Teledyne Industries, Inc.

520 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Teledyne Wisconsin Motor, a Division of Teledyne Industries, Inc. and Local 283, International Union, United Automobile, Aerospace and Agri- cultural Implement Workers of America, UAW. Case 30-CA-7334 24 May 1985 DECISION AND ORDER By CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS On 3 January 1985 Administrative Law Judge Thomas T. Trunkes issued the attached decision. The Charging Party filed exceptions and a support- ing brief, and the Respondent filed a brief in re- sponse, cross-exceptions, and a supporting brief. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings,' and conclusions2 and to adopt the recommended Order. ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. ' The Charging Party has excepted to some of the judge's credibility findings The Board 's established policy is not to overrule an administra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for re- versing the findings 2 We adopt the judge's dismissal of the complaint based solely on the finding that the Union contractually waived, pursuant to par 49 of the parties' collective-bargaining agreement, the right to bargain over the Re- spondent's decision to contract out production work We do not pass on the judge's finding that the Respondent's decision to subcontract piston production work was a mandatory subject of bargaining or that the Union waived its right to bargain over the decision to subcontract piston production work by "failing to pursue a reasonable opportunity to bar- gain " DECISION STATEMENT OF THE CASE THOMAS T. TRUNKES, Administrative Law Judge. The above proceeding was heard in Milwaukee, Wisconsin, on August 13 and 14, 1984. On a charge filed by Local 283, International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW (the Charging Party or the Union) the Regional Director for Region 30, on March 19, 1984, issued a complaint pursuant to Section 10(b) of the National Labor Rela- tions Act (the Act). The complaint alleges that Teledyne Wisconsin Motor, A Division of Teledyne Industries, Inc. (Respondent or the Company) violated Section 8(a)(5) and (1) of the Act by reaching the decision to subcontract out piston production work and by subcon- tracting out this work without negotiating in good faith with the Union on this subject Respondent filed an answer denying the commission of any unfair labor prac- tices. All parties were represented and participated at the hearing and had a full opportunity to adduce evidence, to examine and cross-examine witnesses, to file briefs, and to argue orally. The General Counsel and Respond- ent filed briefs which have been carefully considered. On the entire record, including my observation of the demeanor of the witnesses, I make the following FINDINGS OF FACT 1. JURISDICTION Respondent, a California corporation with an office and place of business in Allis, Wisconsin, has, at all times material herein , been engaged in the business of manufac- turing air-cooled engines . During the calendar year ending December 31, 1983 , Respondent, in the course and conduct of its business operations , purchased goods and materials in excess of $50,000 directly from points located outside the State of Wisconsin . The complaint al- leges, Respondent admits, and I find that , at all times ma- terial herein, Respondent has been an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION The complaint alleges, Respondent admits, 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. Background-The Consolidation of Respondent's Facilities Respondent has been in the business of producing air- cooled engines since 1909 and has been a party to a col- lective-bargaining agreement with the Union covering all of its production and skilled trade workers' since 1937. In 1969 Teledyne Industries, Inc. acquired Respondent and assumed its collective-bargaining agreement with the Union. Until 1981 Respondent operated four plants in the Mil- waukee area designated plants 1, 2, 3, and engineering. Plants 1 and 2 manufactured all of the engine parts; plant 3 was a marketing and distribution facility which also housed a warehouse, personnel and accounting depart- ments, and various support facilities. At the engineering plant Respondent engaged in product design, testing, and other functions traditionally associated with engineering. ' The parties stipulated that the collective-bargaining unit consists of All of [Respondent's] employees in Plants 1, 2, and 3 except the following Executives of the Company, Superintendents and Assistant Super- intendents, Foreman and Assistant Foreman, including all those having the right to hire or discharge or whose recommendation in regard thereto are usually and customarily upheld, Design and Tech- nical staff, Experimental Engineering employees , Metallurgical em- ployees, Service Engineers, Timekeepers, Office Employees and is appropriate for collective-bargaining under Section 9(b) of the Act 275 NLRB No. 76 TELEDYNE INDUSTRIES 521 In 1981 Respondent consolidated its facilities in an effort to cut costs in the face of financial decline.2 In November 1981, Respondent closed its first facility, plant 3. All of its clerical functions, including personnel and fi- nance, were moved to-plant 1 while its warehousing ac- tivities were moved. to another Teledyne facility in Chi- cago.-.The physical plant was sold. In December 1982, Respondent closed its second facility, engineering. The continuing engineering activities, such as testing and quality audits, were rolled into plant 1 while the design aspects were transferred to another Teledyne Co. Final- ly, in the fall of 1983, Respondent closed its third facili- ty, plant 2. All of its ongoing activities were moved to plant ,1 and the building was relinquished to a corporate real estate group 3 - B.' The Decision to Contract Out Piston Production Prior to May 19824 pistons, which are cylindrical moving parts that fit into an engine block, were manu- factured by Respondent at plant 2. A raw casting was brought into the plant where it was machined and became a piston The piston was then taken along with other engine parts and the engine block to the assembly line where it became part of an engine. On May 13 Jack Decker, who at the time was the manager of personnel relations of. Respondent, verbally notified the Union that a cost-reduction committee main- tained by the Company was about to recommend that piston production be discontinued at plant 2 in favor of contracting out the work Decker, who met with John Claffey, the union president at-the time, indicated that a final decision would be rendered by May 21. Claffey im- mediately took the position that under the collective-bar- gaining agreement, Respondent could not make the pro- posed change without bargaining with the Union. Claf- fey also requested that Decker notify him in writing. Decker complied with Claffey's request for a written notice the following day Later the same day Claffey telephoned Decker and reiterated his position that the Company could not unilaterally subcontract. Additional- ly, Claffey requested a meeting with Fred Rathert, who at the time was Respondent's executive vice president,5 and the cost-reduction committee. The parties held a meeting on May 18 in a conference room on the Company's premises. Present for Respond- ent were Rathert, Decker, and Perkins, the last-named -being the chairman of the cost-reduction committee Also present for the Company was- Esther Oleniczak, who was responsible for taking minutes of the meeting. Representing the Union was the entire executive board, including Claffey and International Representative Wally Bruss. - 2 A graph prepared by the Company in January 1982 indicates that be- tween 1966 and 1982 it experienced a general decline in sales 3 Dennis Perkins, who at the time of these proceedings was Respond- ent's'executive vice president and throughout 1982 had been vice presi- dent of operations, testified that the Company saved $600,000 annually by closing plant 2 and engineering Of this amount, $550,000 was attributable to closing plant 2, and $50,000 to closing engineering 4 Henceforth, all dates are in 1982 unless otherwise specified 5 At the time of these proceedings Rathert was president of Respond- ent At the meeting the parties discussed a variety of issues in addition to subcontracting piston production. Claffey reiterated the Union's position that the Company was re- quired to bargain. Rather emphasized that the decision had not yet been made, but that the Company would decide by May 21. He repeatedly explained that the Company was not, competitive and had to discover ways of increasing productivity. Atone point Claffey asked, "What about Plan 2? Will that be moved to Plant 1?" Rathert responded, "Whatever we have to do, we will." Finally Claffey asked Rathert point blank if it was the Company's position that it could subcontract piston work without bargaining with the Union. When Rathert re- plied affirmatively, the union delegation asked for a recess. On returning from their caucus the union repre- sentative announced that, if the Company decided to subcontract piston production, the Union would embark on some type of job action, including the possibility of a strike. As the union officials departed, Claffey said that they awaited the Company's decision. - Decker informed the Union of the Company's decision to subcontract piston production on May 21 with the fol- lowing memorandum: Effective May 21, 1982, the Executive Manage- ment has agreed to implement the recommendation of the Cost Reduction Committee that our Piston Operations be phased out. When this program is completed all pistons will come in finish machined. - As stated above this program will be phased in and you will be kept informed The Union responded by filing a grievance and the unfair labor practice charges underlying this proceed- ing.6 On May 24 Claffey met alone with Rathert to try to change the Company's decision. Rathert responded that . the decision was final However, Rathert did offer a 60- day 'moratorium on any further subcontracting in ex- change for the Union's promise to engage in concession bargaining. Claffey, apparently under the impression that the 60-day moratorium • included the decision to subcon- tract piston production, agreed to these terms. Rathert testified that he made it quite clear that the moratorium only applied to future subcontracting plans and that the decision on piston production was final When Claffey asked him whether it would be wrong to give the mem- bership the impression that there might be a change in the plans as to piston, production, Rathert, according to his own testimony, indicated that although theoretically anything was possible it was unlikely that the Company would reverse its decision. The parties, indeed, began concession bargaining after May 24 On June 2 Rathert wrote to the subcontractor, A.E.I.; Inc. of Michigan, a nonunion machine shop, to inform them that Respondent would be sending it orders. By 6 Apparently the parties have agreed to waive their rights under the grievance and arbitration procedures of their collective-bargaining agree- ment and resolve-their differences before the Board Accordingly, this case is not a candidate for deferral under United Technologies Corp, 268 NLRB 557 (t984),.and Collyer Insulated Wire, 192 NLRB 837 (1971) See MacDonald, Engineering Co . 202 NLRB 748 (1978) 522 DECISIONS OF NATIONAL LABOR RELATIONS BOARD October Respondent had completely phased out piston production at an annualized cost saving of $168,000. C. Discussion The General 'Counsel contends that Respondent was required, to bargain about the decision to contract out piston, production, but that it failed to negotiate or to provide a meaningful opportunity for negotiation before reaching its decision, and, accordingly, violated Section 8(a)(5),and (1) of the Act. Respondent makes a threefold defense. First, it argues that subcontracting piston pro- duction work.was not a mandatory subject of bargaining under, the .Act,' and, therefore, it was not required to ne- gotiate on the subject. Alternatively, Respondent con- tends that the Union waived any right it arguably had to bargain by agreeing to a clause in the collective-bargain- ing agreement which reserved to the Company the unfet- tered right to.contract out production' work. In any case, Respondent asserts that it did provide the Union with ample -opportunity to negotiate before its final decision was implemented. 1. The mandatory subject issue The Supreme Court and the Board have both provid- ed analytic 'frameworks for-deciding when an employer will be required to bargain with its employees' collec- tive-bargaining agent before making a managerial deci- sion. 'In First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), the court classified managerial decisions into 'three categories:- (1) those decisions, such as choice of advertising, product type, and financing, which have only an indirect and attenuated impact on employment; (2) .decisions, such as the -order of succession ,of layoffs and recalls, production quotas, and work rules which are "almost exclusively-an aspect on the relationship be- tween employer and employee"; and (3) those decisions which are•not primarily about the terms and conditions of 'employir`ient but touch on matters of central concern to' the :Union 'and its' members. First National Mainte- nance, supra'at 677..-As ,to the'first category, employers may'act unilaterally; as to the second, they must bargain with the representatives' of their employees. For category tliree•decisions, the Couri applied a balancing test: '[I]n view of an employer's need for unencumbered decision-making, bargaining over management deci- sions 'that have a substantial impact on the' contin- 'ued -availability 'of 'employment should be required only if the benefit, for- labor' management relations y•'iand the collective-bargaining' process, outweighs the burden on' the 'conduct of business.: First Ndtional.Maintenance, supra' at 679.,, - Recently, the Board issued a decision reevaluating the question.-oL the- obligation, to bargain about managerial -decisions,.,in_,liglit of First National Maintenance. In Otis Elevator Co., 269 NLRB 891' (1984);'the respondent-em- ployer discontinued its research'and' development activi- tie in Mahwah, ' New Jersey; and consolidated them 'm its East Hartford, Connecticut facility, without first bar- gaining with the, union. Unable 'to muster, a majority, each''of_the four sitting- Board members"decided that the respondent acted lawfully, but their decisions turned on three different rationales. Members Dotson and Hunter held that: These facts establish that the Respondent's decision did not turn upon labor costs even though that factor may have been one of the circumstances which stimulated the evaluation process which gen- erated the decision. Despite the evident effect on employees, the critical factor to a determination whether the decision is subject to mandatory bargain- ing is the essence of the decision itself, Le., whether it turns upon a change in the nature or direction of the business,- or turns upon labor costs; not its effects on employees nor a union's ability to offer alternatives. (Emphasis added.) Otis Elevator, supra at 892. While concurring with her colleagues in their result, Member Dennis offered another approach to the prob- lem. Building on the analysis set forth by the Supreme Court in First National Maintenance, Member Dennis noted that plant relocations, consolidations, automation, and subcontracting are all category three decisions. Otis Elevator, supra at 897. Member Dennis then developed a two-pronged test for deciding which category three de- cisions required bargaining: [T]he General Counsel must prove (1) that a factor over which the union has'control was a significant consideration in the employer's decision, and (2) that the benefit for the collective-bargaining process outweighs the burden on business. - Otis Elevator, supra. - Member Zimmerman agreed that the decision in Otis Elevator was not a mandatory subject of bargaining,7 but under the following theory: [I] will find bargaining over an employer' s decision . .. to be mandatory when the decision is amenable to resolution through collective-bargaining ... . When the employer's decision to remove bargaining unit work is motivated by reasons "peculiarly suita- ble for resolution within the collective-bargaining framework," -then bargaining may lead to a mutual- ly acceptable solution and . . . cannot be predeter- mined to be ineffectual. But when, as in First Na- tional Maintenance, the union has no control over or ability to affect the reasons underlying an employ- er's decision, the union is relegated to a 'position of merely_ offering advice with no corresponding abili- ty to affect the decision through concessions. Otis Elevator, supra at 900. Member Zimmerman added that: [A] decision motivated by labor costs is a mandatory subject of bargaining. There will no doubt be other ' Member Zimmerman dissented from that part of his colleagues' deci- sion which remanded the "effects-bargaining" allegations to the adminis- trative law judge TELEDYNE INDUSTRIES 523 instances, however, in which the Act should be found to require decision bargaining where the rea- sons underlying . . . [the decision] are not confined. solely to labor costs. Otis Elevator, supra at 900 [Emphasis added.] Applying the standards set forth in Otis Elevator, the issue in the case at bar is whether or not Respondent based its decision to subcontract on labor costs. If the decision to contract out piston production indeed "turned on" labor costs then clearly under the decision authored by Members Dotson and Hunter and Member Zimmerman, respectively, Respondent was obliged to bargain with the Union. Under Member Dennis' ap- proach, a finding that Respondent based its decision on labor costs, satisfies the first prong of the test-that a sig- nificant factor behind the decision is something over which the Union can exercise control. Respondent asserts and Rathert, who along with former Company President Lee Delaney made the deci- sion to subcontract piston production, testified that the decision was based on three factors: (1) the need to free space in order to facilitate the consolidations plants 1 and 2;8 (2) the need to effect unit-cost reductions pursuant to the recommendation of the cost-reduction committee; and (3) the large expenditure which eventually would have had to have been made to replace the aging equip- ment in the piston machine tool area.9 In agreement with the General Counsel, however, I find that the decision did turn on labor costs. Thus, under Otis Elevator-it was a mandatory subject of bargaining. I reach this conclu- sion for a number of reasons. There is an abundance of evidence in the record that labor costs were indeed a crucial factor, if not the only one, in Respondent's decision to subcontract piston pro- duction. Rathert testified that he acted "on the recom- mendation" of the cost-reduction committee, and he de- scribed unit-cost reduction as a "paramount" factor in the decision. In fact, the decision was made only 6 days after the cost-reduction committee issued its report on May 14 and Decker's formal notice to the Union that the decision had been made underscored that the subcon- tracting plan was to "implement" the recommendation of the cost-reduction committee. Respondent argues that it is unclear from the record how much of the unit-cost reduction recommended by the cost-reduction committee was attributable- to labor costs. Although, as Respondent points out, the record is silent as to precisely how much of the saving was attrib- utable to labor cost it is clear that labor costs was the primary,factor Respondent considered. The report used by the cost-reduction committee to determine the savings achieved by subcontracting piston production compared the cost of producing pistons with the cost of purchasing them, exclusive of the cost of materials. Included in the calculation of the cost- of in-house production were Re' spondent's wage rates and a current variable burden rate 8 Perkins testified that the elimination of piston machinery freed 19,000-square feet of space 9,According to Perkins, the replacement cost of the piston production machinery was $1 4 million The equipment being used by the Company as of 1982 was for the most part old (pre-1977) and in poor condition determined by indirect labor costs, fringe benefits, partial utilities, partial depreciation, and operating supplies. It is thus apparent that although the unit-cost savings were related to at least three other items , these savings were primarily dependent on direct and indirect labor costs. In sharp contrast to the persuasive evidence amassed by the General Counsel pointing to the conclusion that labor costs was a t'ontrolling, if not the single factor, behind the decision to subcontract is Respondent's com- plete failure to substantiate its bald assertion that consoli- dation, plans and the age and condition of piston-produc- ing equipment were also crucial considerations. In the face of Respondent's insistence that its need to free space for the planned consolidation was a key factor in its de- cision is the fact that the decision to subcontract was made almost 18 months before the consolidation was ef- fected. Even more to the point is the absence of evi- dence that the consolidation was being planned at the time the decision to subcontract was made . In its meet- ings with the Union about subcontracting piston work, the Company never mentioned i 0 consolidation plans, al- though it complained repeatedly about labor costs and productivity. Moreover, Respondent at the hearing failed to produce one shred of documentary evidence that the consolidation of plants 1 and 2 was on the drawing board in May 1982. It simply strains. credulity that a large organization, such as Respondent, could not deliver a single piece of paper documenting that it was working on the logistics of plant consolidation contemporaneously with its decision to, subcontract. In fact, the earliest date Respondent can trace its active planning of the consoli- dation to is December 1982, 8 months after the subcon- tracting decision had been finalized. i i Neither has Respondent substantiated its claim that the age and condition of its piston-producing equipment was a -significant factor in its decision to subcontract. While Respondent did produce an inventory list indicating that much of the machinery was old and worn, there is no indication that it needed immediate repair or replacement or posed any-other particular problem for Respondent at the time the decision to subcontract was made. While clearly' subcontracting provided Respondent with the in- cidental long-term benefit of obviating the necessity of eventually replacing the machinery, the record is barren of any indication that this was an issue before Respond- ent in May 1982. Obviously, the period between 1981 and the- fall of 1983 was one in which Respondent was gradually scaling down its operations and, indeed, changing the nature and direction of its business. The mere fact, however, that the decision to subcontract piston production coincided with this period does not prove that the two events were linked. 12 A contrary finding would allow employers un- 10 The only reference the Company made to the possibility of further plant consolidations was Rathert 's cryptic response,, "Whatever we have to do, we will" to a point blank question from Claffey - 11 In December 1982, Respondent made a presentation to Teledyne Corporation executives as to its consolidation plans. This was followed up in January 1983 with a presentation to the Union and a handout sum- mary of that presentation to its employees 12 Cf UOP, Inc, 272 NLRB 999 ( 1984) (In this case, as in the case at bar, the respondent- subcontracted work and consolidated its facilities, - Continued 524 DECISIONS OF NATIONAL LABOR RELATIONS BOARD fettered discretion in making managerial decisions during any period of long-term or gradual-, change, without being subject to the -stringent analysis. required by Otis Elevator and First National Maintenance. 13 In the face of the prima facie evidence and, indeed, Respondent's admission that labor costs played a signifi- cant-role in the decision to subcontract, it was incumbent on Respondent to substantiate, its 'bald assertions that other factors played a crucial or even a significant role in its decision-making p`rocess.14 Relieving Respondent of this minimal burden would clearly make it impossible for the General Counsel to ever successfully demonstrate that an employer's managerial decision "turned on"-labor costs, •a result which certainly could not have been con- templated by any of the opinions 'expressed in Otis Eleva- tor'or its progeny.15 Having determined that, Respondent's decision to sub- contract piston production "turned on" labor costs, I find that under any of the opinions expressed in Otis Ele- vator the decision - was subject to mandatory bargain- ing.ls 2.-Waiver of bargaining rights Respondent contends that even assuming the decision to subcontract the manufacture of pistons was a manda- tory subject 'of, bargaining, the Union, by contract, Waived its`right to negotiate. I agree with this conten- tion. - It is well settled that parties may clearly and un- equivocally waive their, statutory right to bargain over mandatory, subjects. 'Southern Florida Hotel Assn., '245 NLRB 561 (1979). See also Metropolitan Edison Co. v. NLRB, 460 U.S.693 (1983): "Such a waiver will not be- lightly inferred but' must be clearly evidenced either by the terms of the parties'- collective-bargaining agreement or in the nature of the prior contract negotiations." Southern Florida Hotel Assn., supra at 567-568. however, in UOP, unlike in the instant case, the subcontracting decision was made at the time the consolidations were actively being planned and effected, and was clearly linked to the fundamental changes being imple- mented by the company) 18 Adams Dairy, 137 NLRB 815 (1962), enf' denied in relevant part 350 F 2d 108 (9th Cir 1965), cert denied 382 U S 1011 (1966), cited by Re- spondent is inapposite In that case, - the employer effected a basic oper- ational change in its business in deciding to eliminate its existing distribu- tion system and to sell its products through independent contractors By contrast, in the instant case Respondent continued to produce engines and continued to use pistons in those engines The only change effected by, the subcontract, according to Rathert's own testimony, was that pis- tons were. produced in Michigan by AEI's employees rather than in Wis- consin by Respondent's workers' - .14 'See -St Regis Paper Co ; 247 NLRB 745 (1980), where the Board upheld the administrative law judge's adverse inference drawn from re- spondent's failure to buttress its oral, assertions that the transfer of work was economically motivated, in the face of the General Counsel's prima facie case that the motive was unlawful . =,is See UOP, Inc ;. supra, Fraser Shipyards, 272 NLRB 496 (1984), Co- lumbia City Freight Lines, 271 NLRB 12 (1984) ie As I have previously noted, the finding that Respondent's decision, turned on labor costs satisfies but one requirement of Member Dennis' test that the Union have control over critical factors in Respondent's de- cision I find, however, that the second prong of this test is also satisfied While the benefit of allowing the Union to bargain over the preservation of its member's job is self-evident, absent from the record is any evidence that a burden would be placed on Respondent in bargaining over this issue; nor is any burden readily apparent In the instant case, the relevant contractual language was contained in paragraph 49 of the 1980-1983 collec- tive-bargaining agreement, in effect at the time the deci- sion to subcontract piston production was made Paragraph 49 reads as follows: OUTSIDE CONTRACTING 49. A. It is the policy of the company that em- ployees of an outside contractor will not be utilized in the plant to replace seniority employees on pro- duction assembly or manufacturing work, ware- housing work, or fabrication of tools, dies, jigs and fixtures, normally and historically performed by them, when performance of such work involves the use of Company-owned machines, tools or equip- ment maintained by -Company employees. B. This policy shall not affect the right of the Company to continue arrangements currently in effect;' nor shall it limit , the fulfillment of warranty ,obligations by vendors; nor limit work which a vendor must perform to prove out equipment. C. It is the ,policy of the company to fully utilize its seniority employees in the skilled trades in the performance of maintenance work. It is the Compa- ny policy in all cases (except in emergency situa- tions, the union will be notified in writing of such emergency situation after completion) to have ad- vance discussion with Union Representatives prior to letting such a contract. In this discussion local management is expected to review its plans or pros- pects for letting a particular contract. The local Union should be advised in writing of the nature, scope and approximate dates of the work to be per- formed and the reasons (equipment, manpower, etc.) why management is contemplating contracting out the work. At such time, Company Representa- tives are expected to afford the Union an opportuni- ty to. comment on the Company's plans and to give appropriate weight to those comments in the light of all attendant circumstances. D. In nb event shall any seniority employee who customarily performs the work in question be laid off as-a. direct and immediate result of work being performed by any outside- contractor on the plant premises. _ E. Nothing in these Outside Contracting para- graphs shall prevent the Company from letting out- side contract when it is apparent that doing the work on company premises cost substantially more than having the outside contractor do such work, provided Paragraph 49 has been followed. F. The Company agrees to give the Union three (3) days written notification prior to Sub Contract- ing -Tool and Die work and will afford the Union an opportunity to have an advance discussion with the Company. All other current practices and lan- guage applications will prevail concerning outside contracting of Tool and Die work. ' ` TELEDYNE INDUSTRIES The General Counsel and Respondent offer alternative theories as to the' meaning of this language According to' Respondent, paragraph 49 is to be read as follows: . ' Subparagraph A places restrictions on' subcontracting work where the *subcontractor -will' work on Respond- ent's premises. Subparagraph C, which requires the Com- pany to provide advance notice and an opportunity for bargaining whether-the work will be done on the compa- ny premises or,contracted out, applies only to mainte- nance work, which was not at-issue in the instant case.17 The, restrictions in subparagraph F, which like subpara- graph C, require advance notice and an opportunity for bargaining, are limited to Too] and Die work. Subpara- graph E permits the company unfettered discretion to subcontract work off the premises, "contracting out," if doing the work on the premises costs substantially more Respondent contends that the =proviso to -subparagraph E, requiring that paragraph 49 be followed, refers to the notice requirements of subparagraphs C and F. The General Counsel reads paragraph 49 differently. According . to the General Counsel, subparagraph E, which allows the -Company to subcontract out work without bargaining, applies only to skilled-trades work. The General Counsel arrives at this conclusion through the following reasoning. The, proviso to subparagraph E is. meaningless' unless it restricts Respondent's right to subcontract workout of the bargaining unit. Only para- graph C, which relates exclusively to the skilled trades, discusses restrictions on subcontracting out., Consequent- ly, the General Counsel reasons subparagraphs C and E must be read together. Since subparagraph C is limited- to the skilled trades, so must be subparagraph E. I cannot accept, the General Counsel's, rather tortured reading of paragraph 49: On.the contrary, I find that the Union quite clearly and unequivocally waived its right to bargain about the Company's decision to contract out production work. Where the parties intended that a sub- paragraph be limited to the skilled trades they expressly so limited that paragraph. Moreover, while the General. Counsel is certainly 'correct in asserting that subpara- graph E must be read in conjunction with subparagraph C, logic does not require that the two sections be limited in the same way. On the contrary, subparagraph E quite clearly permits Respondent to subcontract out either production or skilled-trades work; however, to the extent that-the skilled trades are implicated, the notice and bar- gaining requirements of subparagraph C must be ob- served.18 This is both a logical reading of,the contract and is consistent with the plain meaning of its lan- - guage. 1 9 17 Certain of Respondent's employees perform maintenance work, such as skilled trades, which is not directly related to production The other group of unionized employees are directly involved in machining parts or assembly It is undisputed that the instant dispute only involves produc- tion jobs 18 Similarly to the extent that tool and die work is involved, the re- strictions embodied in subpar F must be adhered to both 19 Although the General Counsel is correct that NCR Corp.; 271 NLRB 1212 (1984), recently decided by the Board, is inapposite, the reason he gives is incorrect Contrary to the General Counsel's assertion, the collective-bargaining agreement in the instant case, - like the contract in NCR, contains specific language permitting the Company to act unilat- erally In fact, in the instant case the pertinent language contained in par 525 The bargaining history behind paragraph 49, cited by. both parties in support of their respective positions, al- though ambiguous, tends to support Respondent's inter- pretation of the contract language. Prior -to 1971, para- graph 49 embodied a comprehensive prohibition against subcontracting: Theeompany shall not employ any new help or call, in any outside help, on work, normally per- formed by regular employees while employees with seniority are working less than forty (40) hours per week or are laid off, provided such employees are capable of performing the available work. This language was removed 'during the, 1971 negotia- tions, the first ;in which Teledyne, was -involved, and re- placed with the paragraph 49 appearing in the 1980-1983 contract. 20 During the 1977 negotiations the' Union offered pro- posals to drastically change paragraph 49. Specifically, the Union proposed that the parties: 1. Eliminate present " paragraph 49 in its enirety. 2. Remove threat of'Plant three movement prior to ratification of new contract. 3. Production: No production farmout without prior union approval, as presently practiced as agreed by Harold Todd in 1967. ,- 4. Skilled Trades: maintenance-continue present, three (3) day agreement and insert into contract. None of these proposals was put into effect. The Union attempted, to expand the restrictions on the- Company's right to subcontract again at the- negotiations for 1980-1983,. offering the following proposals: OUTSIDE CONTRACTING 49 A. It is the policy of the Company that out- side supplies or - contractors will not be utilized to replace seniority employees on production assem- bly, manufacturing, or warehousing work normally and historically performed by them. ,B. No Change: ' C. Old "D"-No Change. D. In the event that doing work on Company premises costs substantialy -more, or there is a lack of available equipment, or -there is a shortage of qualified manpower and 'in the event the Company follows the provisions of this paragraph 49, they then may consider outside contracting providing the Company so -advises the Union Executive Board before'such -plan's are put into - effect. The. company will, then endeavor, upon consideration of all fac- tors, to do said-work in this plant under 'the provi- sions of the current labor `agreement. 49, subpar E, is, unambiguous on its face 'NCR is distinguishable from the case at bar, in that the issue in that case involved an employer's right to modify the contract'without the union's consent, while the instant case involves the Employer's duty to provide an-opportunity to bargain over a mandatory subject . ' - . - '. - .. . 20 Subpar F was added in 1977 . . - - ,W_ - 526- DECISIONS OF NATIONAL- LABOR RELATIONS BOARD These changes were also rejected. . In 1977 the Company proposed two additions, to the collective-bargaining agreement. One change was em- bodied in a proposed memorandum of understanding:' Before contracting any production work to an out- side supplier, the Company will endeavor, upon consideration of all factors, such as efficiency, econ- omy, quality, government, customer - or time re- quirements, etc. to do this work providing it can be done with the' available equipment and there is qualified 'manpower working in the plant. If it be- comes necessary for, the Company to discontinue any of its operations in the plant, or to contract with an outside supplier 'for any production work normally 'performed in the plant, the Company will advise the Union in writing, affording the Union an opportunity to have advanced discussion with the Company. In 'any such discussion the Company shall explain the reasons why it would take the' pro- posed action and the Union shall respond on the merits, including - suggestions of any alternative action consistent with the above stated, factors. The Company will respond- on the merits of the Union [sic] proposed alternative actions before making a final decision. - The Company also proposed a broad management-rights clause. Both of these changes were rejected -by the Union. The general conclusion, that can be drawn from this bargaining history is that in 1971 the Union agreed to language '-which expanded Respondent's discretion to subcontract unilaterally. Since that time the Union has sought to recover lost ground, but has -failed to make any gains at the bargaining table. - Contrary to the General Counsel's assertion, I do not find that Respondent's proposals in 1977 amounted to an admission that it did not already have the power to con- tract out production work without bargaining . The man- agement-rights clause it proposed was extremely broad and would have extended managerial discretion as to a whole range of issues having nothing to do with its power to subcontract. Furthermore, its proposal which, in fact, dealt specifically with subcontracting merely out- lined the procedures Respondent would follow in making the decision. It was not inconsistent with Re-- spondent's position that it was already entitled to make the decision. :Finally, I reject the General Counsel's assertion that the past practice -between the parties establishes that the Union never waived its rights to bargain about contract- ing out production work. Although the Union- produced evidence that it rather consistently, took the position that the Company was required to bargain- about - this issue,21 21 The Union argued for its interpretation of par 49 in a March 1977 letter to the company. president. It also took this position in a February 1982 grievance protesting the elimination of over-the-road truckdrivers Finally, the Union and Respondent clashed over the interpretation of paragraph 49 in an arbitration proceeding , affecting tool and die workers, which the Union ultimately lost. there is no evidence that the contract was ever actually applied this way. On the contrary, the evidence suggests that the Union, having failed to achieve its objectives at the bargaining table, persistently, but unsucessfully, at- tempted to press its position in -the administration of the contract. 3. The Union's opportunity to bargain Respondent contends that, even assuming its obligation to bargain, it did not violate the Act because, in fact, it negotiated in good faith. The General Counsel asserts that Respondent did-not bargain; pointing--out that al- though the Union implored Respondent to "work it out" with the Union before making a final decision,22 the Company refused to delay its decision to allow sufficient time for bargaining. " An employer satisifies its statutory `duty by giving the union reasonable notice of its proposed action and pro- viding the union with an opportunity to engage in mean- ingful -bargaining. Emporium, 221 NLRB -1211, 1214 (1975). - In the instant case, I find that Respondent satis- fied -this requirement. Although the. Company gave notice only 6 days before it planned on making the deci- sion regarding piston production, the,Union had time to and, in .fact,. did arrange a meeting with Respondent. Once at the meeting, rather than offering Respondent al- ternatives to its proposed action, the Union stubbornly insisted that the Company needed the Union's consent to act.23 The Union made no further bargaining overtures, nor did it ask Respondent to allow it,more time to for- mulate proposals. ' - - - Finally, the record indicates that Respondent did not present -the Union with a fait accompli. 24 Both before and after the May 18 meeting, the' Company repeatedly emphasized that it had not yet made a decision It is clear that the Union did not view the decision as a fait accompli, on May 18, by the fact that it felt ,it could coerce Respondent into deciding against the subcontract by threatening to strike. Even after Respondent an- nounced its final decision on May 21, Claffey by his own testimony felt there might be a chance to change the Company's mind. Having concluded that the Union waived its right to bargain over the decision to subcontract piston produc- tion by contract and by failing to pursue a reasonable ' op- 22 The General Counsel illustrates this with the following excerpted minutes of the May 18 meeting BRUSS Attitude is that slot [sic] of the jobs are leaving the Com- pany You are forecasting jobs You are out sourcing them This is the problem Before you do anything I recommend you work it out with the Union [Ibid at 4 ] BRUSS Union is asking you consider and talk to them prior to doing anything . . [Ibid at 7 ] Bargain in good faith not how you are doing Well the main pur- pose of this meeting today is the Piston problem Tell us now you will not farm out until you discuss with us first . We are not going to bargain the way we have [Ibid at 5 ] 23 See San-Diego Van & Storage Co, 236 NLRB 701, 705-706 (1978), for the proposition that when union representatives take the position that they would not permit the employer to take its proposed action instead of offering proposals, the employer may assume that an impasse has been reached - 24 Cf Ciba-Geigy Pharmaceuticals Division, 264 NLRB 1013, 1017-18 (1982), enfd. 722 F.2d 1120 (3d Cir. 1983) - TELEDYNE-INDUSTRIES 527 portunity to bargain, I find that,the 8(a)(5) and (1) allega- Design and Technical staff; Experimental Engineer- tions against Respondent should be dismissed. ing employees; Metallurgical employees; Service Engineers; Timekeepers; Office Employees. CONCLUSIONS OF LAW 1 Respondent is an employer within the meaning of 4. The General Counsel has not established by a pre- Section o Respondent of the Act.- ponderance of the evidence that Respondent has violated and an the Act as alleged. 2. The Union is a labor organization within the mean-. On these findings of fact and conclusions of law and ing of Section 2(5) of the Act. on the entire record, I issue the following recommend- 3. The following is an appropriate unit for collective- ed25 bargaining under Section' 9(b) of the Act: ORDER All of [Respondent's] employees in Plants 1, 2, and 3 except the following: The complaint is dismissed in its entirety. Executives of the Company; Superintendents and Assistant Superintendents ; Foreman and Assistant 25 If no exceptions are filed as provided by Sec 102 46 of the Board's Foreman, including all those having the right to Rules and Regulations, the findings , conclusions, and recommended Order shall, as provided in Sec ' 102 48 of the Rules, be adopted by the hire or discharge or whose recommendation in Board and all objections to them shall be deemed waived for all pur- regard thereto are usually and customarily upheld; poses •