conditions of employment. Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business. The Company was concerned with the high cost of its maintenance operation. It was induced to contract out the work by assurances from independent contractors ,that economies could be derived by reducing the work force, decreasing fringe benefits, and eliminating over- time payments. These have long been regarded as matters peculiarly suitable for resolution within the collective bargaining framework, and industrial experi- ence demonstrates that collective negotiation has been highly successful in achieving peaceful accommodation of the conflicting interests. Yet, it is contended that 95 when an employer can effect cost savings in these respects by contracting the work out, there is no need to attempt to achieve similar economies through negotia- tion with existing employees or to provide them with an opportunity to negotiate a mutually acceptable alterna- tive. The short answer is that, although it is not possible to say whether a satisfactory solution could be reached, national labor policy is-founded upon the congressional determination that the chances are good enough to warrant subjecting such issues to the process of collec- tive negotiation. It is significant to the issues in this case that the Supreme Court in Fibreboard mentioned, among others, these factors: (1) the company's decision to subcontract the maintenance work at its manufacturing plant in Emeryville did not alter the company's basic operation; (2) the Fibreboard Company did not contemplate any capital investment in that matter and, therefore, bargaining about the decision would not significantly abridge the company's freedom to manage its business; and (3) the underlying -matters which induced the Fibreboard Company-to make the decision to subcontract the work - reducing the work force, decreasing fringe benefits, -and eluninatmg overtime payments - were "peculiarly suitable for resolution within the collective bargaining framework" and experience has shown that negotiation "has been highly successful" in accommodating the conflicting interests. In the instant case the Respondent's decision did make a fundamental change in the' basic operation of its truck division. Bearing in mind that the truck division represents between 40 and 50 percent of the total worldwide sales of the Company, it seems apparent that substantial losses in the truck division would have a profound effect on the Respondent's financial situation. As described by Davis and Mercer, the Company's earlier emphasis had been on selling a large volume of trucks: The anticipation was that, with a- sufficiently large volume of sales, profits would surely be generated. Not until the Atlanta experiment in 1974 did the Respondent have a clear breakdown of retail sales at the branch level as distinguished from fleet sales and used-truck sales. The substantial losses incurred by-the Company on a monthly scale of $8 million to $10 million in 1975 gave added urgency to a basic change in the Company's operations. The changes in the operation of the truck division were not merely bookkeeping changes or administrative changes. The changes involved a substantial shift in the Respon- dent's assets away from its branch operations. In, only 4 months' time, the branch assets were reduced from $345 million to $180 million. Several branches were closed during, that period of time and more are scheduled to be closed under the Respondent's new formula of examining a branch's performance by the profits it returns on the assets committed to that branch. This-as a sharp departure from the Respondent's former emphasis on volume sales in the branches. Additionally, the Respondent has made a new commitment of its capital to the creation of used-truck centers to handle the resale of vehicles which have been 13 Fibreboard Paper Products Corp v. N L.RB, 379 U.S. 203 (1964). 96 DECISIONS OF NATIONAL LABOR RELATIONS BOARD taken in trade. Branches are now concentrating on the retail sales aspect of the business instead of fleet sales or used- truck sales. As noted above, this has resulted in a significant shift in the Company's assets away from its branch operations and investment of its capital in the used-truck centers. In these particular circumstances, bargaining about the decision to withdraw its assets from its branches and invest its capital in other facilities would have a significant abridgement on the Company's freedom to invest its capital and to manage its business. It should also be noted that the Supreme Court in Fibreboard pointed to the fact that the matters which induced that company to make the decision to subcontract the maintenance work were matters which could be resolved in the collective-bargaining process. The Court enumerated such matters as reducing the work force, decreasing fringe benefits, and eliminating overtime. Those factors are not present in this case. The underlying factors which precipitated the decision by this Respondent have nothing to do with the wages, hours, or working conditions of employees in the Phoenix branch.14 The underlying factors here involve the nature of fleet sales - the competitive pricing; the need for special equipment on the trucks; the problems of obtaining the equipment from suppliers; the time lag factor from receipt of the order to delivery of, the vehicles to the customer; and disposal of trade-ins at a price which will not result in a loss. These are factors which deal primarily with the pricing of the Company's product -and with procurement of parts from suppliers. These are not labor cost factors - such as the size of the work force, the amount of fringe benefits, and overtime - which the Court pointed out were matters for collective bargaining. In Stone &. Thomas, 221 NLRB 573 (1975), the Board observed: "If the parties are bargaining in good faith over the decision to transfer the work, a union may be willing and able to make concessions in behalf of the employees which will enable the employer to avoid transferring the work." Unlike the situation in Stone & Thomas, the factors in this case which gave rise to the decision to remove the fleet sales were factors over which the Charging Party would have no control - pricing of the employer's product and procurement of supplies. The Union would not be in a position to make "concessions" regarding these factors and the nature of fleet sales. It was clearly not the labor costs in Phoenix which led the Respondent to make its nationwide decision. In view of the foregoing, I find the Stone & Thomas decision and the Board's decision in Burroughs Corporation, 214 NLRB 571 (1974), to be distinguishable from the present case.15 ' The Board has given consideration to such factors as a significant investment or withdrawal of capital, among others, in weighing whether the decision fell within the scope' of entrepreneurial control. In General Motors Corpo- 14 Moreover, it is noteworthy, although clearly not determinative in this 8(a)(5) context, that there is no allegation nor evidence that the Respondent's decision was based on anything but valid economic considerations The evidence is persuasive and convincing that the Respondent reached its decision solely on economic factors and not in retaliation for its Phoenix employees' having selected a union to represent them in collective bargain- ing. ration, GMC Truck and Coach -Division, 191 NLRB 951 (1971), the Board stated: We believe, however, that this issue is controlled by te rationale the courts have generally adopted in closely related cases, that decisions such as this, in which a significant investment or withdrawal of capital will affect the scope and ultimate direction of an enterprise, are matters essentially financial and managerial in nature. They thus lie at the very core of entrepreneurial control and are not the types of subjects which Congress intended to encompass within "rates of pay, wages, hours of employment, or other conditions of employ- ment." Such managerial decisions ofttimes require secrecy as well as the freedom to act quickly and decisively. They also involve subject areas as to which the determinative financial and operational considera- tions are likely to be unfamiliar to the employees and their representatives. While the General Motors case involved the sale of a facility to another company, the rationale appears to be applicable here since there was a reallocation of the Respondent's assets involved in its decision which affected the scope and direction of the truck division. For that reason, I conclude that this case is more akin to General Motors than the Board's decision in Bruce E. Kronenberger and, Herbert Schoenbrod d/b/a American Needle & Novelty Company, 206 NLRB 534 (1973). After considering the foregoing, I conclude that the Respondent was, not required to bargain with the Union with regard to its decision to remove the job classification of fleet account executive and the fleet account work from the certified bargaining unit because: (1) the Respondent's decision did make a fundamental change in the basic operation of its truck division; (2) the decision involved a substantial shift in the Company's assets from its branch operations and new investment of its capital in used truck centers, which if the Respondent was required to bargain about the decision, would be a' significant abridgement on the Company's freedom to invest its capital and to manage its business; and (3) the underlying factors which led the Respondent to make the decision were not factors which could be resolved in the collective-bargaining process. Accordingly, I find that the Respondent did not violate Section 8(a)(5) of the Act in this regard and shall dismiss the allegations of the complaint which pertain to the Respondent's failure to bargain about the decision. Turning now to another matter of the Respondent's obligation to bargain with the Union about the effects of its decision, the question of whether such an obligation existed is not in issue. At the hearing and again in the Respondent's brief it is conceded that the Respondent had an obligation to bargain, upon request, about the effects of the decision on the Phoenix unit employees., Respondent contends, is Also distinguishable is the Board's decision in The University of Chicago, 210 NLRB 190 (1974), enforcement denied 514 F.2d 942 (C.A. 7, 1975) There the Board pointed out that the university simply transferred the same work at the same location from one bargaining unit to another. The only significant difference was that the employees were represented by a different union which had a contract with wage rates as much as 80 cents an hour less than what they had previously enjoyed. INTERNATIONAL HARVESTER COMPANY 97 however, that the Union has never requested bargaining with regard to the effects of the decision and that "such an absolute failure to request bargaining constitutes a waiver of bargaining rights on the subject"" Respondent points, inter alia, to the recent Board decision in Globe-Union, Inc., 222 NLRB 1081 (1976). In that case the Board found that adequate notice of that Company's plan for reorganization and possible reduction in the unit was given to the union representative on February 28, 1975, even though the conversation was "off the record." The Board said: We also do not agree that the notice given in this case was inadequate because the February 28 conversation was "off the record." The fact that by so classifying the conversation Nelson would not be obligated to tell the employee bargaining committee and the added fact that Ross may have wished the employees not to know of the layoffs beforehand do not detract from the adequacy of the notice to the Union. Nelson was the designated representative of the Union with authority to deal with Respondent. Relying on the Globe-Union decision and various cases involving agency questions, the Respondent urges that Tony Vavrus be found to be an agent of the Charging Party and that notice to the Union be found in the October 31 telephone; conversation between Graham and Vavrus. In my view, the evidence falls short of establishing that Vavrus was the agent of Local 274 with either real or apparent authority to act as an agent. From the context of the October 1975 _telephone conversations between Graham and Vavrus, I conclude that Vavrus made it clear that he was acting as an intermediary to get the parties back together for negotiation meetings after the Union's abrupt walkout from the September 1975 meeting. Graham indi- cated that the Company had had previous dealings with the Western Conference of Teamsters and that was one of the reasons for his making the October 31 telephone call. Graham did not appear to be misled as to the role that Vavrus was playing in setting up the meetings. Unlike the Globe-Union case, Vavrus was not "the designated represen- tative of the Union with authority to deal with Respon- dent." In any event, Vavrus made his status clear at the outset of the negotiation meeting on November 4. While I have concluded that the telephone conversation on October 31 between Graham and Vavrus did not give notice to Local 274 concerning the Respondent's decision, I find that the Respondent did give such notice to the designated union representatives and bargaining committee on November 4. From that point forward it must be determined whether the Union made a request to bargain or waived its right to bargain on the effects. As the Board observed in the Globe-Union case, the union representative there did not put "Respondent's willingness to bargain to a test." Instead, the union representative in that case adhered to his position that the union's certification guaranteed that the work remain in the unit. The Board said: "At a time when it was incumbent on the Union to prosecute its right to engage in collective bargaining over the issue, it chose to limit its reaction to protesting the actions taken, followed closely by its filing of unfair- labor practice charges in the instant proceeding." 16 The Union in this case did not adhere to such an adamant position. Instead, one of the Union's negotiating team, either Nelson or trussing, asked Graham and Farrell as to what the impact would be of the, Company's decision on the Phoenix branch. According to Graham, this oc- curred at the bargaining meeting on the afternoon of November 4. Graham indicated- that Farrell was unable to respond at that time because he would have to go to the branch office and go, over the records with Schump and make a determination. It seems to me that the request from either Nelson or Grussing as members of the Union's negotiating team to know what the "impact" was going to be on the Phoenix branch was tantamount to,a request for bargaining on the "impact or effects of the Respondent's decision as it applied to the Phoenix bargaining unit. The request was timely made on the very same day that the Union learned of the decision and the request was made in a contract negotiation session from one-of the members of the Union's negotiating committee . The request was made in the presence of the Respondent's chief negotiator, Graham, and other officials of the Respondent. Neverthe- less, the Respondent did not thereafter bargain with the Union about the matter. The list of fleet accounts to be removed from the bargaining unit was promptly prepared and discussed with employees, but there was an absence of bargaining over the effects of the decision with the Union. While the meeting on November 20 with the retail sales representatives and Assistant Business Agent Donnelly came close to being a bargaining session, it was not intended to be one by the parties and it appears to have been more accurately described by the witnesses as an airing of gripes and complaints. As recently reiterated by the Board in Kroehler Mfg. Co., 222 NLRB 1269 (1976): The Board and courts have repeatedly held that a waiver ofbargaining rights by a union will not be lightly inferred and must be clearly and unequivocally con- veyed. [Citing: The Timken Roller Bearing Co. v. N.LR.B., 325 F.2d 746 (C.A. 6, 1963), cert. denied 376 U.S. 971 (1964); cf. American Buslines, Inc., 164 NLRB 1055 (1967).] In view of the foregoing, I conclude that the Union did not clearly and unequivocally waive its right to bargain with the Respondent with regard to the effects of the Respondent's decision on the Phoenix bargaining unit employees. Instead, I find that the Union made a request for bargaining on the impact or effects at the Phoenix branch, but that such bargaining never took place. Clearly, the Union could have been more aggressive in asserting its bargaining rights and in pursuing the matter, but its performance was not quite the "studied passivity" which the Respondent ascribes to the union negotiators. In any event, I conclude that the Union's conduct did not reach the level of a clear and unequivocal waiver. Accordingly, I fmd that the Respondent did fail to bargain with the Union 16 The Board cited Amencan Bushnes, Inc., 164 NLRB 1055 (1967). Unlike the present case, in American Buslnes the company gave the union a week's advance notice and invited discussion of any phase of the situation 98 DECISIONS OF NATIONAL LABOR RELATIONS BOARD regarding the effects of its decision on the Phoenix unit employees and thereby violated Section 8(a)(1) and (5) of the Act. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section III, above, _ occurring in connection : with the operations de- scribed in section I, above, have a close, intimate, and substantial relationship to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free- flow of commerce. Upon.the basis of the foregoing findings of fact and upon the entire record, I make the following: CONCLUSIONS OF LAW 1. International Harvester Company is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. Sales Dnvers & Helpers, Local 274, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, is a labor organi- zation within the meaning of Section 2(5) of the Act. 3. The following employees constitute a unit appropri- ate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: 17 All Retail Sales Representatives . . . employed by the Respondent at 317 S. 9th Avenue, Phoenix, Arizona; excluding office clerical employees, service station employees,-, truck parts representatives, partsmen, parts delivery drivers, guards, professional employees, super- visors as defined in the Act and all other employees. 4. At all times material herein, the Union has been, and is, the exclusive representative of all employees in the above-described appropriate unit for the purposes of collective bargaining. 5. By refusing and failing to bargain with the Union regarding the effects on the unit employees of the Respon- dent's decision to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work which was previously performed by employees in the unit, the Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(1) and (5) of the Act; 6. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent has engaged in unfair labor practices in'violation of Section 8(a)(1) and (5) of the Act, I shall recommend that it be ordered to cease and desist therefrom and that it take certain affirmative action to effectuate the policies of the Act. [Recommended Order omitted from publication.] 17 I have omitted the classification of"Fleet Account Executive" from the description of the unit inasmuch as that classification is no longer a part of the bargaining unit.