Morco Industries, Inc.

762 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Morco Industries, Inc. and All Southern Fabricators, a Division of Morco Industries , Inc. and Sheet Metal Workers International Association, Local Union No. 57, affiliated with Sheet Metal Workers International Association, AFL-CIO. Case 12-CA-9065 30 April 1986 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND JOHANSEN On 20 March 1981 a panel of the National Labor Relations Board issued its Decision and Order in this proceeding.' The Board held, in agreement with the decision of Administrative Law Judge Richard J. Linton, that the Respondent had violat- ed Section 8(a)(5) and (1) of the Act by transfer- ring work from its Pinellas Park, Florida plant to its Long Beach, Mississippi plant without bargain- ing with the Union about the transfer. Thereafter, the Board filed an application with the United States Court of Appeals for the Fifth Circuit to en- force the Board's Order. While the case was pending before the court, the Board, sua sponte, requested that the court remand the case for further consideration. On 24 October 1981 the court granted the request. The Board's re- quest for remand was prompted by the United States Supreme Court decision in First National Maintenance Corp. v. NLRB.2 Since First National Maintenance the Board has decided Otis Elevator, 269 NLRB 891 (1984), interpreting the Court's de- cision. The Board has considered the entire record in the case and the judge's decision in light of the ex- ceptions, briefs, and position papers; the Supreme Court's decision in First National Maintenance; and our decision in Otis Elevator. We conclude that the Respondent's decision to transfer work had as its focus a change in the nature and scope of a signifi- cant facet of the business and was therefore not a mandatory subject of bargaining. The Respondent fabricates stainless steel cafete- ria equipment at a plant in Pinellas Park, Florida. As a result of a large increase in business and an absence of room for expansion at the facility, the Respondent decided in late 1978 to open a plant in Long Beach, Mississippi. This plant was to start production in January 1980. The Respondent, during contract negotiations in the fall of 1979, as- sured the Union representing the Pinellas Park em- 1 255 NLRB 146 (1981) 2 452 US 666 (1981) ployees that the new Long Beach plant would have no impact on the existing Pinellas Park unit. In July 1979, after construction of the Long Beach unit had begun, the Respondent signed a contract to construct the equipment for the cafete- ria of Southern Bell's new headquarters in Atlanta. The Respondent decided in October 1979 to use the more skilled Pinellas Park work force to make the relatively sophisticated equipment for the Southern Bell cafeteria and to transfer the standard work then being done at Pinellas Park to the Long Beach facility. In mid-December 1979, before any production was underway at Long Beach and before all of the equipment necessary for the production of the standard items had been transferred from Pinellas Park to Long Beach, the Respondent learned that there would be a delay in the work on the South- ern Bell equipment. The Respondent continued to transfer work from Pinellas Park to Long Beach. With the Southern Bell work late in arriving, the Respondent decided in mid-January to lay off some employees at Pinellas Park, and on 31 January 1980 five employees were laid off. The Respondent laid off two more on 29 February 1980. After the first layoffs, the Union requested bar- gaining about them and the work transfer. The Re- spondent's vice president of the equipment division referred the Union to its corporate attorney. The attorney referred the Union back to the vice presi- dent, who refused to discuss the matter and re- ferred the Union back to the attorney. In Otis Elevator we held that it is the nature of a managerial decision itself, not the impact of that decision, which determines whether a duty to bar- gain over that decision attaches. Where a decision turns on a change in the scope, nature, or direction of a significant facet of the enterprise, the Act does not impose an obligation to bargain. This is true whether or not the decision is prudent and whether or not it materializes as planned. Applying Otis Elevator to the instant case, we find that the decision to transfer work turned en- tirely on the need to expand the Respondent's metal fabrication facilities, and that this expansion involved a change in the nature and scope of this facet of the enterprise. In reaching this decision, we note that the physical plant in Florida had reached its absolute limits for expansion, and that the Respondent had already lost orders because of the lack of fabrication facilities. In addition, the new facility involved a capital investment of $950,000 and provided a better location to service the expanding market in the mid-South. Indeed, it was the increased capacity of the Long Beach fa- cility that made it possible for the Respondent to 279 NLRB No. 100 MORCO INDUSTRIES 763 enter into the Southern Bell contract. Finally, we note that the Respondent has not sought to under- mine the status of the Union or escape the labor costs embodied in the contract. To the contrary, the Respondent's motive was to keep the more so- phisticated work in the unionized Pinellas Park plant. Accordingly, we conclude that the Respondent did not violate Section 8(a)(5) and (1) of the Act when it failed to notify or bargain with the Union about its decision to transfer work to the Long Beach plant.3 However, for the reasons stated by the judge, we find that the Respondent violated Section 8(a)(5) of the Act when, in February 1980, the Respondent's vice president Roger Stoll refused to discuss the layoffs with the Union and referred it back and forth between Stoll and the Repsondent's corporate attorney. We shall therefore order the Respondent, on request, to bargain with the Union about the ef- fects of its decision to transfer work out of the bar- gaining unit, including the layoffs. THE REMEDY Having found that the Respondent unlawfully re- fused to bargain with the Union about the effects of its decision to transfer work out of the bargain- ing unit, we shall accompany our order to bargain with a limited backpay requirement designed both to make whole the employees for losses suffered as a result of the violation and to recreate in some practicable manner a situation in which the parties' bargaining position is not entirely devoid of eco- nomic consequences for the Respondent . We shall do so in this case by requiring the Respondent to pay backpay to its employees in a manner analo- gous to that required in Transmarine Corp., 170 NLRB 389 (1968), and Interstate Tool Co., 177 NLRB 686 (1969). Thus, the Respondent shall pay employees backpay at the rate of their normal wages when last in the Respondent's employ, from 5 days after Board 's decision until the earliest of the following conditions: ( 1) the date the Respond- ent bargains to agreement with the Union on those subjects pertaining to the effects on it employees of the decision to transfer work out of the bargaining unit ; (2) a bona fide impasse in bargaining; (3) the failure of the Union to request bargaining within 5 days of this decision , or to commence negotiations within 5 days of the Respondent's notice of its desire to bargain with the Union ; or (4) the subse- quent failure of the Union to bargain in good faith; but in no event shall the sum paid to any of these employees exceed the amount he would have earned as wages from the date on which he was laid off to the time he was recalled or secured equivalent employment elsewhere, or the date on which the Respondent shall have offered to bar- gain, whichever occurs sooner; provided, however, that in no event shall this sum be less than these employees would have earned for a 2-week period at the rate of their normal wages when last in the Respondent's employ. ORDER The Respondent, Morco Industries, Inc. and All Southern Fabricators, a Division of Morco Indus- tries, Inc., Tampa, Florida, its officers, agents, suc- cessors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain with Sheet Metal Work- ers International Association, Local Union No. 57, affiliated with Sheet Metal Workers International Association, AFL-CIO, with respect to the effects on its employees of its decision to transfer work from its Pinellas Park, Florida plant to its Long Beach, Mississippi plant. (b) In any like or related manner failing or refus- ing to bargain collectively with the Union. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) Make the employees who were laid off as a result of the transfer of work from the Respond- ent's Pinellas Park, Florida facility whole in the manner set forth in the section of this decision enti- tled "The Remedy" for any loss of earnings they may have suffered by reason of their layoffs. (b) On request, bargain with the Union with re- spect to the effects on unit employees of the Re- spondent's decision to transfer work from its Pinel- las Park, Florida plant to its Long Beach, Missis- sippi plant. (c) Post at its Pinellas Park, Florida facility copies of the attached notice marked "Appendix."4 Copies of the notice, on forms provided by the Re- gional Director for Region 12, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent ' Member Dennis agrees based on the analysis set forth in her separate opinion in Otis The focus of the decision-expansion of fabrication facili- ties-was wholly outside the Union's control The Union was in no "po- sition to lend assistance or offer concessions that reasonably could affect the employer's decision " Otis Elevator, 269 NLRB at 897 * If 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 Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " 764 DECISIONS OF NATIONAL LABOR RELATIONS BOARD to ensure that the notices are not altered , defaced, or covered by any other material. (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT in any like or related manner fail or refuse to bargain collectively with Sheet Metal Workers International Association, Local Union No. 57, affiliated with Sheet Metal Workers Inter- national Association, AFL-CIO, or any other labor organization which is your exclusive collective-bar- gaining representative. WE WILL NOT refuse to bargain with Sheet Metal Workers International Association, Local Union No . 57, affiliated with Sheet Metal Workers International Association, AFL-CIO, or any other labor organization which is your exclusive bargain- ing representative, over the effects of our decision to transfer bargaining unit work. WE WILL, on request by the Union, bargain col- lectively with it with respect to the effects of our decision to transfer certain unit work from our Pin- ellas Park, Florida facility to our Long Beach, Mis- sissippi plant. MORCO INDUSTRIES, INC. AND ALL SOUTHERN FABRICATORS , A DIVISION OF MORCO INDUSTRIES, INC. Local Union No. 57, affiliated with Sheet Metal Workers International Association, AFL-CIO (the Union) and subsequently amended, against Morco Industries, Inc., d/b/a All Southern Fabricators. I In his complaint, as amended, the General Counsel al- leges that Respondent is a single, integrated business en- terpnse and that it has violated Section 8(aX5) of the Act by unilaterally transferring work from its All Southern Fabricators bargaining unit in Pinellas, Park (Tampa) Florida, to its Morco Stainless Steel Fabricators bargain- ing unit in Long Beach, Mississippi. For many years, the Union has been the exclusive collective -bargaining repre- sentative of the All Southern Fabricators (Southern or Tampa), bargaining unit . On the other hand , the Long Beach, Mississippi (Morco Stainless or Long Beach) fa- cility is new and the employees unrepresented. On the entire record, including my observation of the demeanor of the witnesses, and after due consideration of the briefs filed by the General Counsel and Respondent (the Charging Party filed none ), I make the following FINDINGS OF FACT I. JURISDICTION Jurisdiction is not an issue. Morco Industries, Inc., a Florida corporation, with headquarters in Mobile, Ala- bama, operates an unincorporated facility in Pinellas Park (Tampa), Florida (known as All Southern Fabrica- tors (Southern)), where it is engaged in manufacturing and selling restaurant equipment . During the past 12 months, Respondent, through its Southern facility, sold and shipped products valued in excess of $50 ,000 direct from Tampa, Florida, to customers located at points out- side the State of Florida . Respondent admits, and I find, that it is an employer within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED Respondent admits , and I find, that the Union is a labor organization within the meaning of Section 2(5) of the Act. Steven L. Sommers, Esq., for the General Counsel. William F Banta, Esq., and Ellis B. Murow (Kullman, Lang, Inman & Bee, P. C), of New Orleans, Loui- sianna, and Pfilip G. Hunt, Esq., of Mobile, Alabama, for the Respondent. Richard H. Frank, Esq., and Mark F Kelly, Esq. (Frank, Chamblee & Kelly, P.A.), of Tampa, Florida, for the Charging Party. DECISION STATEMENT OF THE CASE RICHARD J. LINTON, Administrative Law Judge. This case was tried before me in Tampa, Florida, on August 11 and 12, 1980, pursuant to a complaint issued April 15, 1980, by the General Counsel of the National Labor Re- lations Board through the Regional Director for Region 12. The complaint is based on a charge filed March 5, 1980, by Sheet Metal Workers International Association, III. THE ALLEGED UNFAIR LABOR PRACTICES A. Corporate Structure and the Single-Employer Issue As the pleadings regarding the identity of Respondent remain imprecise, attention must be devoted here to that subject. Originally the complaint named "Morco Indus- tries, Inc.; and Morco Industries, d/b/a All Southern Fabricators" as the Respondent and, in paragraph 2(c) of the complaint, they were alleged to be a single integrated enterprise. In its answer, Respondent termed this allega- tion as irrelevant. Early in the hearing , the General Counsel was permitted to amend the complaint so that Respondent was described as: Morco Industries, Inc.; and All Southern Fabricators , a Division of Morco In- dustries, Inc. At the hearing, and in its brief, Respondent ' The corporate structure of the Employer will be discussed shortly For convenience, reference to the Company, and its relevant divisions, usually will be as Respondent MORCO INDUSTRIES has described itself as "All Southern Fabricators, a Divi- sion of Morco Industries, Inc." Record evidence clarifies the situation and demon- strates that Southern and Morco Stainless are both unin- corporated operating entities (or plants with company names) within an operating division of the corporate Re- spondent, Morco Industries, Inc. Based on the testimony of Roger Stoll, vice president of the equipment division of Morco Industries, Inc., the corporate structure is as follows. Morrison, Incorporated2 (Umbrella owner) Morco Industries, Inc. Equipment Division All Southern Morco Stainless Steel Fabricators Fabricators (Tampa, Florida) (Long Beach, Mississippi) (And seven other unidentified companies) The relevant management hierarchy is as follows: Roger Stoll is vice president of the equipment division. He formulates the labor relations policy for the entire equipment division (nine companies) and sees that such is implemented. Although Stoll reports to Executive Vice President C. J. Hollingworth, the record does not estab- lish which firm Hollingsworth is with . Stoll also is in charge of corporate planning and administration. E. L. "Ed" Matthews is vice president for manufacturing for the equipment division and, it seems subordinate to Stoll. William Temple is general manager of Southern. John Randall is manager of Long Beach. Stoll testified that he maintains fairly close communication with an official in charge of Morrison Cafeterias at Morrison, incorporated, so that the production of restaurant equipment will be coordinated with the scheduled construction completion of Morrison's new cafeterias. Southern and Long Beach are the only two plants producing metal equipment for cafeterias in the equipment division. Southern has been in operation since 1969. Although Long Beach opened in early January 1980, there was no production for the first 2 months. The central headquarters of Morco's Equipment Divi- sion is in Tampa, Florida, which houses Stoll's offices. Stoll visits all nine facilities in the equipment division on a regular basis to conduct supervision of their operations. Along with Matthews, Stoll made the decision to open Long Beach. The contract sales division of Morco sells the kitchen equipment that is fabricated at both Southern and Morco Stainless through a centralized sales oper- ation to some of the same customers of both plants. One might wonder why it is necessary to discuss in detail the relationships between the various entities here since they are all part of Morco Industries, Inc. Howev- er, as the Board stated (in a Sec . 8(b)(4)(B) context), "The Hearst cases hold, of course, that corporate identity does not in itself preclude neutrality among the parts of 2 Also owns Morrison Cafeterias 765 the corporation." Teamsters Local 560 (Curtin Matheson), 248 NLRB 1212 (1980). Conceivably, Long Beach could be so autonomous as to be the equivalent of a subsidiary corporation so that the need to resolve the single em- ployer concept would be more obvious. It is clear that Southern and Long Beach are far from being autono- mous, and, in fact, are closely integrated within Morco's equipment division. Moreover, the key factor, a centrally controlled labor relations policy, is present here. In view of the foregoing, it is clear that Morco Indus- tries, Inc. is the responsible Respondent in this proceed- ing. As Southern and Long Beach are mere unincorpo- rated operating plants of Respondent Morco Industries, Inc., with a labor relations policy centrally controlled and administered by Vice President Roger Stoll of the equipment division, it is clear that for our purposes here, all entities3 are a single employer. I so find 4 Los Angeles Marine Hardware Co., 235 NLRB 720, 721, 731-732 (1978), enfd. 602 F.2d 1302 (9th Cit. 1979). C. Background and Chronology 1. Site leased-union recognized In 1969 Respondent acquired its Tampa facility by leasing property that had formerly been occupied by an- other company. That firm's employees were represented by the Union. Respondent immediately recognized the Union, negotiated its own contract with the Union, and began operation with 12 employees in the bargaining unit. In the 11-year relationship between Respondent and the Union, there have been no strikes directed at the Tampa plant, no arbitrations, and no lawsuits. Operating as a "job shop," Southern's only initial cus- tomer was Morrison Cafeterias, a corporate affiliate, for whom it fabricated stainless steel equipment, including counters, dishwashers, etc. A few years before opening, Respondent began seeking and securing contracts with "outside" (unaffiliated with Morrison, Inc.) companies such as Marriott, Hyatt, Disney World, and the Federal government. 2. Tampa's physical capacity exhausted During the first 10 years of its existence, Respondent's Southern operation experienced much success. The Tampa plant fabricated the equipment for I11 of the 112 Morrison cafeterias constructed during that period of time. While initially Respondent had orders for 5 or 6 Morrison cafeterias every year, the annual orders now average about 15 to 16.5 Further, the "outside" portion 8 Morco Industries, Inc, the Equipment Division, Tampa, and Long Beach * Respondent does not address the matter in its brief and styles the caption as "All Southern Fabricators, A Division of Morco Industries, Inc " 5 Since its early years, Respondent has added new stainless steel restau- rant products to its line for Morrison's, including ice bins, shelving, let- tuce bins, dishwashers , hoods, and frosttops Prior thereto, Morrison Cafeterias was forced to purchase this equipment from unaffiliated com- panies These new products obviously contributed to the spiraling sales and heavy demand for work at the Tampa facility 766 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of the business also prospered to the point that today more than 55 percent of the Tampa sales are to non- Morrison-customers. The sales volume grew from $148,375 in 1970 to $3,434,293 for the fiscal year ending May 31, 1980.6 This exceptional increase of 2300 percent motivated two expansions of the Tampa plant to the point of more than exhausting the land available to Re- spondent. The original plant, leased in 1969, had 12,000 square feet. In 1971 an additional 12,000 square feet were added, and in 1975 still another 12,000 square feet of manufacturing space were tacked on to the structure. A diagram of the property, drawn to scale, was received into evidence as Respondent's Exhibit 4. Even with these expansions, Respondent found that it was forced to contract out the equipment for a Morrison cafeteria in 1975 because of lack of capacity. In the winter of 1979, Respondent realized there was simply no additional room for expansion. The Pinellas Park zoning ordinance, section XVII, paragraph F, states, "the maxi- mum area of allowable coverage of a lot or parcel by structure shall be fifty percent (50%) of the land area of the lot or parcel." Respondent was informed in February 1980 that a variance from that regulation would be nec- essary because more than 50 percent of its lot was devot- ed to the building. Photographs accepted into evidence depict the two additions , the small area for parking and driving around the plant, and the crowded conditions inside the plant. In 1977 Respondent was forced to cancel some orders it had accepted from outside companies because it simply lacked the capacity to fill them. Howard Johnson, one of those companies, has not placed an order since that inci- dent. Desparate for space in 1978, Respondent located and leased a separate warehouse building two blocks from its Tampa (Pinellas Park) plant for the purpose of staging and storing finished products. Testimony reflects that this unwieldy arrangement has been both inefficient and expensive. 3. Long Beach plant built In the winter of 1978, Respondent selected Long Beach, Mississippi, as the site of a plant designed to re- lieve the over-expanded capacity of Tampa and to fabri- cate at least some of the equipment for planned Morrison cafeterias. Most of Morrison's new cafeterias, as Re- spondent's Exhibit 11 reflects, were opened in the mid- South. As explained by Vice President Stoll, the reasons Respondent needed the Long Beach plant was that the capacity of the Tampa plant had been exhausted. Long Beach, Mississippi, was selected primarily because it is relatively close to the growth of Morrison Cafeterias, which are being constructed in mid-South/Southwest lo- cations such as Lafayette and New Orleans, Louisiana; Dallas and Fort Worth, Texas; Springfield, Missouri, Oklahoma; and Ohio.7 As described by Stoll, Respond- 6 The number of Respondent's full-time sales persons has grown from one in 1977 to six at the time of the hearing, an indication of the heavy "outside" work it is doing Moreover, the bargaining unit had grown from the original 12 to some 31 or 32 as of the time of the hearing 7 Stoll testified that additional reasons were ( 1) the very attractive bond offer from the State of Mississippi, and (2) the fact that other sheet ent made a capital investment of $950,000 in building this new facility-the operational name of which is Morco Stainless Steel Fabricators. Chastain Havens, union steward at Tampa, testified that it was general knowledge among the employees during June 1979 that the Long Beach plant was under construction. Checking with Tampa Plant Manager Manuel Santana Jr., Havens learned that indeed the new plant was under construction. More will be said later on this subject. Although the Long Beach plant opened the first part of January 1980, the buildup has been slow, and even 7 months later there were only 17 production and mainte- nance employees. The production completed in January and February was, in the words of Vice President Stoll, "nil." 4. Impact of Southern Bell's headquarters contract On July 9, 1979, Respondent and Beers Construction Company signed a contract under which Respondent is to fabricate the stainless steel restaurant equipment for the cafeteria of Southern Bell's new general headquarters (a building in excess of 50 stones) in Atlanta, Georgia. This contract is by far the largest contract ever entered into by Southern. The contract, for slightly less than $1,000,000, called for installation of the equipment during April, May, and June 1980, and in turn, required Re- spondent to complete work already scheduled in 1979 and then fabricate the Southern Bell work during the first quarter of 1980. Stoll testified that Respondent would not have accepted the project if the Long Beach plant had not been scheduled to open in January because Respondent knew, from its exhausted capacity at Tampa, and its previously existing orders, that it could not possi- ble handle all other work, as well as the Beers contract, if only Tampa's manufacturing capacity were available. Therefore, Respondent planned that with at least limited production capacity available at Long Beach beginning in January, some work could be allocated to it which, in turn, would "free up" capacity at Tampa. In August and September 1979, Respondent's execu- tives, including Vice President Stoll, had several meet- ings during which the allocation of work between the Tampa and Long Beach plants, beginning in January 1980, was extensively discussed. Stoll testified that, de- pending on the size of the job, some 3 to 5 months scheduling time is needed between the decision on where to produce and the actual beginning of production. Sub- stantial lead time is necessary because of technical prob- lems connected to pre-parking sketches and other mat- ters prior to beginning the actual fabrication of the equipment. In discussing, in August and September, what work to fabricate at which plant, Stoll and his managers considered the skill of the respective work forces and lo- cation of the installation of the equipment to be fabricat- ed. Applying these concepts to the facts before Respond- ent in October, the final business decision was made to utilize the more experienced work force at Tampa and to metal companies in the Mississippi Gulf Coast area provide at least some experienced sheet metal workers MORCO INDUSTRIES construct the sophisticated equipment connected with the Southern Bell Telephone job, while allocating the standard, relatively routine fabrication of shelving and other basic equipment for Morrison Cafeterias to the Long Beach facility So far as the record reveals, only these business factors of work force skill and customer location were analyzed and applied by Respondent in allocating the work con- tracted for. Thus, in October 1979 the work for the first quarter of 1980 was scheduled for both Tampa and Long Beach by Respondent with the anticipated result that Tampa would continue operating at capacity, with no layoffs considered or anticipated, while Long Beach would begin fabrication of routine, standard work for Morrison Cafeterias. 5. Employees and the Union learn of Long Beach plant-contract negotiations-Tampa Manager Santana foresees no layoffs In November 1978 Respondent interviewed two Tampa bargaining unit employees , Manuel Santana and Bob Steyer, for the plant manager's position at Long Beach. The position was offered to Santana that same month." As previously noted, Union Steward Chastain Havens testified as of June 1979 the fact of construction of Long Beach was "general knowledge" among em- ployees at Tampa. Havens asked Santana about it and the latter confirmed that the plant was under construc- tion. Testifying further, Havens stated that he and Busi- ness Manager Salinas discussed the Long Beach situation before the October-December 1979 contract negotiations between the Union and Respondent. In October, November, and early December 1979, the two parties conducted a series of negotiating sessions which ultimately resulted in a new collective-bargaining agreement with a 2-year term extending through Decem- ber 31, 1981 At least twice, and perhaps three times during the negotiations , Harold Salinas, Union's business manager and chief negotiator, asked Vice President Stoll about the Long Beach plant. Stoll assured Salinas that Long Beach would have "little or no effect" on the bar- gaining unit in Tampa. According to the March 13, 1980 pretrail affidavit of Salinas, Stoll advised Salinas during the negotiation that Long Beach would fabricate the more simplified production items and that this would allow Tampa to increase its work volume.9 The Union 8 Before matters progressed any further, a management change oc- curred and Santana became manager of the Tampa plant 8 At the trial , Business Manager Salinas testified he could not then recall Stoll making the statement during the negotiations, but did recall that Stoll had said it at some unrecalled time and place Salinas authenti- cated the affidavit Under the circumstances, I credit Salinas' March 1980 version as an admission , or his past recollection recorded, even though the affidavit (R Exh 1) was not offered in evidence under either FRE 801(d) or 803(5) Salinas testified that he did not recall Stoll's naming spe- cific equipment to be manufactured at Long Beach Union Steward Havens testified that none was specified With a very brief and ambigu- ous reference, Stoll testified he informed Salinas "what items were going to be kept " (Tr 208) The "items" could have been a generalized refer- ence to "more sophisticated production" items, in a remark similar to that contained in Salinas' pretrial affidavit 767 did not follow up with any oral or written requests for more details. Sometime in late 1979, Respondent moved one of its press brakes from its Tampa plant to the Long Beach fa- cility. Stoll testified that the press brake is used to make shelving, and was moved from Florida to Mississippi so that the latter facility could produce shelving. Around the same period of time, a punch press was moved from, Tampa to Long Beach . After these machines left South- ern, less shelving was being manufactured at Tampa. Subsequent to this equipment being transferred to Missis- sippi, the Tampa employees no longer produced certain shelving, chicken boxes, pan tops, pot sinks, lettuce bins, salad tables, work tables, beverage tables, landing tables, dish carts, or beverage tables, all of which comprised about 33 percent of the work they previously had manu- factured. These items were partially produced with punch presses and press brakes. i ° Union Steward Havens testified, without contradiction, that Tampa Manager Santana told him that the items were to be pro- duced at Long Beach. At a service pin and profit-sharing awards ceremony in late December 1979, Tampa Manager Santana took the opportunity to calm concern employees had been ex- pressing about possible layoffs at Tampa because of the new plant. According to Havens, at the awards meeting Santana told employees that he did not feel that Long Beach would interfere with Tampa, that while Tampa would lose some work to Long Beach, he foresaw no future layoffs at Tampa (Tr. 126, 156). 6. Southern Bell job delayed-layoffs at Tampa In December Respondent learned, for the first time, that its plans relating to the scheduling of work at the two plants for the early months of 1980 were in jeop- ardy. As Stoll explained at trial, the event undermining the allocation of work was the failure of Southern Bell Telephone Company to supply the necessary sketches and drawings and the resulting delay in the beginning of the fabrication of the equipment for that project. On re- ceiving final confirmation of the delay in mid-December, Stoll was at first hopeful he could secure other contracts for Pinellas Park which would take the place of the Beers project. But by the middle of January, after at- tempts to secure work had failed, it became obvious that a layoff for lack of work would be necessary. Thus, in mid-January, a decision was made to lay off certain em- ployees on January 31, and in mid-February a decision was made to layoff certain employees at the end of Feb- ruary. At the trial, the parties stipulated to the following in- formation regarding the seven employees , generally clas- sified as sheet metal mechanics , who received the reduc- tion-in-force layoffs: 1s Havens' percentage estimate seems a bit high, but it is clear that an indefinite layoff of 7 employees from a bargaining unit of only about 37 (an approximate figure) represents a reduction in the work force of almost 19 percent-a substantial number 768 Name Larry R. Davis Constantine Kassars Lawton M Osborne Mortimer Salch Daniel P Sinclair Wallace Messer John J Neidlingerii DECISIONS OF NATIONAL LABOR RELATIONS BOARD Hired Laid Off 12-27-77 1-31-80 12-4-78 1-31-80 3-14-72 1-31-80 2-24-75 1-31-80 6-25-79 1-31-80 9-9-77 2-29-80 8-6-79 2-29-80 Stoll testified that the anticipated work slump oc- curred in February, with another in March, and that the layoffs were made for lack of work. He further testified that Respondent's work on the Southern Bell Telephone project finally began about mid- to late-June 1980. In fact, he stated that Respondent has had a request with the Union t 2 for two journeymen sheet metal mechanics for over a month, but the Union has not been able to Comply. 1 3 At the trial, Stoll explained that he did not consider giving the Union prior notice of the impending layoffs because the Company had experienced layoffs in the past. 14 Stoll credibly testified that he believed in the truth of his remarks during the negotiations in October- November that Long Beach would have little or no effect on the Tampa employees. After the subsequent de- velopments, he realized that Long Beach did have some effect, but he never so informed the Union. Although Stoll testified that conceivably there would have been a layoff at Tampa even had there been no Southern Bell project, and no Long Beach plant, such statement is not supported in the record.' s 7. Mooneyhan meets with Stoll after layoffs Immediately on the reduction-in-force layoff of five unit employees on January 31, 1980, Salinas requested a meeting with Stoll "to discuss the shop in Mississippi."18 Such a meeting was held on February 4, 1980, during which Salinas and International Organizer A. Q. Moon- eyhan represented the Union, while Stoll and Ed Mat- thews represented Southern. At the meeting, which lasted only about 4 minutes, Mooneyhan stated that he wanted to discuss the shop in Mississippi, to which Stoll replied that he did not want to discuss it, and referred 11 Neidlinger is classified as a sheet metal apprentice is The Union, according to Salinas, serves as Respondent's hiring hall at Tampa (Tr 108) 13 A letter dated July 7, 1980, from Santana to Salinas, and referring to telephone requests beginning June 24, 1980, is in evidence as R Exh 2 In the letter, Santana "confirms" his earlier requests for one welder, pol- ishers Lawton Osborne and Connie Kassars (laid off January 30, 1980) and four journeymen, including Daniel Sinclair (laid off January 31, 1980) Salinas testified that eventually both Osborne and Kassars returned to work at Southern, but that Sinclair has not since he had been em- ployed and "it's not customary usually to take a guy out of a shop that's already employed on the referral procedure " (Tr I I 1 ) 14 No clarifying evidence was presented 15 A significant amount of overtime was being worked at Tampa in the last half of 1979 Thus, Stoll's speculation that the layoffs could have oc- curred in any event is not logically supported by the evidence Indeed, Stoll admitted that at the time of the Tampa layoffs, the simpler work previously transferred from Tampa to Long Beach was in fact being manufactured at the latter facility (Tr 291) is According to Stoll, the union representatives referred to "Long Beach" rather than to "Mississippi " The difference is immaterial the union representatives to Corporate Attorney Pfilip Hunt in Mobile, Alabama. Hunt, when contacted by Mooneyhan, referred him back to Stoll, at which time Salinas set up another meeting with Stoll. This second meeting between the Union and Respondent took place on February 13, 1980, at which time Stoll and Bill Temple, Morco equipment division general manager of manufacturing, met with Salinas and Mooneyhan. Moon- eyhan again requested to discuss the Mississippi oper- ation, and informed Stoll that Southern could conceiv- ably be in violation of the contract covering the South- ern operation. Stoll admits that during this February 13, 1980 meeting, Mooneyhan asked him about the transfer of work from Tampa to Long Beach and the consequent layoff of unit employees at Southern (Tr. 206). Stoll in- formed the union representatives that he did not want to discuss the matter and again referred Mooneyhan to At- torney Hunt. Mooneyhan explained at trial that the purpose of the Union's request to discuss Long Beach had the threefold purpose to discuss: (1) the layoffs; (2) the work trans- ferred; and (3) possible misuse of the union label at Long Beach. 17 He credibly denied that the purpose was to seek recognition at Long Beach. Stoll testified that he referred the union representatives to Corporate Attorney Hunt because he believed they wanted to discuss possible recognition of the Union at Long Beach. This belief was based on direct reports he had received from employees at Long Beach that a union organizer had shown them a copy of the Southern contract and said he could secure the same wages for them at Long Beach. At times during his testimony, Stoll did not appear to be fully candid, and I do not credit him on this key point. Thus, while Stoll may have thought that one of the topics Mooneyhan wanted to discuss was possible recognition at Long Beach, i s I am convinced he felt that the primary purpose of the visits was to discuss the work transfer and employee layoffs. Indeed, as already noted, Stoll concedes the significant point that at the second February meeting Mooneyhan did refer to the transfer of work and did ask about the layoffs. In short, it appears that Respondent was playing a game in which the union representatives were referred back and forth- apparently simply to delay the inevitable discussion about the layoffs and transfer of work. I therefore credit the testimony of Mooneyhan and Salinas concerning the purpose of the meeting, and I accept Stoll's February 14, 1980 admission regarding Mooneyhan's reference to the work transfer and layoffs. D. Analysis and Conclusions Respondent argues, in essence, that its decision to transfer some of the more simple production items from its Tampa facility to its new Long Beach plant, in order to make room for sophisticated work required in the it He explained that he wanted to make sure that the Union's label was not being placed on items fabricated at Long Beach 18 Even this is dubious since Stoll concedes he was unaware of any organizing campaign and assumes he would have been alerted had there been one (Tr 202) MORCO INDUSTRIES huge Southern Bell project, was a decision lying "at the core of entrepreneurial control" and was "fundamental to the basic direction of (the) corporate enterprise," and therefore outside the area of mandatory bargaining. Fi- berboard Corp. V. NLRB, 379 U.S. 203, 225 (1964) (Jus- tice Stewart concurring). It contends that it is significant that the decision to transfer the work was related direct- ly to its nearly $1 million capital investment at Long Beach and its ability to take on the largest contract in Southern's history, the $952,053 subcontract from Beers Construction Company for kitchen work at Southern Bell Telephone's new headquarters building in Atlanta, Georgia. Of importance, in this line of argument, is the fact that the situation at Tampa which presented man- agement with a critical problem was not the cost of labor i 9 but the finite capacity of the plant. However, in Ozark Trailers, 161 NLRB at 566-567, the Board declared that whether a particular management decision must be bargained about does not turn on the commitment of investment capital, or whether it involves a "major" or "basic" change in the nature of the employ- er's business. While such matters are of significance to an employer, they also are of so profound significance to the employees who have invested years of their working lives developing the skills they use to earn their liveli- hood They have a substantial interest in protecting that livelihood, and the duty to bargain over such any deci- sion which adversely affects that livelihood, as the Board recently observed, places only a minimal burden on an employer. Brockway Motor Trucks, 251 NLRB 29 (1980). On the other hand, it is axiomatic that the duty to bar- gain over a decision attaches only where the decision has a foreseeably adverse effect upon the bargaining unit. Westinghouse Electric Corp., 153 NLRB 443, 446 (1965). At the time Respondent's allocation decision was final- ized in October 1979, Respondent reasonably foresaw "little or no" adverse impact on the Tampa bargaining unit. Therefore, there was no duty to bargain over the decision-until such time as a reasonably prudent busi- ness person would have recognized that there might well be an adverse impact In our case, that moment came in mid-December.20 With the mid-December 1979 news that the Southern Bell project would be delayed, Re- spondent's bargaining duty finally did attach, for it was obvious that, in the absence of Respondent locating some interim work, some adverse consequences would affect the Tampa employees Respondent argues that it has a history of subcontract- ing when production capacity reached 100 percent and, therefore, this fact constitutes a past practice exempting it from any duty to bargain over the transfer of the standard Morrison cafeteria items to Long Beach. This 10 A factor referred to by the Board in Ozark Trailers, 161 NLRB 561, 567 (1966) 20 It is undisputed that the Union did raise the subject of the new Long Beach plant two or three times during October-November in con- tract negotiations Each time Stoll answered the very limited questions Union Representative Salinas asked That Salinas did not press for more details, even though it would appear he had no right to do so, is not Stoll's fault In effect, the Union waived its claim to a right to more de- tails regarding the decision, and its effects, as of that moment As a corol- lary, it may be said that Respondent waived its right to remain silent to the extent that Stoll answered 769 contention apparently is based on the very brief state- ment by Stoll concerning an event in June 1975 when Southern contracted with another fabricator to build the equipment for the one Morrison cafeteria Southern did not equip (Tr. 228). No further details, such as whether the Union was notified and agreed, are given. It seems clear, moreover, that no layoffs were involved. In any event, Respondent's duty to bargain here did not arise until mid-December. Moreover, Tampa Manager San- tana's December (apparently) statement to Union Stew- ard Havens that the lettuce bins (and other Morrison standard items) were being sent to Long Beach for pro- duction did not absolve Respondent of its obligation to notify the statutory representative. I note that Business Manager Salinas represented the Union at negotiations for a renewal contract, signed the contract on behalf of the Union, and was the addressee of Southern's July 7, 1980 written request for additional workers (R. Exh. 2). Thus, Respondent is well aware of the fact it must notify the official statutory representative involving matters of substantial importance. Medo Photo Supply Corp. v. NLRB, 321 U.S. 678 (1944). In light of the foregoing, I find that Respondent vio- lated Section 8(a)(5) of the Act by not alerting the Union in mid-December 1979 regarding the nature of its alloca- tion decision, and by not giving the Union the opportuni- ty to bargain regarding that decision and, as a practical matter, its effects. It therefore follows that Respondent continued to breach its bargaining obligation at the February 4 and 13, 1980 meetings by refusing to discuss the decision and its effects (including the layoffs) and it must be ordered to remedy these violations. It is not illogical to say that in mid-December Re- spondent should have given the Union notice and the op- portunity to bargain over the decision (as well as the ef- fects). While the Union may not have had any alterna- tive suggestions, and may have acquiesced in the deci- sion, that is a matter better left to the parties for bargain- ing than to speculation here. Similarly, it does not come too late to require bargaining now over the decision and its effects even though the Tampa facility is working at full blast. The Southern Bell project is not, so far as the record discloses, long term in the sense of the Morrison cafeteria projects. With full bargaining on the subject, the parties may agree to some other solution than leaving the Morrison standard items at Long Beach. Although bargaining on the matter should be required, as requested by the General Counsel, an order directing Respondent to return the work to Tampa, as requested by the Charging Party at the trial, would seem inappro- priate. Tampa, as noted, is at full capacity with the Beers contract (Southern Bell project) and the skills required (and present in the Tampa work force) are more sophisti- cated than for the Morrison standard items transferred to Long Beach. Accordingly, I shall not recommend that the work be retransferred. Offers of reinstatement, with full backpay, also should be required. The extent of the obligation owed regarding this subject is a matter better left to the compliance stage. 770 DECISIONS OF NATIONAL LABOR RELATIONS BOARD CONCLUSIONS OF LAW 1. Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. All production and maintenance employees em- ployed by the Respondent at its 5010 South Lois Avenue, Tampa, Florida facility constitute a unit appro- priate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act. 4. At all times material, the Union has been the exclu- sive collective-bargaining representative of all the em- ployees in the unit described above in Conclusion of Law 3, and Respondent is now, and has been at all times material, legally obligated to recognize and collectively bargain with the Union as such representative. 5. Since mid-December 1979, Respondent has violated Section 8(a)(5) and (1) of the Act by failing to give notice to the Union over Respondent's decision to trans- fer certain of its work from its Tampa, Florida facility to its Long Beach, Mississippi plant, by unilaterally trans- ferring such work, and the opportunity for the Union to bargain over such decision and the effects thereof. 6. The above unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that Respondent has engaged in the unfair labor practices set forth above, I shall recommend that it be ordered to cease and desist therefrom, to take certain affirmative action designed to effectuate the poli- cies of the Act and to post signed and dated copies of an appropriate notice to employees. As Respondent, by unlawfully refusing after mid-De- cember 1979 to bargain with the Union concerning the decision to transfer work and the effects thereof, and laid off seven employees as a partial consequence of its deci- sion to transfer, I shall recommend that Respondent be ordered to make each employee whole for any loss of earnings or benefits he may have suffered as a result of his layoff. Backpay shall be computed in the manner es- tablished by the Board in F W Woolworth Co., 90 NLRB 289 (1950), with interest computed in the manner prescribed in Florida Steel Corp., 231 NLRB 651 (1977).21 In view of the fact that by June 1980 Respondent's Tampa facility was enjoying full employment as a result of the work on the Southern Bell Telephone Company project, and that Respondent be ordered to restore the status quo ante by retransferring the work from the Long Beach facility to the Tampa plant. [Recommended Order omitted from publication.] 21 See generally Isis Plumbing Co, 138 NLRB 716 (1962)