Dubuque Packing Co., Inc.

, - DUBUQUE PACKING CO Dubuque Packing Company , Inc. and United Food and Commercial Workers International Union, AFL-CIO, Local No. 150A. Cases 33-CA-5524 and 33-CA-5588 16 December 1987 DECISION AND ORDER, BY CHAIRMAN DOTSON AND MEMBERS BABSON AND STEPHEN'S On 17 June 1985 Administrative Law Judge Robert M. Schwartzbart issued the attached deci- sion. The General Counsel and Charging Party filed exceptions and supporting briefs, the Respondent filed cross-exceptions, a supporting brief, and an answering brief, and the General Counsel and the Charging Party filed answering briefs to the Re- spondent's cross-exceptions. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. 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, i and conclusions and to adopt the recommended Order. ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. i Members Babson and Stephens find that, under any of the views ex- pressed in Otis Elevator Co., 269 NLRB 891 (1984), the Respondent was not obligated to bargain with the Union over its decision to relocate unit work from its Dubuque plant to its Rochelle plant. Because the Respond- ent did not have an obligation to bargain over its relocation decision, Member Babson finds it unnecessary to pass on the judge's findings relat- ing to the issue of union waiver and his alternative findings set forth in fn. 132 of his decision Judith T Poltz and John C. Gwynn, Esqs., for the General Counsel. Ray J. Schoohoven and Douglas A. Darch, Esgs. (Carl E. Johnson, Ellen E. McLaughlin and Robert R. Bruce, Esqs., and Seyfarth, Shaw, Fairweather & Geraldson), of Chicago, Illinois, for the Respondent. Robert H. Nichols, Esq. (Cotton, Watt, Jones & King), of Chicago, Illinois, for the Charging Party. DECISION STATEMENT OF THE CASE ROBERT M. SCHWARZBART, Administrative Law Judge. These consolidated cases were heard in Dubuque, Iowa, pursuant to charges filed by United Food and Commercial Workers International Union, AFL-CIO, Local No. 150A (the Union) and amended consolidated 499 complaint.' The complaint alleged that Dubuque Pack- ing Company, Inc. (the Respondent) violated Section 8(a)(1), (3), and (5) of the National Labor Relations Act (the Act). The Respondent, in answering the successive complaints, denied the commission of unfair labor prac- tices and interposed certain affirmative defenses Issues 1. Whether the Respondent violated Section 8(a)(5) and (1) of the Act by not bargaining in good faith with the, Union as duly recognized. bargaining agent of certain of its employees during the term of a collective-bargain- ing agreement. (a)' Concerning the Respondent's decision to relocate hog slaughter and processing operations from its Du- buque, Iowa plant to a newly acquired facility in Ro- chelle, Illinois (b) Concerning the effects of such relocation on affect- ed employees 2. Whether the Respondent also violated Section 8(a)(5) and (1) of the Act by: (a) Coercing and attempting to coerce unit employees and the Union into accepting midterm modifications of the collective-bargaining agreement. (b) Reducing the Union's negotiating opportunities by establishing ultimatum-backed deadlines by which time the Union either must accept Company-proposed mid- term contract concessions or face partial shutdowns and large-scale job losses. (c) Refusing to provide the Union with certain finan- cial data requested for bargaining purposes by- (i) Limiting the scope of the financial information fur- nished to the Union only to the Dubuque plant instead of providing the Companywide data requested. (ii) Insisting that the Union accept certain midterm contract modifications before any financial information would be released. (iii) Preventing free and confidential interchange be- tween the Union and its retained accountants by threat- ening to sue such accountants if they issued a report to the Union that had not been approved by the Respond- ent. (d) Repudiating a written agreement to not seek fur- ther midterm modifications during the term of the collec- tive-bargaining agreement if certain conditions were met, which promise had been made by the Respondent in ex- change for a valuable earlier contract concession by the Union. (e) Implementing certain midterm contract modifica- tions unilaterally without having reached bargaining im- passe or having obtained the Union's agreement. (f) Exacting from the Union and implementing a writ- ten agreement calling for midterm contract concessions in the form of wage and other benefit reductions, which i The docket entries are as follows The charges in Cases 33-CA-5524 and 33-CA-5588 were filed by the Union on 26 June and 7 August 1981, respectively Consolidated complaint in these cases issued on 28 April 1982, and the amended consolidated complaint, dated 22 October 1982, was served after the start of the hearing The matter was heard on 7 and 8 September, 25-29 October 1982, and 31 October, 1-4, 8, and 9 Novem- ber 1983 287 NLRB No. 52 500 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD agreement had been obtained by alleged unlawful bar- gaining tactics 3. Whether the Respondent's relocation of work from its Dubuque plant to Rochelle and the resultant layoff of Dubuque employees was violative of Section 8(a)(3) and (1) of the Act as done in retaliation for the employees' membership in and support for the Union and their con- certed refusal to agree to further midterm contract con- cessions. - All parties were given full opportunity to participate, to introduce relevant evidence, to examine and cross-ex- amine witnesses, and to file briefs. Briefs, submitted by the General Counsel, the Respondent, and the Union, have been carefully considered.2 On the entire record of this case and my observation of the witnesses and their demeanor, I make the follow- ing FINDINGS OF FACT cility principally relevant to this proceeding,5 the Re- spondent, until about 31 August, slaughtered hogs and beef and processed and packed meat products. Until that date, approximately 2000 persons represented by various labor organizations were employed by the Respondent at that plant. Of these, around 1900 were represented for many years by the Union in a contractually described unit of "all production employees in the employer's Du- buque, Iowa, plant," which the parties agree was appro- priate for purposes of collective bargaining.6 The most recent in the series of collective-bargaining agreements between the Respondent and the Union for the Dubuque plant production employees, effective from 1 September 1979, through 1 September 1982,' provides for union security, incentive pay, cost-of-living allow- ances, and a grievance procedure culminating in manda- tory arbitration. The contract also contains the follow- ing: I. JURISDICTION The Respondent, an Iowa corporation with corporate headquarters and a place of business located in Dubuque, Iowa, where, prior to 3 October 1981,3 it had operated a hog and beef slaughtering and meat processing plant. Al- though the Respondent had other facilities, its main Du- buque plant is principally involved in this matter. During the 12 months prior to issuance of complaint here, a representative period, the Respondent sold' and shipped from its Dubuque plant finished products valued in excess of $50,000 directly to points outside the State of Iowa. On the foregoing facts, I find that the Respondent, at all times material, was an employer engaged in com- merce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. ill. THE ALLEGED UNFAIR LABOR PRACTICES A. Background The Respondent, a closely held corporation, engaged in meat processing and packing when the events consid- ered here are alleged to have occurred, had approximate- ly 11 plants located in Wisconsin, Illinois, Iowa, Kansas, and Nebraska.4 At its main Dubuque, Iowa plant, the fa'- 2 The consolidated complaint was based substantially on Los Angeles Marine Hardware Co, 235 NLRB 720 (1978), enfd 602 F 2d 1302 (9th Cir 1979), with later reliance on Milwaukee Spring Division, 265 NLRB 206 (1982), Milwaukee Spring I The General Counsel also cited Otis Ele- vator Co, 255 NLRB 235 (1981), Otis Elevator I, in her brief Although the parties were able to argue in their briefs the impact of Milwaukee Spring Division, 268 NLRB 601 (1984), Milwaukee Spring II, issued after the close of the hearing, briefs were filed before the issuance of Otis Ele- vator Co, 269 NLRB 891 (1984), Otis Elevator II, which is now control- ling 3 All dates hereinafter are within 1981 unless otherwise specified 4 During the course of the hearing, the number of plants were reduced to five ARTICLE V-MANAGEMENT 5.1 The management of the plant and the direction of the working force, with the right to establish rea- sonable rules and regulations, the right to hire, sus- pend and discharge for just cause, to assign to jobs, to transfer employees within the plant, or increase and decrease the working forces, to determine the products to be handled, produced or manufactured, to schedule production, establish methods, standards of work, process and means of production and han- dling, and establish working hours are vested exclu- sively in the Company, provided this will not be used for the purpose of discriminating against any employee of the Company. The right of the Compa- ny to sub-contract the manufacture of any product or products now being processed in the Company plant at Dubuque, Iowa, shall be subject to an ad- vance discussion of such action with officials of the local union. This discussion shall require the Com- pany to show the absolute economic necessity of' such action and the Company shall be required to supply complete and detailed information showing the specific need for such sub-contracting, and this will not be done unless the economic necessity is es- tablished to the union officials ARTICLE XXIX-MISCELLANEOUS s The Respondent, founded in Dubuque in 1931, had expanded from that location 6 The Respondent's Dubuque plant maintenance employees were sepa- rately represented by another union, as were small drivers units of main- tenance employees, butchers, drivers, retail store clerks, the painter, and the rabbis who performed ritual slaughter in the preparation of kosher meat - This agreement, actually executed on I November 1979, originally was unchanged in relevant provisions from earlier contracts The con- tract was subsequently amended on 26 August 1980 and 19 October 1981, at which time it also was extended to 1 September 1983 The 26 August 1980 changes became effective on 1 November of that year DUBUQUE PACKING CO 501 29.9 The Company shall give notice in writing to the Union of the closing of the plant or department at least six (6) months prior to such closing. The following individuals were supervisors and agents of the Respondent, occupying the positions set forth next to their respective names Charles E Stoltz, president; Charles R. Naylor Jr., vice president of labor relations, Donald Strausse, execu- tive vice president; Robert H. Wahlert, chairman of the board; Robert C. Wahlert, president emeritus; David Wahlert, executive vice president; Ernest B Myers, as- sistant corporate director of labor relations; Dean Miller, personnel director; Larry J. Tangeman, plant superinten- dant, Dubuque plant, until 31 August, Rochelle, Illinois plant from 1 September 1981-15 October 1982, and Clif- ford Less, corporation counsel 8 The following individuals were most active on behalf of the Union. Lewie G. Anderson, International vice president and director, packinghouse division, United Food and Com- mercial Workers International Union, AFL-CIO, CLC; John Mancuso, assistant to Anderson, Wendell Olson, International vice president, UFCW International; Wil- liam H. Wynn, International president, UFCW Interna- tional; Melvin Maas, president, Local 150A, UFCW; Paul Casel, executive board member, Local 150A, UFCW, and Allan Jansen, time study representative, Local 150A, UFCW B. The Positions of the Parties The General Counsel and the Union essentially argue that the Respondent, during the term of the most recent collective-bargaining agreement , unlawfully relocated the hog kill and cut, related operations, and pork processing from its main Dubuque, Iowa plant to a newly acquired facility in Rochelle, Illinois, about 110 miles away, to avoid the high contractual labor costs at the. Dubuque plant, to avoid bargaining with the Union, and to punish employees who had supported the Union by rejecting additional midterm contract concessions sought by the 'Company The General Counsel noted that Rochelle em- ployees were paid much less than those at Dubuque and, unlike Dubuque employees, had no benefits . These par- ties contend that the decision to relocate turned on labor costs as the work relocation followed and was contin- gent on acceptance of the Respondent's proposal for ad- ditional union concessions during the term of the 1979- 1982 collective -bargaining agreement . The Respondent's proposal in this regard called for a 15-month wage freeze and was backed by an ultimatum that if the Union and employees did not accede , certain operations would be closed and many jobs lost. The General Counsel ' and the Union asserted that these matters were consistent with those used to extract a series of earlier midterm contract concessions from the Union during the 1979-1982 con- tract term, and the labor agreement immediately preced- ing. The Company's tactic, as argued, was to announce heavy financial losses at Dubuque, present its proposed concessions, threaten partial closure, and major job loss if the proposals were not accepted, and impose a dead- line for agreement if the negative consequences of nonac- ceptance were to be avoided. The Respondent often would attempt to raise worker support for its proposals through media releases and by way of correspondence sent directly to employees. The General Counsel and the Union further contend that even after the above work relocations, the Respond- ent unlawfully obtained and implemented a written agreement signed by the Union calling for further con- cessions in the form of pay and benefits reductions. It is argued that this agreement had been obtained by other unlawful bargaining tactics, including a refusal to pro- vide financial data requested for bargaining purposes until the Union actually agreed to the Company's pro- posals; by improperly limiting the scope of the data fur- nished; by censoring through prior review and threats of lawsuit what the Union's own auditors could report; and by imposing new deadlines on agreement backed by threats of yet greater job losses if the proposed further concessions were not granted. The General Counsel and the Union assert that the Union earlier had attempted to cooperate with the Company by agreeing to the conces- sions originally sought, but that the Respondent, in seek- ing the wage freeze and later concessions, had repudiated a written pledge made in consideration of a costly earlier "give-back" that it would seek no new concessions during the contract term. The Company, in turn, argues that it had lost millions of dollars in the operation of the Dubuque facility, that it had tried hard to retain the work at Dubuque, efforts that included seeking the requested concessions and moving work to Dubuque from other closing plants; had honored its labor agreement with the Union at Dubuque; had furnished appropriate data; and, generally, had acted in good faith. The Respondent asserted that it had no ob- ligation to engage in decisional bargaining concerning the work relocation, that the Union had waived certain bargaining rights by inaction and that in the circum- stances of this case when it had acted in response to pressures from its banks, had lost its credit line and also had closed other facilities, it had had no meaningful al- ternative but'to seek the disputed concessions and, where not successful, to take further action. The facts of this matter, carefully developed by the parties, are very detailed with much correspondence and other documentation indicative of the parties' motives at the time and the tenor of their relationship. So anchored, this matter does not rest on questions of credibility. 8 Of the company officials named, Stoltz, Strausse, R H Wahlert, R C Wahlert, and David Wahlert made up the Respondent's executive committee until 15 October 1982 when the employment of Strausse, R C Wahlert, and David Wahlert ended R H Wahlert left the Re- spondent earlier on 15 August 1982 Stoltz continued to occupy his posi- tion as the Respondent's president at the time of the hearing Naylor left the Respondent at the end of August 1982 C. Events Leading to the Work Relocation from Dubuque to Rochelle 1. The "buy-back"-increase in incentive standards On 17 November 1978 the Respondent and the Union executed an agreement proposed by the Respondent to 502 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD modify the then-effective 1976-1979 collective-bargain- ing agreement by raising the existing incentive standards 15 percent, effective immediately. Under this accord, in exchange for one-time cash payments to each unit em- ployee, employees thereafter would be required to produce at a rate of 115 percent of the prior existing work standards in order to receive incentive pay The Respondent's 1978 purchase of the '15-percent increase in incentive standards is referred to by the parties as the "buy-back." When the buy-back proposal was first submitted to the Union's executive board in the summer of 1978, it was rejected. Certain employees, however, thereafter circu- lated petitions requesting a vote on the matter. Also, by correspondence, dated 11 October 1978, signed jointly by the Respondent's president, Charles E. Stoltz, and board chairman, Robert H. Wahlert, the Respondent strongly urged employees to support the buy-back to counteract "the excessive cost of [its] wage incentive program" and thereby reduce existing losses and save jobs The 11 October letter noted that wage incentives in the meat packing industry were rapidly becoming a thing of the past and named several other large meat packing companies that had eliminated or greatly curtailed incen- tives. The Respondent, the letter noted, had lost' in excess of $4.77 million so far in that fiscal year, largely because of the price of its incentive program that had rendered its labor costs uncompetitive Only because of the Respondent's other plants had the Company been able to survive as well as it had. The Respondent stated its willingness to borrow $3 million to make the pro- posed payments to employees as it believed in the effec- tiveness of its proposal, but marked that that offer would be withdrawn if the Respondent did, not "receive a posi- tive response by 17, November 1978."9 ' This correspondence to employees was followed by a second such letter, dated 10 November 1978, from Robert C. Wahlert, president emeritus, who drew on his 44 years with the Respondent to urge employees to vote for the Respondent's proposal, if given the opportunity, essentially for reasons set forth in the 11 October letter. Both letters informed employees that the incentive system as it then existed was costing the Respondent ,$8 million a year. Charles R. Naylor Jr, vice president for labor rela- tions, explained that the Respondent had sought the buy- back because of poor productivity and the Company's fi- nancial losses, which were high in comparison with the industry at large. In addition to paying the same high labor rates as were provided in the Industry Master Agreement, the Respondent also was affording an incen- tive system whereby employees received additional com- pensation for exceeding certain work standards., Accord- ing to Naylor, these standards had become lax and the system out of control with a result that the Respondent had not been able to maintain production levels commen- surate with changes in production techniques Employees were paid at 150 to, at times, more than 200 percent of 9 The 17 November ultimatum date is the first-noted of several Re- spondent-imposed negotiating deadlines The lawfulness of two later such deadlines are in issue - incentive This, according to Naylor, illustrated the weakness of a system where employees regularly could achieve such rates. Naylor and Executive Vice President Donald Strausse agreed that the Respondent also had been motivated in incentive elimination by the industry's thrust in that direction. 10 Over the objection of their Union's leadership, the Du- buque production employees voted to accept the Re- spondent's buy-back proposal and, by a memorandum of agreement and, addendum thereto, the 15-percent in- crease in work standards became effective as of 17 No- vember 1978. 2. Notice of closing of the Dubuque beef kill On 14 May 1979, a few months before expiration of the 1976-1979 collective-bargaining agreement, a negoti- ating session was held attended by Company President Stoltz, Executive Vice President Strausse, Dubuque Gen- eral Plant Manager Larry J. Tangeman, Vice President for Labor Relations Naylor, and other company officials The Union was represented by its president; Melvin Maas, and all members of its executive board. At the 14 May meeting, Stoltz told the union repre- sentatives that the beef operation was not carrying the Company as in the past. The Dubuque plant had lost $4.2 million not including the $1.5 million paid in the buy-back. The Company was in desperate financial straits, had been losing money for some time,' and had lost $8 million in 1979. Stoltz informed the Union that the banks financing the Respondent's operations were re- quiring that the Respondent pledge its inventories and accounts receivable as collateral 12 In late August 1979, the union representatives, at an- other negotiating session, were given a financial report, dated-14 July 1979, prepared by the certified public ac- counting firm regularly used by the Respondent, McGla- drey Hendrickson & Co., which showed that for the 37- week period ending on the July date of the report,13 the Respondent's Dubuque Division14 sustained a net loss in excess of $6.4 million., In the late summer and fall of 1979 negotiations con- tinued and the parties executed the collective-bargaining agreement, effective 1 September 1979 to 1 September 1982. On 29 March 1980 a hearing was held before Arbitra- tor Richard Pegnetter pursuant to a union-filed grievance contesting whether the Respondent had a right to make an overall study of the beef kill department and to imple- ment new departmentwide incentive standards calculated 10 In the Dubuque beef kill, where production was best, it had been necessary to pay a premium to achieve the higher production figures which still were below those obtained by certain competitors without paying incentives 11 The Dubuque division's last profitable year was 1976 13 The Respondent's relationship with its banks, important in this matter, will be detailed below 13 The McGladrey Hendrickson report was signed on 13 August 1979 14 As most comprehensively defined, the Dubuque division consisted of the Respondent's plants at Dubuque and Denison, Iowa, and corporate headquarters at Dubuque, including corporate and plant management and sales Under the Respondent's bookkeeping methods, losses allocated to Du- buque referred to the Dubuque division, not to just the Dubuque plant DUBUQUE PACKING CO. separately for the slaughter of steers, heifers, bulls, and COWS. 1 s On 6 June 1980 the arbitrator issued his award' which generally upheld the Union's position on procedural grounds. News of the arbitrator's 6 June award was conveyed to Company President Stoltz and Executive Vice Presi- dent Strausse who then were in Europe. They returned on 9 June. On 10 June the following letter was sent to Union President Maas by Ernest B. Myers, assistant cor- porate director of labor relations: Pursuant to Section 29.9 of our labor agreement (The "Agreement"),16 this letter is your notice that the following departments will be closed effective December 12, 1980. Beef Kill Beef Cooler Beef Break Beef Boning Hide The costs of operating these departments are too high for the Company to remain competitive with its beef products. The employees affected are those on Exhibit A, attached hereto . . The affected employees will be permitted to exer- cise their seniority rights in accordance with the ap- propriate provisions of the Agreement. This action is being initiated for economic rea- sons. In a press release, dated 12 June 1980, the Respondent announced that in addition to the five departments previ- ously announced for closing in connection with the beef kill, nine other related departments also would close re- sulting in a loss of 350 to 500 jobs. On 3 July 1980, at Union President Maas' request, rep- resentatives of the Respondent and the Union met to dis- cuss the possibility of keeping open the beef kill depart- ment. The meeting was attended by Company President Stoltz, Executive Vice President Strausse, Maas, and Union Attorney Robert H. Nichols, 17 and others. Strausse began by stating that he had been away when Arbitrator Pegnetter's award had come down and was concerned about future problems in the plant, specifical- ly high seniority.18 Strausse described difficulties that the Respondent had been having with its other plants, and spoke at length of his efforts to get relief from sewage costs from the city of Dubuque. The sewage problem coupled with the objectionable work standards had, in the Company's view, created an impossible situa- 15 The arbitrator noted that the beef kill department then employed about 92 workers in 69 different jobs The new disputed standards imple- mented by the Company were approximately 45 to 65 percent higher than those previously existing 18 Sec 29 9 of the contract, quoted above, requires that the Respond- ent give the Union 6 months advance notice of any plant or departmental closing 17 Nichols appeared for the Union in the present proceeding 18 The seniority of many of the unit employees of the Dubuque plant, which averaged 25 years, was resulting in increased pension and vacation costs 503 tion. Since the standard could not be adjusted, there was no way the Company could continue to operate the beef kill. Strausse continued that if the beef kill closed, the hog kill also would have to go and eventually the entire plant would be shut down.19 Strausse iterated that there must be an adjustment of the work standards to reach fair and equitable standards for both sides or the Re- spondent would not be able to continue the operation. The Union offered its full assistance to have the sewage costs reduced. Responding to Strausse's stated desire to seek clarifica- tion of his award from the arbitrator, Union Attorney Nichols stated his belief that the Respondent could not do so unilaterally, but that such a course required mutual consent. Stoltz, too, spelled out the need for reductions in the Respondent's beef kill costs and the need to become competitive. Nichols, in turn, asked that certain informa- tion be made available in the form of profit and loss statements and one or two other items, so that the Union could determine if there was anything it could do to forestall the announced closing. Naylor agreed to furnish this data during the following week, which he did. During the 3 July meeting, Strausse announced that the Company was looking at some new facilities This al- ready had been publicly announced by the Company in a 23 June press release.2 ° The union committee did not object to this. No deadlines were imposed. Naylor char- acterized the 3 July meeting as positive in tone, with the Union anxious to do what it could to save jobs After 3 July, the parties continued to meet concerning the beef kill, but negotiations at first did not go well. On 22 July, the Union issued a press release after that day's meeting, indicating that the parties had met three times before to resolve the problems of the beef slaughtering operation and that the Company was demanding a work standard increase of 43 percent. However, it had in- formed the Union that even if it agreed to such an in- crease, there would be no assurance that the higher standard would keep the Company from removing the beef slaughtering operation from Dubuque. The release noted that the Respondent had imposed a 23 July 1980 deadline for the acceptance of its proposal, that no progress had been made, and that no further meetings were scheduled. On the following day, the Respondent issued its own press release noting that as a result of the ending of dis- cussions with the Union concerning the continuation of beef slaughter operations at the Dubuque plant, the Company was announcing its agreement to purchase the Joslin, Illinois plant of Illini Beef Packers, Inc. As previ- ously announced, the beef slaughter operations at the Dubuque plant would cease completely about 12 Decem- ber but that because of continuing losses, the Respondent 19 At the time of the 3 July meeting, the Respondent's only hog kill operation was at the Dubuque plant 20 In its 23 June press release, Respondent had announced that it was in the process of evaluating several alternate plant sites in eastern Iowa to identify the location of a new beef and hog slaughtering plant that would have the capacity to slaughter 350,000 cattle and 2 5 million hogs per year and, when fully operational, would employ approximately 1000 people 504 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD anticipated at least a 50-percent reduction in the volume of its Dubuque beef operations by the end of September. The Respondent anticipated doubling the processing op- erations at the Illim Beef plant in the near future.21 3. The agreement to modify the contract by ending incentive pay a Communications and negotiations At a 30 July 1980 meeting of company and union rep- resentatives, Stoltz, as was his custom, read a prepared statement to the union committee in which he declared that the decision to move the beef and allied departments was behind the Company but that the Respondent was continuing to review each of the remaining operations to ensure that all possible actions were taken for the profit- ability of the Dubuque plant. The phasing-out of beef op- erations did not eliminate the Respondent's financial problems or make the Dubuque plant profitable. He noted that the Company could not, continue to operate the Dubuque plant with the losses it was incurring but with the help of the union executive board and that of all the employees, the Company believed that it could keep the plant open. The most immediate problem, Stoltz continued, was the future of the Respondent's entire pork operation. Unless the Company and employees collectively could find some way to stop the tremendous losses incurred on pork in recent years, the Respondent's pork operations would go the same way as its beef operations. In many departments, although the Respondent was paying incen- tives above the top_ wages and fringes in the industry, production was less than that of the competition. The Respondent must be able to get top productivity for what it was paying in order to compete. Stoltz reiterated that the Respondent's pork operation was the one with which it was most concerned. The Company still was willing to pay the master rate for its employees' work but could not continue to pay a premi- um over and above that. It also would be necessary to find ways of increasing and modernizing the kill and cut chains so as to lower per head costs. If these things could not be done, Stoltz did not know how the pork operation could be saved. He noted that over the past 3 years the members of the Respondent's banking group had expressed concern over the poor results of the Dubuque plant and indicated belief that the Company's financial condition was seri- ously troubled The banks no longer believed the Com- pany's past promises that it would turn the Dubuque op- eration around and make it profitable Stoltz concluded as follows: We can save the plant and its jobs, but it will take surgery to do it. You have to believe me about 21 In fact , the Respondent purchased the Illint Beef plant in Geneseo, Illinois, 75-80 miles from Dubuque, about 17 October 1980 and continued to operate that facility until the fall of 1981 Although the Geneseo plant at its peak employed about 400 individuals, its operation did not result in job loss at Dubuque As matters developed, in spite of the notice of clos- ing, the beef kill continued at the Dubuque plant until that facility closed in October 1982 that. We want to eliminate the incentive plan by November 1, 1980, and make the necessary contract changes to obtain top productivity per man hour for every department in the plant. We know that your attitude about this is crucial to the success or failure of our efforts to keep this plant operational. If you are willing to work with us and take a positive approach to the matter, we believe that the plant will remain and be profitable. If you take a negative approach and convey the at- titude to your membership, then the future of this plant is clear-it will close. The future of this plant and its 2,000 plus jobs will be decided not by man- agement alone but by the concerted action of the management, the Union leadership and the other 2,000 employees. Further meetings. were held concerning the Respond- ent's 30 July proposal to eliminate the incentive program as related to pork production. During these meetings, the Respondent repeatedly informed the Union that it could not afford the $5 million in annual incentive pay and reit- erated that if there was no relief the Company probably would close the plant. The Union again was reminded that the Company's banking group was very unhappy with the Respondent's performance and was going to cut off financing, which would have to be replaced. The Union was told that the Company would have to have a decision by 1 September 1980 on its proposal to elimi- nate incentive pay. b. The Respondent's pledge to seek no further concessions during the contract term While these discussions were in progress, Stoltz sent the following written pledge, dated 21 August 1980, to the Union to gain acceptance of the Company's proposal: Since the Company presented its proposal to elimi- nate the incentive program at the Dubuque, Iowa plant, we have been asked by you, and other people, to provide assurances or guarantees that the Company would not come back with additional de- mands during the life of the present labor agree- ment As an indication of the Company's belief that this proposal will meet its needs, I'm willing to do so. Therefore, provided that the production levels as presented in Article 18.1 of our proposed Memoran- dum of Agreement are maintained, the Company will not request or demand any additional contract revisions during the life,of the present labor agreee- ment. Within a few days after receipt of Stoltz' above 21 August letter, company, and union representatives reached agreement whereby the contract was to be modified so that, effective 1 November 1980, Dubuque plant employees no longer would receive incentive pay but would be required to maintain production require- ments equivalent to the averages of those during the first 7 months of 1980-from 1 January through 31 July. DUBUQUE PACKING CO Under the new plan, employees would be required to produce at the same average level as they had during the first 7 months of 1980 although no longer eligible for in- centive pay. Work standards had become work require- ments and employees who thereafter failed to produce at the levels agreed for the control period would be subject to discipline. At a union membership meeting on Sunday, 24 August 1980, Stoltz' 21 August letter and the proposed agree- ment were read to the employees, who then voted for ratification of the agreement. The accord to end incen- tives was executed on 26 August and actually became ef- fective on 3 November 1980, in conformity with the start of that workweek. While the work requirements for pork slaughter and production, used to end the incentive system, were based on the production figures for the first 7 months of 1980, when such work had been run on incentives, the beef kill in that interim had been operated on a nonincentive pro- duction level and a separate agreement was necessary to determine future production levels there. Such an accord on the number of head per hour was reached by the Company and Union within 2 weeks after the execution of the understanding to end hog kill and cut incentive pay It is undisputed that the elimination of incentive pay at the Dubuque plant saved the Respondent approximately $5 million annually. It also is concluded that none of the Respondent's future actions were properly taken because of the employees' failure to meet the newly established work requirements on which the Respondent' s agree- ment not to seek further concessions had been made con- tingent.22 4. Subsequent negotiations on the beef kill; company cost-cutting measures On 16 September 1980 Maas sent Stoltz the following letter- ' 22 The Respondent sought to negate the efficacy of its 21 August pledge to seek no further concessions during the contract term by con- tending through Strausse's testimony and in its brief that the requisite contingency , the agreed work requirements , actually had not been met This, however, is inconsistent with the weight of the evidence Stoltz tes- tified directly that work requirements had been met, and this view is sup- ported, by company correspondence Assistant Director of Labor Rela- tions Myers, in a letter, dated 19 November 1980, praised the perform- ance of the beef kill to that point and, in fact, although 6 months' notice of closing of the beef kill had been served in June 1980, that operation, as noted, continued until the Dubuque plant finally closed in the fall of 1982 In correspondence, dated 16 February 1981, to its banking group concerning cost-cutting measures undertaken , the Respondent noted the implementation of the agreement to end incentives and noted improved efficiency from 92 percent in November 1980 to 99 8 percent as of 8 Feb- ruary 1981 Earlier , on 18 September 1980, the Respondent, in a letter to the Union, praised the positive attitude displayed by the Union and the beef kill employees This was reiterated in the Respondent's 1 June 1981 letter to the Dubuque Chamber of Commerce where the Respondent sought that organization's assistance in obtaining further concessions from the Union There, the Respondent, referring to this promise, recognized its responsibility to not approach the Union directly Accordingly , as late as 1 June, the Respondent was conducting itself as though the production requirements contingency had been met, a view further supported by the production records and Naylor's testimony correcting Strausse Accord- ingly, while there were certain problem areas within the plant, produc- tion requirements were met sufficiently to preclude the Respondent from asserting them as a valid basis for its subsequent actions 505 On behalf of the employees in the Beef Kill and re- lated departments, Local 150A requests that the Company reconsider its decision to close the beef operations at the Dubuque plant. The employees in the Beef Kill Department have shown their good faith by raising the chain speed [slaughter rate] in the last two weeks Since they are working with the management to provide great- er efficiency, I believe that management should work with them to save their jobs if possible If the Company will try to save their jobs, it will show good faith on the Company's part and that is not a "get even situation." Our members want their jobs and are willing to work to keep them. We are available to meet with you at your earliest convenience and would appreciate your serious consideration. In Stoltz' 18 September reply he stated that the Re- spondent would be most happy to discuss the beef kill with Maas and the Union's appropriate representatives However, he noted as follows: After receiving your letter, we did raise the possi- bility with our lead bank, and while they would not give us a definite answer at this time, they did indi- cate that they would give it serious consideration providing certain conditions were met. As you know the Beef Kill at Dubuque is scheduled to close December 12th and one of the problems we would encounter in operating the kill at Dubuque is a lack of operating capital due to the additional monies now needed for the Illini operation In order for our Banks to consider making this additional capital available, it will be necessary for us to con- vince them that we can return not only the Beef op- eration but the entire plant to a profitable operation by increasing our productivity, and would suggest that we consider the month of November as a trial period during which all parties would make a con- certed and cooperative effort. . . we are thankful for the positive position that the Union and the Beef Kill employees have dis- played. President Emeritus Robert C Wahlert again wrote to the employees on 29 October 1980 expressing his con- cern over the future of the Dubuque plant. His letter, in relevant part, continued: As you know, November 1 will bring about another new change-a change in the labor contract and the payment of incentive wages at the Dubuque plant. Let there be no misunderstanding-this labor change will not in itself be a cure-all and automati- cally make the Dubuque plant profitable. It is a big step forward and we are halfway home, but we are still short $4 million just to break even It is abso- lutely essential that we work together to improve efficiency and cut costs and, as provided in our In- centive Agreement, to make any further changes 506 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD necessary and maintain our plant equal in produc- tivity with our competitors. Wahlert's letter ended with an appeal for increased pro- ductivity and for joint effort by management and work- ers to do what is necessary to keep the plant in business. On 19 November 1980 Assistant Director of Labor Relations Myers sent the following letter to Union Presi- dent Maas: By letter dated June 10, 1980, I notified you of the Company's intention to close the Beef Kill, Cooler, Break, Boning _and Hide departments effective De- cember 12, 1980. In response to your letter of Sep- tember 16, 1980, Mr. Stoltz informed you [by letter of September 18, 1980] that the Company would use the month of November "as a trial period during which all parties would make a concerted and cooperative effort." The test period, of course, applied to all departments in the plant. While the Beef operations have performed commendably to this point in November, you are aware of our con- cern over the performances in several other depart- ments. Nonetheless, the Company is willing to seek from the banks the additional capital required for maintaining the beef operations. As of now, we have no such long term commitment from them. Because of the areas of production that are still con- cerning us, as well as the availability of money, we are unable to revoke the notice of closing but are able to assure you that we will postpone the effec- tive date of the closing on a month-to-month basis. You are certainly aware of what is happening to in- terest rates this month. On the day after receiving the above 19 November letter, Maas and another union official met with Myers. Maas told Myers that as far as the Union was concerned, the Respondent could rescind the 6 months' notification closing of the beef kill, but the Company could not put the Union on a month-to-month basis. Maas insisted that the Respondent would have to give the Union another 6- month notice. Myers disagreed stating that under the contract, after the Company gave 6 months notice, it could put the Union on a month-to-month basis The par- ties, still divided on this 'issue, agreed that the matter probably would have to be decided by a third party sometime in the future. On 8 December 1980 and 29 January 1981, in response to union requests, Company President Stoltz sent Maas detailed letters describing comprehensive measures that the Respondent was taking to reduce expenditures. In addition, on 30 January the Respondent, in a memoran- dum to all hourly paid management employees, an- nounced that in the context of the Company's difficult fi- nancial times, the Respondent no longer would provide semiannual cost-of-living adjustments for hourly paid management employees and that, thereafter, all manage- ment employees, salaried and hourly paid, would under- go annual wage evaluation reviews on 1 December- eliminating the dual standard for salaried and hourly paid management personnel. Around 1 February 1981, 11 hourly rated nonbargaining unit management , office, and secretarial jobs were eliminated and, as of 1 March, the sales staff was reduced by 16 employees. 5. The Respondent's attempts to increase the hog slaughter rate On 2 December 1980 Industrial Engineer Roger F. Less sent the Union a letter revising the gang sets or work crews to be assigned to handle increased chain speeds.23 As the Union points out in its brief, since in- centives had been eliminated, the practical effect of in- creasing the chain speed on the hog kill would be to make the employees work faster for the same money. Accordingly, Maas, in his reply of 10 December to Less, wrote that Local 150A did not agree with the issued gang sets as indicated in Less' letter . On 18 December the entire hog kill night shift was laid off. On 5 March, Larry J. Tangeman, general plant super- intendent of the Dubuque plant, sent a written request to the U.S. Department of Agriculture requesting permis- sion to increase "the Pork Dress Chain speed to 845 plus per hour effective 16 March."24 Word of the Respondent's attempt to increase the hog kill chain speed spread and a petition was circulated at the plant on this matter . This resulted in a meeting of local union officers and stewards which, in turn, generat- ed the following letter, dated 13 March, to the Company over Maas' signature: At this time, the Officers of Local 150A wish to inform you that our Working Agreement, in its en- tirety, will not be further changed until its expira- tion date in 1982.25 A motion of such was presented and approved by the stewards' and officers at a meeting held on March 12, 1981. After receipt of the Union's above 13 March letter, the parties held a series of meetings on the matter at various times, including on 20 and 25 March .2fi At these meet- ings, the Union took the position that management, under the contract, had the right to increase the chain speed if the production line were properly manned. However, the Union never agreed that the five-employee increase proposed by the Respondent would be suffi- cient. There was an understanding that the Company 23 The chain speed figure is a euphemism for the number of head slaughtered per hour 24 At the time of Tangeman's letter, the hog chain speed was 750 head per hour 25 This, of course, was a reference to Stoltz' 21 August 1980 pledge that, for ending the incentive system, the Respondent would not seek ad- ditional contract revisions during the remainder of then-current labor agreement 26 Strausse gave background for the Union 's 13 March letter, testifying about a meeting with the Union in the first part of March when the Com- pany had requested the Union's agreement to increase the chain speed to 845 head per hour The Company then proposed to make certain physical modifications and to add five employees to the work force, explaining that these measures were necessary to enable the Respondent to become competitive and to remain in the pork business The Union was reminded that the Company had lost $6 million during the past year Maas, as union spokesman, replied that the Union would take the proposal under advisement However, this proposal thereafter was rejected by the Union's above 13 March letter DUBUQUE PACKING CO 507 could increase the chain speed at specified rates until a certain figure was reached At the 20 March meeting, the Respondent continued to try to obtain agreement on increasing the chain speed. The Respondent described some of the financial difficul- ties it was having and indicated that the Mercantile Bank of St Louis, its principal bank, wanted to leave their credit arrangement on 1 April, and that other lender banks wanted to do the same The Company was not killing hogs because it could not get the money. Other competitors were getting out of slaughtering and staying in manufacturing because manufacturers, unlike slaugh- terers, did not have to put up advance money. The Union, in turn, indicated the problems it had had, includ- ing unfilled jobs and people on layoff. The Union ad- vised the Respondent that there was a bottleneck at the gambrel table.27 As there was room for only one operator to attach the gambrel stick to the steel roller to enable lifting of the carcass, no one on the line could have moved faster than the gambrel station employee. This bottleneck, as noted, was indicated by the Union during their March discus- sions concerning the speed of the main chain . It was to this chain, which conveyed the carcasses to the cooler, that the Respondent proposed to add the five employees. However, it also would be necessary to increase the speed of the two other chains to accomplish this.28 At the end of the meeting, the Respondent announced that it intended to add nine men to the gang and to in- crease the chain speed by about 10 head on the following week. The Union did not agree to this. By the 25 March meeting, the chain speed had reached 762. The Company announced that it was increasing the chain speed to 775. The Union objected as the Company earlier had stated that it intended to increase the chain speed in increments of 10 and as the speed then was not at 765 The parties agreed to jointly time the chain in order to determine the new speed. When the parties met again on the matter of increasing the chain speed, on Friday, 27 March, the Company an- nounced that, effective the next Monday morning, it was increasing the main chain speed, then at 770, to 780. The rosin chain would be set that morning at five hogs per hour faster than the main chain The stick chain speed would be jointly checked after the 27 March meeting and would be set at 795. 27 There were three chains on the Dubuque plant hog kill floor-the stick or supply chain , the rosin chain, and the main dressing chain from which the carcasses went to the cooler Tracing the hog kill floor pro- duction procedures, the carcasses moved from the stick chain to a hot tub called the scouring tub From there, carcasses were conveyed by the rosin chain to a dehairing machine, afterwhich they were rolled out to a short conveyor where a gambrel stick , a wooden stick , was inserted be- tween the hind legs of each carcass Carcasses then were moved to a hangoff station where they were lifted by the gambrel stick onto a steel roller and sent to the cooler Is The term "head per hour into the cooler" relates to the total number of animals slaughtered and then delivered into the cooler, nor- mally expressed as "head per man per hour " in calculating productivity for individual employees 6. The notice of closing of the Dubuque hog kill and cut and the aftermath On 30 March the Company sent the Union the follow- ing 6 months' notice of the closing of the hog kill and cut. Pursuant to Section 29.9 of our Labor Agreement this letter is your notice that the following depart- ments will be closed effective October 3, 1981: Hog Kill Hog Cut There will, of course, be reductions in allied depart- ments. The costs associated with operating these de- partments are too high for the Company to remain competitive with its pork products The affected employees will be permitted to exer- cise their seniority rights in accordance with the ap- propriate provisions of the Agreement. This action is being initiated for economic reasons. Although the 30 March letter giving 6 months' notice of the closing of the hog kill and cut departments stated that the action was for economic reasons, Strausse con- ceded that the letter had been sent in response to the Union's above 13 March letter that had, in effect, reject- ed the Company's efforts to increase the chain speeds.29 After the Union received the 6 months' notice of the closing of the Dubuque hog kill and cut about 30 March, it did not request a meeting with the Respondent to dis- cuss that matter during April and May. This was true al- though on the same day as the notice was given, 30 March, the Respondent , answering a media inquiry, noted that it had given such notice of the closing of the hog kill and cut and that reductions to be made there and in associated departments , including some manage- ment personnel, would approximate 530 persons. This figure did not include part-time employees. Economic reasons were given for this action, which was described as necessary if the Respondent was to preserve the re- maining operations and jobs at Dubuque. Maas testified that he realized at the time that as many as 900 jobs might be affected by the closedown. On 3 April, the Respondent mailed to each employee an article reprinted from Successful Farming Magazine, titled "Who Will Kill The Hogs?" In its accompanying cover letter, the Company stated that the article effec- tively explained why some of the problems then facing "old line" pork slaughterers were not peculiar to the Re- 29 The Respondent, unable to convince the Union to cooperate, ulti- mately was unsuccessful in increasing the chain speed Although, in March, while discussions on this matter were in progress , the Respondent spent from $45,000-$50,000 in improving the chain system, and later added five employees , production backslid below historical levels to 680 per hour General Plant Superintendent Tangeman complained of this in letters to the Union, dated 16 and 23 April, when he threatened to revert to the old speed and to lay off the five new employees if production was not raised to 730 head per hour by the week beginning 27 April When this was not achieved , he wrote to the U S Department of Agriculture on 4 May advising that, effective that date, the Respondent had reduced its (official) chain speed from 806 to the original speed of 750 508 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD spondent alone According to the letter, the article also "points out why pork slaughterers who were paying $16.00 per hour were going out of business, while those are paying $8.00 per hour will use this advantage to expand in the hog slaughter business." The Respondent promised a more detailed future explanation of its own particular situation at Dubuque. This promised explanation followed in a company ad- vertisement on 8 April in the local newspaper, entitled "Why Are the Fresh Pork Operations Being Closed?" In this advertisement, the Respondent announced, among other things, that it was closing its hog slaughter and cut operations because the Dubuque plant had lost millions of dollars over the past several years, and that a major portion of the plant's losses were due to those to oper- ations. In 1980 alone, the two departments had lost $9,905,000 and that 1980 losses could have been reduced by a minimum of $6,200,000 had the Company not oper- ated the hog kill and cut that year. The Respondent pointed out that it did not want to leave Dubuque having spent over $27 million to modernize and renovate that facility. The advertisement noted that eight of the Respond- ent's major competitors had closed various plants either completely or had determined to end slaughtering oper- ations while continuing to process fresh pork and raw materials. As such fresh pork and new materials could now be obtained on the open market it no longer would be necessary to continue absorbing multimillion dollar losses from slaughtering as Respondent's needs could otherwise be fulfilled. The advertisement concluded as follows: The final question posed by many is whether or not the Company is giving six-months notice of closing as a ploy or even a threat to force further conces- sions from the Union. It is not! The notice is re- quired by our labor contract. The Company cannot close the department until six months after it noti- fies the Union of its intent to do so. Last year the Union asked for and received from the Company an assurance that it would not request any further con- tract modifications during the remainder of this labor agreement. The Company is honoring that commitment. It simply has made a difficult econom- ic decision-one that is analogous to a doctor's de- cision to amputate a leg in order to save a patient's life . . . In early April, Maas telephoned Lewie G Anderson, UFCW International vice president and director of its packinghouse division, and Wendell Olson, also a UFCW International vice president, concerning the above maga- zine article circulated by the Respondent and its 8 April newspaper ad. Maas also mailed copies to the two offi- cials. Anderson promised to send Maas his ideas in writ- ing. 7. Rejection of the Respondent's wage freeze/profit-sharing proposal; the 1 July 1981 deadline to save the Dubuque hog kill and cut a. Events A 22 May story in the local newspaper described a memorandum from the Respondent's president Stoltz to Executive Vice President Strausse as "the first solid evi- dence that the closing could be diverted " The newspa- per noted that it had received "a crumbled photocopy with a handwritten note saying that it had been retrieved from a wastebasket." The memorandum, marked "Confi- dential!" was dated 11 May, and is as follows- I am hearing a lot of rumors concerning the possi- bility that Local #150 may want to meet with us about the closing of the hog slaughter operations to see if we would change our minds If they are inter- ested in offering concessions to keep the hog kill, we shall be willing to discuss the possibility, but I don't want anyone to be misled Any such conces- sions will have to have a plant-wide impact, rather than just involving the employees of the hog slaughtering operations Our losses are so severe that concessions involving only those operations would be too insignificant to be meaningful. As you know, Don, any such suggestions have to be reviewed and acted upon before July 1, since we will be entering commitments at that time that we will have to honor. Any overtures after that will just be too late. The 22 May news article, referring to the above memorandum quoted the Respondent's corporation counsel, Clifford Less, to the effect that the Respondent would keep its plant open if plantwide labor costs re- mained at the same level for the balance of the labor contract, which then had 15 months to run. Less ex- plained there that the Respondent had not approached the Union because of its commitment to the Union not to do so after their members had voted to give back incen- tive pay. Citing Maas as the source, the article noted that the Union would not approach the Company for talks because, in effect, its members had expressly rejected any further concessions during the vote on incentives of the preceding August. The Company stated that the shut- down was due to 1980 operational losses of $6 2 million, much of which was attributable to labor costs. Less was quoted to the effect that the plant was paying an average of $16.97 an hour in wages and fringe benefits, that a 40- to 45-cent cost-of-living increase was scheduled to take effect on 1 July, that another 25-cent-an-hour wage raise was due in September, and that two other cost-of-living increments also were contracted for in 1982. Therefore, should the employees agree to a freeze, by the time the contract expired, their wages would be least $1.25 per hour below the agreed rate under the existing contrac- tual schedule. According to Less, as reported, if the labor contract was not modified, it was possible that the Dubuque plant would be completely closed and that all of its 2300 em- DUBUQUE PACKING CO ployees would be laid off. However, if the plant became competitive in its labor costs, the Company believed the Dubuque plant would survive as a production facility. A wage freeze also would keep open the beef butchering line, which had been continued on a month-by-month basis since November. UFCW International Vice President Anderson re- sponded to the company documents sent to him earlier by Maas in a lengthy analysis, dated 21 April. There, Anderson conceded that although plant closedowns in the packing industry had been going on since the 1800s, caused principally by major structural changes in the in- dustry, technological advancements, conglomerates bleeding their meat packing subsidiaries, and the failure of certain companies to run efficient modern operations, these causes could never be corrected by pay cuts or freezes, and employers should not be permitted to exploit such situations. Anderson made detailed replies to,vari- ous points raised in the company-circulated magazine ar- ticle, but noted particularly that in excess of 70 percent of all UFCW members working in pork slaughter were paid at the national rate in an industry that is 80-percent organized Anderson wrote that employers were prepar- ing their bargaining positions by planting stories with various trade publications, and opined that, in any event, wage freezes would not resolve the various other diffi- culties indicated by the Respondent, including that there were too many pork packers in the industry, that the bigger packers were squeezing the smaller operators out of business, and that, as the industry had become capital intensive, many potential packers were precluded from entering the industry. Anderson reiterated that pay cuts would not correct such a concentration of power, and pointed out that all the competitors' plants referred to in the magazine article as having been closed for various reasons were old and poorly designed 30 Anderson's above 21 April response was printed in the Local Union's newsletter. In 29 May letters to both the Company and Union, Harvey A. Schmidt, Executive Vice President of the Dubuque Area Chamber of Commerce, offered to medi- ate differences between those parties out of concern for the impact that the announced loss of 530 jobs at the Du- buque plant, plus an additional 300 jobs that might be lost indirectly in the market place, would have on the local economy The Respondent, on 1 June, wrote ex- pressing appreciation to the Chamber for its willingness to intervene. The letter, which repeated the Company's position concerning the benefits of an agreed wage freeze as earlier reported in the local newspaper, contin- ued: . . we recognize that the leadership of Local 150A has been instructed by its membership not to contact the Company regarding any contractual modifications to the present labor agreement. In ad- dition, we recognize our obligation not to approach 30 Significantly, Anderson referred to the then-closed Swift & Compa- ny plant at Rochelle, Illinois, subsequently acquired by the Respondent as the new location for the Dubuque hog kill and cut, as having been closed "because it was a multi-story, multi-specie, poorly designed plant located in an area where the hog supply was not ideal " 509 the Union directly since the Union requested and received from the Company assurances that it would not request further contract modifications during the life of the present labor contract.31 Such a continued stalemate would guarantee the loss of some 500 jobs from the plant and from the Dubuque area community. Without specific con- tract modifications, the Company cannot continue to accept the severe losses that the Company has absorbed at the Dubuque plant in recent years. With the modification that we are considering, Company could justify the absorption of some addi- tional losses while the Dubuque plant is being re- stored to competitive posture. If the Union and its members would agree to plant-wide wage freeze between now and Septem- ber 1, 1982, the Company would revoke the an- nounced closing of the Hog Kill and Cut depart- ments. This would also save the jobs in the allied departments that would otherwise be affected. This proposal involves no cuts in wages or fringe bene- fits Clearly the cost of fringe benefits would prob- ably continue to rise, but the Company would accept that In conjunction with the freeze on the wage rates of the Union contract, the Company would also take the following steps: 1. It would cancel the announced closing of Hog Kill and Cut. 2. It would guarantee to continue Hog Kill and Cut Operations for the balance of the labor agree- ment. 3. It would cancel the announced closing of the Beef Operation which is presently operating on a month-to-month basis. 4. It would freeze the wages and salaries of all management personnel at the Dubuque for the dura- tion of the present labor agreement . . You certainly have the Company's permission to forward the statement of position with its proposal to the representatives of Local 150A In addition, the Company's representatives will be available at any reasonable time to meet with you and/or the representatives of Local 150A 32 The offer by the Chamber of Commerce to mediate did not go further because the Union in its reply to the Chamber, also on 1 June, rejected this offer. 31 In support of the above finding that the production contingency to the Respondent's promise to seek no further concessions had been ful- filled, on 1 June, 8 months after the effective date of the agreement to end incentives, the Company continued to conduct itself as though that contingency had been met and refrained from directly approaching the Union for the additional concessions sought See fn 22, above 32 In adducing evidence of the various letters, media releases, news stories, newsletters, and other documents that form so large a part of the record of this proceeding, the parties tacitly agreed that, as a practical matter, timely actual knowledge of the contents of such documents was had by the nonoriginating party even when not directly addressed to that party The Respondent was the largest employer in Dubuque and events relating to the future operation of its plant there was of great signifi- cance 510 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD On 8 June, Union President Maas and other union ex- ecutive board members met, at management's request, with the Respondent's president Stoltz, and other compa- ny officials Stoltz distributed and read aloud the follow- ing statement, reproduced in relevant part The management believes that a freeze on wages for the duration of the Contract'is still a necessity if we are to save the hog slaughter operations at this plant and, hopefully, to ensure the continuance of the balance of the plant's operations We propose that a freeze go into effect July 1, in return' for which the Company would guarantee to continue Hog Kill and Hog Cut operations for the' life of the present labor agreement, and to cancel the an- nounced closing of the Beef Operations. You may already be aware that the wages and salaries, of all management personnel have been frozen. If Local 150A takes the necessary steps to save the Hog Slaughter' Operations, the Company would im- plement a Profit Sharing Plan effective July 1, 1981 to cover all bargaining unit employees whose Unions agreed to the wage freeze. This Plan would provide for a fund into which an amount equal to 25% of the income before deduction of income taxes for the Company's Dubuque, Iowa main plant would be paid. The amount to be contributed to this fund would be determined from audited fiscal year financial statements for this plant Since the ef- fective date falls during the present fiscal year, the first period will be for the months from July 1 through October 31, 1981, which will be the end of the present fiscal year. The beginning financial statement will be the internal statement for the week ending July 4, 1981 Thereafter the periods will coincide with the Company's fiscal years. The distribution of profits of the fund will be made within 45 days of the receipt of the audited financial statement. After describing how profits would be prorated for distribution and the terms of eligibility, Stoltz' statement concluded as follows: other departments would have to absorb the $3.5 million in overhead that the hog kill and cut had been carrying. The union representatives requested a recess to exam- ine Stoltz' statement When they returned, one of the questions the union officials reiterated was whether the Company considered the parties, in talking about this proposal, to be negotiating. The response was no.34 The union executive board members then asked questions about the mechanics of profit sharing, which company representatives attempted to answer During this meeting both Stoltz and Strausse repeated that the Respondent had to have an 'answer to its proposal by 1 July. If no answer from the Union were forthcoming by that date, other, undescribed, arrangements would have to made. Maas testified that that was the Union's first notice of the 1 July deadline. Summarizing, if management's 8 June proposal was agreed to, the employees' pay rate would be frozen at $10.02 an hour through 1 September 1982, but they then would receive profit sharing in the event of profits. The previously issued notifications of closing of the hog cut and kill and the beef kill would be rescinded for at least the term of the then-current collective-bargaining agree- ment, and, the continuation of those operations would be guaranteed for the next 15 months as The Company reiterated on 8 June that if the Union did not agree to the validity of the profit-sharing audit performed by the Company's auditors, the Union could have their own accountants audit the Dubuque, plant books, using the Company's auditors', statement as a starting point. The Union also was free to audit the Re- spondent's accountants' first statement if desired, but the Union was advised that such an audit would cost it about $40,000 As their session ended, the-company representa- tives requested that the Union submit its wage freeze/profit-sharing proposal for approval at the regular monthly membership meeting scheduled for the next day, 9 June. This was done. , By the evening of 9 June, Stoltz had learned through the news media that the union membership had voted to reject the Respondent's profit-sharing/wage freeze pro- posal. On the next day, 10 June the Respondent issued the following press release, which, in relevant part, an- nounced: If one or more participating Unions questions the validity of the audited results, such Union(s) will be permitted to have the results checked by an audit- ing firm of the Union's choice with the cost of such second audit to be borne by the Union(s).33 During that meeting, Stoltz told the union representa- tives that the probable result of the closing of the hog kill and cut, if this proposal were rejected, would be that the overhead would have to be carried by the other de- partments, including all the processing departments This would result in a gradual plant deterioration since the 33 Stoltz' 8 June offer of an audit related solely to audit of the profit- sharing plan if questioned This offer to allow an audit with respect to profit sharing was distinct from the controversy that thereafter arose fol- lowing the Union's 23 June request for companywide financial data for bargaining purposes, which will be described below Dubuque Packing Company will proceed with its announced plans to close the Hog Kill and Cut De- ' partments at its Dubuque, Iowa main plant. The 34 Maas explained that the Union did not want their questions concern- ing the Respondent's 8 June proposal to be considered "negotiations" be- cause the Union, at that time, was not in a position to negotiate with management concerning contract concessions in view of the Respond- ent's prior agreement when the incentive system was discontinued that no further concessions would be sought 35 While there obviously was a question concerning the value of profit sharing in a company that claimed only losses, the wage freeze for the remainder of the contract term would have a tangible effect on scheduled earnings As of 8 June, the Respondent's bargaining unit employees were earning the contract rate of $10 02 an hour, exclusive of benefits The agreement called for an hourly cost-of-living increase on 1 July of 42 cents to be paid until the annual increase about 1 September 1981 of 25 cents an hour, bringing the hourly rates to $1069 Two more increases were scheduled during 1982 before the contract expiration date DUBUQUE PACKING CO Company has been informed by media representa- tives that the Company's latest proposal has been rejected by the Union. Since the rejection appears to be clear, the Company regards the July 1 dead- line for an answer as no longer binding on the Com- pany, and it will proceed with its scheduled plans to discontinue the Hog Kill and Cut Operations Since the announcement on March 30, 1981 of the closing of the Hog Slaughter Operations, vari- ous alternatives, including the ultimate closing of the Dubuque Plant, have been studied and consid- ered . . . . Therefore, since all of our efforts to sal- vage as many jobs as possible have apparently been rejected, the Company will proceed to expedite the alternative plan. The alternate plan involves moving approximate- ly 50% of the processing operations to two other plants within the next few months. The Company has options to lease two plants that are presently closed. Each of them has excellent slaughter and processing facilities36 and can be operated at sub- stantially lower costs than the Dubuque plant. The Dubuque plant presently has 1889 full-time production employees on its plant payroll. This number will be reduced to approximately 980 within a few months, and further reduced to 450 by October 3 of this year. It is our long-range plan to maintain these 450 jobs at the Dubuque Plant ... . The Company will not sacrifice any product volume or quality during the transition period.. . . All present customers will continue to be supplied and the present sales force will be maintained. The present management will be offered the op- portunity to transfer to the new locations. Stoltz conceded that the 10 June press release was the Respondent's first announcement of its "alternate plan" to move half its processing operations to two other plants within the next few months; of the Respondent's options to lease the two plants; and of the Respondent's plans to reduce the Dubuque plant payroll in stages to around 450 employees by 3 October Until the 10 June announcement, there had been no reference to a loss of more than 530 jobs in the hog kill and cut operations at that facility. When, on 10 June, the Respondent announced its "al- ternative plan," it already had quietly acquired options on two slaughter and processing plants located in Du- Quoin, Illinois, and Des Moines, Iowa, respectively. Stoltz had negotiated the option to lease the Des Moines plant in early May, while the option for the DuQuoin plant, negotiated by Strausse, was taken in early June. Both options were scheduled to expire on 3 July. Stoltz attributed the need for 1 July deadline to the Des Moines plant owner's stated desire for lead time to make the Des Moines facility ready for the Respondent's use by 3 Oc- tober when the 6-month notice of closing expired. Ac- cordingly, Stoltz and the owner had negotiated 3 July as 3e Processing refers to the production of bacons, hams, and sausages, involving operations and personnel beyond slaughter and cutting 511 a date by which the owner would have to know whether the Respondent was going to lease the plant. For this reason, the Respondent originally had pressed the Union for a 1 July answer on its profit sharing/wage freeze proposal.37 As matters later developed, however, the Respondent let both the DuQuoin and Des Moines plant options expire on 3 July because it appeared that it would be able to purchase another plant in Rochelle, Illinois, from Swift & Company under terms agreeable to the Re- spondent. Stoltz and other Respondent's officials first in- spected the Rochelle plant, which Swift had closed earli- er, by appointment made 10 June The Swift's represent- atives were receptive to Stoltz' offer to buy the plant under an arrangement that called for a small down pay- ment and favorable financing. The, Respondent's pur- chase agreement for the Rochelle plant was not finalized until 10 July. However, on 10 June, a month before this purchase, Maas learned of the Respondent's press release announc- ing its "alternate plan" for partial relocation to leased premises and major job loss at Dubuque, in a telephone call to Kansas City where he was attending a meeting with UFCW International Vice President Wendell Olson. It was then that the Union realized how much more severe had been the consequences of rejecting the Respondent's wage freeze proposal than had been previ- ously made known by the Company. b. The Union 's request for frnanc:al information On 16 June Maas was at a meeting of union officals in Chicago, Illinois. Among those present were UFCW International Vice Presidents Lewie G. Anderson and Wendell Olson. There, Maas showed Anderson the Re- spondent's entire wage freeze/profit-sharing proposal, in- cluding the offer to audit the Dubuque plant books in the event of'a validity question , and the 1 July deadline. Maas returned to Dubuque from Chicago and on the next day, 17 June, went to the plant where he informed Strausse and Naylor that a written request would be forthcoming from the International Union for the corpo- rate books and records Naylor replied that he would refuse to provide the corporate books as it was germane to provide financial information only for the Dubuque plant. By hand-delivered letter of 19 June, Maas con- firmed to the Respondent that a request for information was en route Such information , if provided, would enable the Union to meaningfully assess the Company's most recently proposed changes to the collective-bar- gaining agreement . The letter protested the Company's conduct in "once again" advancing the deadline for the plant's elimmation.38 37 Stoltz' assurances to the Union and employees in June that the Re- spondent could remain in operation for the next 15 months ifithe Union accepted the Company's 8 June proposal, were given on his belief that the banks would extend further credit to the Respondent based on sav- ings from the proposed wage freeze, rather than on any actual represen- tations made by those financial institutions 38 By telegrams, dated 18 and 24 June, from Anderson and UFCW International President William H Wynn, respectively, the Local Union was directed not to enter into any midterm contract concessions with the Continued 512 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Implementing the 16 June decision at the Chicago meeting,39 on 23 June, Anderson sent the Respondent a lengthly letter requesting detailed corporationwide infor- mation from the Respondent In summary form, the fol- lowing information was requested in Anderson's 23 June letter. This is accompanied by Anderson's explanation at the hearing as to the need for such data 40 1. The Respondent's consolidated balance sheet for the past five fiscal years and for the six months ending 1 May 1981, including annual reports. An- derson explained that information for five years was required as, in the packing industry, a given single year of loss or profit did not necessary indicate v*hether a Company was financially healthly or in trouble. 'Q. The consolidated income statement for the past fivd fiscal years and for the six months ending 1 May, 1981, including the annual reports for that time periad The Union considered such information neccessary in order to learn total income as op- posed to net profits 3 All notes and explanations of accounting prin- ciples as they applied to both balance sheets and income statements. This material was requested to enable an understanding as to the kind of account- ing principles that had been used; to show how the Company had arrived at its figures. 4 A detailed explanation of the Company's debt situation. This demand item, which was spelled out in detail in the 23 June letter , was considered neces- sary to determine the Company's mdebtness, an im- portant component in determining its financial health. 5. A weekly summary of plant operations report- ing the weekly slaughter by species, the total weekly profits or losses for slaughter by species and for fabrication, etc., for each of the Respondent's plants for the last three fiscal years, updated through 1 June 1981. Anderson explained that the requested weekly summaries of plant operations were another component of the Respondent's finan- cial health necessary to determine the production levels in cattle, hogs and processed meats One de- partment could be losing money while the rest of the operations and products might be profitable It was necessary to learn whether it was just a single department or the entire plant that was unprofitable. Should given departments be established as unprof- Respondent or to submit any proposals for same for membership vote until the International Union had had an opportunity to fully investigate the situation and until Maas had discussed the matter with the Vice Presi- dent Olson These directives, which were consistent with the control vested in the International Union by the UFCW constitution, were issued at Maas' request, made for the purpose of avoiding a membership vote on the Company's 8 June proposal until the Union could examine the Com- pany's books and records as In "Chicago, the union officals concluded that they had no way of knowing whether the 8 June concessions then being requested were justi- fied Accordingly, it was decided that a letter should be sent to the Com- pany requesting indepth financial information 40 The explanations made by Anderson at the hearing and set forth here were not given to the Respondent during the months when the in- formation requested in the 23 June letter was actively sought itable, production could be increased or concessions given. 6. The straight time and labor costs per hour for all bargaining unit employees and the cost per hour for all fringe benefits. This referred to the straight time labor costs per hour for all bargaining unit em- ployees and additional expense items such as shift premiums, rest periods, holidays, vacations, and in- surance for each plant separately as of 1 May 1981. Such information would show which plants were producing on a profitable basis and which were charging unprofitable operations against the Du- buque headquarters facility reducing its profitability on paper 7 A list of prospective packing plants which the Company had acquired since 1980 or then had plans to acquire or to lease, including the relevant details of such plants. The Union did not believe that it should make concessions while the Company was attempting to buy other facilities, particularly since the purchase of other plants could potentially take away jobs from facilities where Union-represented employees were employed 8. A list of all companies and their locations with which the Respondent currently had subcontracting agreements for the production of either raw materi- als or finished manufactured products. This informa- tion was sought so that - the Union could avoid making concessions where the Respondent was sub- contracting outwork 9. A list detailing the total compensation paid to each executive, officer and director of the Compa- ny, including salaries, bonuses and deferred com- pensation for the past three fiscal years, and copies of all compensation agreements. Anderson explained that management compensation is a part of the Re- spondent's profit picture as administrative costs could drain the Company's profit structure Also, in the Union's view, workers should not be making concessions where executives were receiving exor- bitant salaries. Anderson's 23 June letter ended by requesting infor- mation pertaining to pensions and related matters for each employee who currently held seniority in the bar- gaining unit This was requested to enable to the Union to determine <the, individual employees' pension entitle- ments Anderson further explained that the request for de- tailed information had been necessitated by the Respond- ent's status as a closely held corporation about which the Union had no information Had the Respondent been publicly held, much of what had been asked for could have been obtained from publicly filed documents re- quired by the Government. Also, concessions had been made earlier and the Respondent, contrary to its prom- ise, was exacting additional concessions during the term of the same contract. As noted, in requesting information on a corporatewide basis, rather than merely for the Du- buque plant, the Union had been particularly concerned that as the Dubuque plant was the main, headquarters fa- cility, its profitability had been reduced by costs and DUBUQUE PACKING CO losses incurred by other plants but charged against Du- buque Also, the Respondent's references to losses at the hearing referred to losses by the Dubuque division rather than merely the Dubuque plant. It is the Union's position that the Respondent's operations were so integrated that when this financial information was requested, the Re- spondent did not keep separate books and records for any single plant but maintained its recordkeeping on a consolidated corporationwide basis In any event, the Union asserts that in order to intelligently determine its position with regard to the contract concessions then being demanded, the Union would require an overview of the Company's entire financial picture. To accomplish this, the Union submitted its 23 June request for financial data. After the union membership had voted on 9 June to reject the Company's wage freeze/profit-sharing propos- al, employee petitions were circulated. In response to these petitions, the Union scheduled a special meeting for Sunday, 28 June, to resubmit the Respondent's proposal to a second vote Also, although the Respondent, in its above 10 June press release, had canceled the 1 July deadline for ac- ceptance, initially imposed as part of its wage freeze/profit-sharing proposal, this deadline date and the general status quo were revived in a 24 June memoran- dum sent by the Company to all members of Local 150A. In this memorandum, the Respondent noted that the Union's executive board had scheduled the 28 June special membership meeting because hundreds of its members had signed petitions asking for an opportunity to vote on the Company's proposed profit-sharing plan and 14-month wage freeze. After criticizing the International Union for attempting to deny the employees an opportunity to vote on this matter, the Respondent's memorandum continued: . . We are not asking anyone to take any cuts in wages or benefits We are simply asking that you help us "hold the line" by agreeing to a wage freeze for the next 14 months at a base labor rate of $10.02/hr and still maintain your fringe benefits We have been concerned the past two weeks at the International's public statements that it would not permit you to vote on this proposal until after it has seen the Company's books. As of Wednesday morning, June 24, no such demand had actually been presented and if such a -letter would come now, it is obvious that it would .be impossible to audit the plant's operations or even verify the losses for Sunday (June 28).4 1 The Company regrets that the International failed to act before this time but the July 1 deadline cannot be postponed If you are allowed to vote, your vote will decide whether or not the Company closes the hog kill and cut departments as well as reduces the processing operations at this plant. If the Company's proposal is rejected, some 1400 jobs will be lost from this 4' Anderson's 23 June letter was not received by the Company until 25 June, the day after its above 24 June memorandum to employees was issued 513 plant and transferred to other plants. The Company hopes that that can be avoided, but a "yes" vote this Sunday is absolutely essential if they are to be saved We have absorbed losses in excess of $25,000,000 during the past four fiscal years as part of our effort to save this plant The Company has eliminated scores of management jobs, eliminated overtime pay for foreman, consolidated sales areas, eliminated the Cost of Living allowance for office employees and frozen management salaries We have done every- thing we can think of, but now we are asking you to help us by voting "Yes" this weekend. On 25 June, 3 days before the vote, Anderson called Stoltz and proposed that the Respondent place in escrow the cost-of-living allowance (COLA) increase that was scheduled to begin 1 July pending resolution of the issue raised by the Respondent's request to modify the con- tract. Under Anderson's proposal, in exchange for the Union's agreement to the escrow arrangement for the COLA instead of a payout to the employees, the Re- spondent should agree to keep the plant open pending resolution of that issue Stoltz rejected this, reiterating the Company's demand for a decision by 1 July as to whether the union members would agree to the Re- spondent's proposed contract modifications. Stoltz also refused Anderson's repeat of his 23 June re- quest for access to the Respondent's corporate books and records, offering only those for the Dubuque plant. In his letter to Stoltz later that day confirming their tele- phone conversation, Anderson wrote that the more ex- tensive records requested were necessary in order to enable the Union to determine whether it should enter into negotiations with the Respondent concerning modi- fications to the existing contract. On 26 June, the Respondent issued a press release and sent a memorandum to all members of Local 150A and a telegram to Anderson. The Respondent's 26 June press release noted the re- ceipt on the preceding day of the letter from the UFCW International asking for financial, operating, and'pension information concerning bargaining unit employees affect- ed by the Respondent's announced intention to close the Dubuque plant. In the Company's view, this letter, which was concerned only with procedural steps relating to the closing of operations, assumed that there was no possibility of saving the employees jobs This, in turn, led the Respondent to believe that the Dubuque plant "has already been `written off' by the International." The press release also noted that on the day before, Anderson, for the first and only time, had called the Company to ask if the 1 July deadline could be extended should the International Union agree to place the cost-of- living allowance in escrow. The Company had explained that because of certain business commitments already made, it could not extend the deadline. The Company now understood that Anderson would be at the Sunday meeting "for the express purpose of making certain that there is no vote on Sunday." The release continued as follows: 514 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD We will admit that the International has been very successful in the past at imposing their wishes on the members. At Swift, Armour, Marhoefer and many others, after plants were closed because of the International's insistence that no relief be given, and the employees realized that they had been sacri- ficed, the employees tried desperately to have the plants reopened at any price. It appears clear that the International would sacrifice any job at this plant in order to maintain the illusion of a national wage scale. - ... It should be obvious after extending the op- portunity to the International to audit our plants [sic] books at any time they choose, we would be plain stupid to be anything but honest with our em- ployees. We are being just as honest and truthful when we say that July 1 is an absolute deadline. If we do not have any agreement by that date, we will be forced to proceed with our plans. We certainly do not want anyone to be mislead [sic] and we sincerely hope that our employees realize that after July 1 it will be too late-there will not be a second chance. The Company's 26 June memorandum to union mem- bers was similar in content to the above-described press release. The Respondent's 26 June mailgram to Ander- son, which was signed by Stoltz as company president, in relevant part, was as follows:42 Your request for data is so extensive as to be un- reasonable both as to subject matter and volume, even if there were enough time to review those items before this weekend. You have been aware of our problem for weeks and have been aware of the notice to close the Hog Kill and Cut Departments since March 30, 1981. To now ask for this data is unreasonable. You are aware, of course, that we have only an- nounced the closing of two departments, not the closing of the plant as you erroneously state in both your letters. Your request for this information appears to be related to a desire to negotiate with the Company as to its decision to close part of its operations. As you know, I am sure, the U.S. Supreme Court ruled just this week that an employer has no obligation to bargain with its employees over the decision to close part of a business. We do recognize that we still have an obligation to negotiate as to the effects of the decision to close part of our plant; however, we believe that you do not need this voluminous data in order to fulfill your negotiating obligations as to the impact on employees. As to relevant economic data, we have clearly stated on the record that your office will be permit- ted to have our plant operations audited by an inde- pendent auditing firm of your choice once our pro- posal is accepted. We have also agreed to permit your 42 Although sent on 26 June, the mailgram was not received at Ander- son's office until 29 June However, a copy was given to Anderson by Maas at the 28 June union membership meeting auditors to verify the transfer values of product be- tween the Dubuque plant and our other plants. This offer was made in sufficient time to permit you to act on it. By delaying until Thursday of this week to even contact us, you have assumed the responsi- bility of your inability to review our financial posi- tion prior to this weekend . . . [Emphasis added.] On the following day, 27 June, Stoltz sent the following letter to Maas: The Company has been advised that your Inter- national officials will attempt to prevent the mem- bers of Local 150A from voting on the Company's profit-sharing proposal because the International has not yet audited the books. The Company's offer to the Union, that it can audit its books, still stands. After the proposal is accepted this Sunday the International may proceed with the audit If the re- sults of the audit do not indicate that the plant has lost substantial sums of money in the last four and one-half years, the Company will retroactively repay all sums that are withheld under the wage freeze and cancel the entire profit-sharing proposal The July 1 deadline cannot be changed because of business commitments. The Company believes this proposal meets the major concerns of the International, the Local and the Company. c. The 28 June vote on the wage freeze/profit-sharing proposal Maas chaired the 28 June membership meeting, which also was attended by Anderson and Olson After reading aloud the Respondent's 8 June - wage freeze/profit-shar- ing proposal, its above 26 June mailgram and 27 June letter to those gathered, Maas announced that he and the executive board were recommending that the Company's proposal for concessions be rejected until the books and records were turned over. He then introduced Anderson and Olson, both of whom spoke against the Company's, proposal. Anderson told the members that, in his view, the Re- spondent's proposal was unacceptable. He reminded them that in the past they had made major concessions worth millions of dollars to the Respondent and that it was inconceivable that they could make further conces- sions, especially those being requested, without close ex- amination into whether the Respondent really was having problems or whether it just was playing games and was trying to bleed its employees. Anderson told the meeting that the Union had requested information from the Company, which, when received, would be analyzed and reported by its experts. After that, the Union would seek to carry on meaningful discussions with the Compa- ny and report back to the membership The Union could not proceed unless it did so on an intelligent basis with knowledge of the facts. A motion from the floor that the Company's proposal be accepted went unseconded although nearly 2000 people were present. The membership adopted the lead- DUBUQUE PACKING CO 515 ership's recommendation that the wage freeze/profit- sharing proposal be rejected Immediately after the 28 June `meeting, Maas and An- derson were interviewed by a local broadcast station for a taped news conference. During this interview, Maas stated that if the Company was in as bad shape as claimed, it should be willing to open its books and nego- tiate with the Union Maas also was critical of the Re- spondent's repeated tactic, again manifested on 26 June, of going around the Union's officers to attempt to direct- ly influence the membership. During that same conference, Anderson related that the members at the meeting had been told of the Compa- ny's response to the international Union's request to look at the company books, that there was not time to exam- ine the books, and that the membership had to make a decision concerning the proposed further concessions at that meeting that day Anderson asserted the Union's po- sition that this would destroy the bargaining process by creating a pattern that other employers would emulate. Anderson rejected the idea of Company-imposed bar- gaining deadlines and declared that if the Respondent was serious about addressing its alleged problems it would not try to circumvent the collective-bargaining process by creating deadlines and by trying to appeal di- rectly to the membership, but would proceed as in the past by going to the bargaining table. Anderson rejected the Company's countercharge that the Union had had ample time to look at the books since 30 March but had not made any effort to do so until the preceding week, contending that the first date the Inter- national had been apprised of a crisis at the Dubuque plant was on 16 June. The letter requesting financial data,, in that context, had been an early response. Ander- son also asserted that the Respondent's offer to open the books only for its Dubuque plant was not acceptable be- cause the Union could not ascertain the Respondent's overall financial health unless able to look at the books for the entire corporation. Anderson called Stoltz on 30 June,43 asking that Stoltz delay the 1 July deadline and repeating the request for the financial information Stoltz replied that the matter was academic. As the membership had not made, a decision, Stoltz asked what difference did the books then make. Anderson retorted that the books made a lot of difference and expressed the hope that the Company would provide the corporate books for review and delay taking action until the Union could meaningfully discuss the situation with the Company Stoltz reiterated that he would give the Union the books for the Dubuque, Iowa plant Anderson repeated that that offer was not acceptable, that the Union could not obtain an intelligent picture of the Company' s finan- cial condition from looking at the books of just one plant, but needed the financial information for all plants. If the Union could acquire such an understanding, it could proceed with discussions. Anderson restated his hope that this material would be provided Stoltz again declared that he was not going to give the books for the entire Company 8 Finalization of the decision to close the hog kill and cut at Dubuque Naylor, on 1 July, sent the following letter to the Union: Now that the July 1 date has arrived, the Compa- ny wants to confirm in writing to you that its previ- ously announced decision to close the Hog Kill, and ,Cut departments is irrevocable, as is the decision to reduce operations in other departments. As a result of those reductions, we will be seek- ing further reductions in the plant's taxes and sewage rates. If, in addition to those savings, the Union would still agree to the proposed wage freeze, the Company would be able to review the effect of those savings on the total number of jobs to be reduced. We will not be able to identify the exact number of jobs to be saved since the econom- ics of the situation will determine the actual number of jobs retained at this plant. The Company's offer to let the Union audit the books is still valid. Also on 1 July, the Respondent issued a press release, which contained much the same content as Naylor's above letter of that date to the Union. However, the- press release also referred to Anderson's 29 July call to Stoltz when the Respondent had stood by its offer to permit the Union to have the plant books audited by an outside accounting firm of the Union's choice The Re- spondent reiterated that its recent actions had been "mo- tivated solely by economic factors." Since the 1 July date had been reached without union action on the Com- pany's proposal, the Company would proceed with the closing of the hog kill and cut departments and person- nel reductions by 3 October 44 Stoltz, by letter of 8 July, replied to a telegram re- ceived that date from Anderson asking for a response to his 23 June letter. In his wire, Anderson had stated that the International Union had not as yet heard from the Company whether the request to examine the informa- tion would be granted In his reply, Stoltz referred 'to his above 26 June mailgram in response to Anderson's letter In addition to a copy of that wire, Stoltz also enclosed a copy of Naylor's 1 July letter to Maas restating that the Respondent's offer to allow the Union to audit the records of the Dubuque plant was still valid Stoltz re- called that during the 30 June telephone conversation, he had'suggested that the Union's auditing firm should visit with the Respondent's auditing firm "to resolve any questions as to what financial records (the Union) really 43 On 29 June, the day after the union meeting, Stoltz again spoke with Swift & Company representatives about purchasing Swift's Ro- chelle, Illinois plant The Swift officials expressed interest in Stoltz' earli- er offer and a meeting was set for 10 July, when the Respondent's acqui- sition of the Rochelle plant was finalized 44 On 3 July, as noted, the Respondent allowed its lease options on the DuQuom and Des Moines plants to expire in anticipation of purchasing the Rochelle plant 516 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD needed to verify the losses at this plant" Stoltz noted Anderson's failure to get back to him on that matter.45 Anderson again called Stoltz on 9 July, opening the conversation with an expression of the Union's concern for the status of the jobs in the Dubuque plant. Anderson told Stoltz that the International Union had accountants on its own staff who could adequately review the Com- pany's financial information, and reiterated the Union's request to see the Company's corporate books. Stoltz, in turn, insisted that the books to be reviewed by an inde- pendent. auditing firm because he was concerned about confidentiality, and suggested that the auditors from each side discuss how they could proceed Stoltz wanted the Respondent's auditing firm, McGladrey Hendrickson, to work with whichever auditing firm the Union would fi- nally select to determine the scope of the audit. Al- though Anderson did not make a commitment to use an outside auditor, he did indicate the possibility that such auditors could be used and that an independent firm might be named in the near future Anderson declared that the parties were headed in the right direction and that he would call Stoltz on 14 July. 9. The purchase and purpose of the Rochelle, Illinois plant On 10, July, the Respondent issued a press release an- nouncing the agreement that date with Swift & Compa- ny for the purchase of the Rochelle, Illinois plant which it described as a full-line slaughtering and processing fa- cility. The Respondent announced its expectation that certain operations would commence at Rochelle by 31 August. The Respondent, on the following day, issued a second press release concerning the purchase of the Ro- chelle plant, more descriptive of what was planned for that facility. This release is as follows: Dubuque Packing Company confirmed this morning that the initial operations at its new Rochelle plant would include a Hog Kill and Cut. Processing oper- ations will start up shortly thereafter in the follow- ing areas: Pork and Ham Boning Curing and Smoking Various Sausage Items Sliced-Bacon and Smoked Meats When the second shift is operational, the slaughter capacity will exceed 5,400 hogs per day. Excluding beef operations, the Rochelle plant will be able to handle 75% of the processing operations now being handled in the Dubuque, Illinois, main plant. The plant is a very large, modern and efficient facility and the Company is very pleased with its acquisi- tion. Two options on other plants were permitted to expire on July 3 because of the progress with nego- 45 Stoltz testified that the Union was informed on 25 June and thereaf- ter that the Company's willingness to allow the Union to conduct an audit, or, more precisely, an examination of its records was contingent on the union proceeding through an outside accounting firm of its choice, retained at union expense, rather than through UFCW International staff accountants tiations over the Rochelle plant. Because of the Ro- chelle plant's size, it has more capacity than those other two plants combined Applications for employment will be accepted through the Illinois Jobs Service offices. Dubuque Packing Company is an equal opportunity employer and will accept applications from any and all per- sons without discrimination. The plant will be - hiring some 700 production employees and the Company will be transferring or hiring approxi- mately 100 administrative and supervisory persons by the first of next year. Unfortunately, many of our Dubuque plant employ- ees (including some union leaders) are under the mistaken impression that the Rochelle facility and capacity will be in addition to rather than a replace- ment for Dubuque plant operations. As any prod- ucts are processed or, manufactured at Rochelle, they will be accompanied by a corresponding de- crease in volume at the Dubuque plant. When the hog cut and kill are closed on October 3, the Du- buque plant's raw materials will be acquired from the open market or transferred from Rochelle As the Company announced on July 1, the number of jobs retained at the Dubuque plant will be depend [sic] solely on the question of whether or not the Company can economically justify such op- erations The Company had not yet received any positive response from the Union as to that ques- tion. Many of our hog buying stations will remain open because their locations will enable' them to serve the needs of the Rochelle plant. D. The Financial Data and Auditing Controversy; Threats to Sue GTC Stoltz explained that the Respondent had insisted that the International Union conduct its audit through an out- side auditing firm rather than by its staff accountants to protect confidentiality. The Respondent did not want Local 150A and the UFCW International, which also ne- gotiated with Respondent's competitors, to have access to its corporate books and records Similarly, as all the Respondent's other plants were under contract with the UFCW International and various sister locals to Local 150A, under a series of separate contracts, the Company did not want to give Local 150A information concerning those other plants which, in Stoltz' estimation, would give that local a substantial increase in bargaining power. In the Respondent's view, an outside auditing firm could be subjected to advance restriction as to the scope of the financial information it could report to the International and Local Unions The initial guidelines for the Union's audit were sug- gested by Edward O. Ulve, a partner in McGladrey Hendrickson & Co., the Respondent's accounting firm, in a letter of 10 July to R. H Wahlert, then the Respond- ent's board chairman. Ulve, at Wahlert's request suggest- ing arrangements that might be made with the certified public accounting firm employed by the Union, wrote DUBUQUE PACKING CO. 517 that the goal of such an examination should be to pro- vide reasonable assurance to the Union that management had not materially misrepresented the extent of Dubuque plant losses and that such losses had economic substance. At the same time, the Company intended to keep confi- dential all financial information concerning other plants, divisions, subsidiaries, and affiliates To accomplish this, Ulve recommended: (1) that it be established that the Union auditors' final report be a special report in letter form rather than in the form of a financial statement. Such a report might present conclusions freely drawn but based on financial information relating to the Du- buque plant only, and not to other company operations; (2) that the Respondent seek the union auditors' warran- ty that knowledge of the financial results of other plants, which in Ulve's view inevitably would be obtained re- gardless of restrictions applied, not be verbally communi- cated; (3) that it be emphasized that the above restric- tions were not meant to limit the scope or extent of the auditor's work but merely to restrict the availability of financial information concerning other plants to the audi- tors only. Ulve also recommended that the Respondent authorize that the union auditors be afforded access to his firm's files on the Company and that the nature and extent of audit procedures be based on the union audi- tors' professional judgment. Ulve's 10 July recommendations to Board Chairman Wahlert concerning the guidelines for the requested audit essentially were incorporated in Naylor's 15 July letter to Maas. There, Naylor emphasized that the audi- tors to be retained by the Union would be able to dis- close all financial information relating to the Dubuque plant but could not report specific information about other company plants and operations. To the extent that such auditors would learn about aspects of the Respond- ent's other plant operations, they would be asked to pro- vide written assurances that such information would be kept in confidence. Naylor also emphasized that it was important that the union auditors recognize the subjec- tive factors connected with allocating management charges While the Respondent's position concerning the union audit was being formulated, the Union continued its ef- forts to obtain access to the corporate books and records. Although Anderson did call Stoltz on 14 July, he did not then announce who the Union's auditors would be, but promised to call back on 21 July Anderson did not again call Stoltz on 21 July, but, joined Olson, Union Attorney Eugene Cotton, Maas, and the Local Union bargaining committee at a meeting that day with Respondent's executive vice president Strausse, Vice President for Industrial Relations Naylor, and sev- eral other management representatives.46 Anderson and Naylor served as principal spokesmen for their respec- tive sides. Anderson began by stating that the Union was there to negotiate for the 1400 jobs that the Company had said 46 The 21 July point meeting was a first between those parties since 8 June when the Company had made its wage freeze/profit-sharing propos- al were going to be lost at the Dubuque plant.47 Naylor re- plied that those jobs were gone; the Company was clos- ing those departments and, according to the Labor Board's Regional Office, there was no obligation to bar- gain concerning them Anderson asked what jobs the Company was talking about, what departments would remain in operation, and how many and which jobs would stay at the Dubuque plant. The company repre- sentatives answered that they did not then know what departments would stay in operation but thought that most would remain. The parties also discussed whether other jobs would be lost as well, the Respondent stating its willingness to negotiate about other jobs beyond those in the hog kill and cut. Anderson again declared the Union's need for the entire Company's financial records, but once more was told that the Respondent did not feel that corporatewide records were needed Anderson replied that as far as the Union was concerned, the Respondent's plants inter- locked and, conceivably, the Respondent could be charg- ing losses against the main Dubuque plant that had been incurred by other plants. Also, there could be other losses incurred at other Company-owned plants within the city of Dubuque, such as the Blue Ribbon facility, that could have been charged against the main plant. Without recourse to the financial information for all of those plants, the Union could not proceed intelligently. The Respondent reraised its confidentiality issue, noting that it was a private corporation and did not want the information released to anyone other than the Union. Anderson reassured the Respondent's representatives that it was not the Union's intent to publicly release the Re- spondent's financial information. Matters of confidential- ity then were argued back and forth. The Respondent's representatives then distributed copies of the above-described 10 July letter from Ulve of McGladrey Hendrickson, recommending to the Compa- ny procedures and guidelines to govern the Union's inde- pendent auditing firm in its examination. Anderson, after reading this letter, declared it unacceptable and reaf- firmed the Union's position that it had a right to all the information it had requested without restriction. There followed an argument on this point, the Respondent taking the view that its proposal concerning the Union's use of an independent auditing firm and its auditor-rec- ommended procedures were reasonable The Company reiterated its desire that a regional or national certified public accounting firm, not otherwise connected with the Company or the Union, review the material.48 49 At the 21 July meeting, Anderson stated that he would persist in seeking to negotiate concerning the Dubuque plant fobs even though the NLRB Regional Office had orally informed the parties that it did not consider the transfer of the Dubuque hog kill and cut to the Rochelle plant to be unlawful and that such an allegation would not be included in an injunction petition to be filed by the Regional Office As the Regional Office's position subsequently changed following submission to the Divi- sion of Advice, the Respondent, contending that it had been entitled to rely on representations by the General Counsel's agents, argues estoppel This will be considered below 48 Anderson finally stated that the Union would consider using outside auditors 518 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD At the 21 July meeting, Naylor, replying to, Ander- son's restated desire to negotiate for all Dubuque plant jobs, expressed his thought that Anderson' s insistence on negotiating for the hog kill and cut jobs would place an unnecessary hurdle in way of the negotiations, that the parties were not there to negotiate about the hog kill and cut jobs because the Company already had acquired the Rochelle, Illinois plant for such purposes, and that the decision to slaughter and cut hogs at the Rochelle facili- ty was irrevocable. He suggested that the parties focus on other jobs, such as those in processing. In response to Anderson's inquiry about what jobs were salvageable, Naylor related that in order to man 900 jobs, it would be necessary to employ something ap- proaching 1100 to 1200 employees because of long-term illnesses, vacations, and other absenteeism factors. As the parties drew closer to their lunchbreak on 21 July, Naylor suggested that the parties' auditors, when the Union made its selection, should get together. After their midday break, the parties met again for 15 to 20 minutes reviewing what had been accomplished and agreed to meet again 49 On 21 July, right after the meeting, the Respondent issued a press release critical of the Union. The release noted that at a meeting that day, officials of the Interna- tional and Local Union had rejected the Respondent's offer to provide corporation financial records to an au- diting firm of the Union's choice within "reasonable guidelines" prepared by the Company's auditors. The Union, instead, had insisted "that all Plant and Corporate financial and confidential information be furnished to the Union and their auditing firm without restrictions or conditions." Although the Company was and is available for negotiations, the Union had called the negotiations to an end without requesting further meetings and clearly was not concerned with "our problems in Dubuque. 1150 In response to this press release, Anderson, on 24 July, sent a lengthy letter to Stoltz summarizing the parties' negotiating history for the closing of the Dubuque hog kill and cut from the Company's 30 March notice that those departments would be closed. In this letter, Ander- son offered the following explanation for why the finan- cial information was sought: So that there may be no possible misunderstand- ing on your part, let me repeat that first and fore- most, we have requested the records of this whole Company, and not just those of the Dubuque plant, so that we may verify your claims that this Compa- ny must have a wage-freeze in order for this plant to remain open and for the Company to' remain competitive. That is why the information was sought Secondly, in light of the repeated assertions by management as to its over-all condition, we 49 Between 25 June and 21 July, union officials had discussed, without decision , the Respondent 's demand that an outside auditing firm be used It was not until the 21 July- meeting with the Company that Anderson agreed to this condition so The press release concluded with an announcement that the finan- cial information that it had offered to the Union that day was consistent in scope and content with a Regional Office settlement proposal, and that the offer was sufficient to eliminate the need for issuance of an unfair labor practice complaint wanted to ascertain what, if anything, was being of- fered in the profit-sharing proposal With these facts in mind, we would then be in a position to bargain intelligently about the nature and extent of the ac- ceptable mid-term contract concessions, if any. You steadfastly refused to make such information available to us. but instead insisted that we vote your proposal up or down, and that if we failed to accept it by July 1 the jobs would be irretrievably lost The Union concluded by reiterating its entitlement to information about the Respondent's overall profitability and its desire to bargain to save all jobs at the Dubuque plant, including those in the hog cut and kill. In a 29 July letter from Naylor to Maas, the Respond- ent specified the financial data that it was willing to pro- vide The germane part of this letter is as follows: Dubuque Packing Company hereby reaffirms its offer to negotiate concerning the Company's deci- sion about the transfer of the additional 900 jobs an- nounced on June 10.51 Naylor, in his letter offered that: The Company will not transfer those (900) jobs until you have had a reasonable opportunity to bar- gain concerning them. The Company further agrees to provide the financial information you requested Some of that information will only be made avail- able to the independent auditing firm you select and some will be' made available directly to you. I will discuss Mr. Anderson's requested information point by point: 1. The Company will provide all of the consoli- dated balance sheet data to your auditing firm That portion of the information directly relating to the main Dubuque may be disclosed to you. 2. The consolidated income statement information will all be made available to your auditing firm. That portion of the information directly relating to the main Dubuque plant may be disclosed to you. 3. The notes and explanations to items 1 and 2 written out above will be made available on the same basis as the balance sheet and income state- ment data to which the notes apply. 4. All information concerning the Company's debt situation will be disclosed only to your audit- ing firm. 5. All information concerning plant operations in- cluding weekly kill by species, profits or loss by species, etc., will be only shown to your auditing firm. 51 As the Company had explained earlier to the Union, there originally only were about 1450-1500 bargaining unit positions at the Dubuque plant, filled by approximately 1889 employees The Respondent's offer, reiterated in its 29 July letter, to negotiate concerning the transfer of the additional 900 jobs, not including the 530 jobs related to the hog kill and cut departments , assertedly was consistent with its obligations as then de- fined by the NLRB Regional Office DUBUQUE PACKING CO 519 6. We will provide to both you and your auditing firm the labor and fringe benefit costs for all bar- gaining unit employees. 7. Information concerning the identity of plants we have acquired since 1980 will be provided to you Information as to the "kill or processing capac- ity" and the acquisition costs will only be provided to your auditing firm 8. The Company has no subcontracting agree- ments as subcontracting is defined in our labor agreement. Therefore, no such information exists. 9. Information concerning the compensation of officers and directors of the Company will only be made available to your auditing firm. All of the information requested concerning the pension options and employee census will be made available to you. As we have discussed before, your auditing firm will be required to give the Company assurance that it will maintain the confidentiality of the infor- mation made available to it... . Noting that the Respondent was "still available to bar- gain about the effects of its decision to close the Hog Kill and Cut departments, and the reduction of the ancil- liary jobs," and its continued high operating losses, and that much of the information sought could be provided to the Union's designated auditors very quickly, the Re- spondent emphasized the need for early negotiations.sz Stoltz' written reply on 3 August to Anderson's lengthy 24 July letter reminded Anderson that the Re- spondent was available for negotiations concerning the transfer of all jobs except those connected to the hog kill and cut departments and the jobs ancilliary thereto, as announced on 30 March. Stoltz also declared the Com- pany available to negotiate concerning the effects of its decision on all involved employees. On 5 August Maas replied to Naylor's 29 July letter in another lengthy missive which again reviewed,the histo- ry of the matter from the Union's standpoint, pointed out changes in the Respondent's, positions and referred to the posture of the matter before the NLRB Regional Office. Maas, after again criticizing the Respondent's bargaining stance in pressing the Union for agreement before it could know the facts and for the restrictions placed on what its auditors could report, made the following pro- posals: As to when these negotiations should commence, we wish to proceed at the earliest possible date when useful negotiations can be conducted. Your . .. threat to accuse the Union of bad faith unless such negotiations occur before the auditors have even had a chance to conclude their examination of the records . . indicates that you have returned to the position you took back in June, demanding that the Union act in accordance with the Company's dictates before the facts are available for examina- 52 Naylor's above 29 July letter came into the possession of the media, and on 31 July the local newspaper carried an interview with Maas con- cerning the contents of the letter in the article, Maas criticized Naylor for having given his letter to the media tion. . . . We are not in the habit of signing a con- tract first and then checking the facts. Even after the auditors have examined the records, if we are hog-tied by the limitations dictat- ed in your letter, we still would be in a position where the auditors would not be allowed to tell us what is in most of those records. As we have indi- cated, we think that limitation violates your legal obligation to bargain in good faith. However, we are anxious to make as much progress as possible We therefore propose the following procedure. 1. The Company should make prompt delivery to the Union at least of the limited information it has expressed willingness to deliver, and to the auditors of the limited' information which it has indicated a willingness to give to them.53 2. Negotiations are to commence as soon as possi- ble after the auditors have completed their review and feel they can with reasonable certainty convey meaningful and useful conclusions to the Union and have had an opportunity to confer with the Union. 3. The auditors are to respect the limitations placed on them by your letter as to what they may or may not reveal to the Union, unless the [NLRB] General Counsel's office concludes that those limi- tations are contrary to the Company's collective bargaining obligations, in which event the auditors are to reveal additional data to the extent deter- mined by the General Counsel to be the permissible limitations. In Naylor's 6 August reply, he contradicted the histor- ical recitation, but responded as follows to Maas' above proposals: 1. The Company agrees to make the requested in- formation available immediately after receiving ap- propriate assurances from your auditing firm that they will maintain the confidentiality of the infor- mation which is not to be disclosed by them to you. We will forward to your auditors and to you the in- formation consistent with the terms stated in my letter of July 29. . . . Our auditors will be available to assist your auditors. 2. We suggest that negotiations commence imme- diately with the understanding that you need not execute any agreement until your auditors have completed their review and conferred with you as to their conclusions... . 3. The Company cannot agree to accept the Gen- eral Counsel's conclusions until we have reviewed those conclusions. Please advise me of the identity of your auditors and the date that negotiations can commence On 11 August, Maas, in his reply to Naylor's 6 August letter, as supplemented by Naylor's followup correspond- 53 On 5 August, the date of this letter, the Union had not yet an- nounced its auditing firm although selection had been made 520 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ence of 10 August,54 repeated the Union's intention to include the hog cut and kill jobs in its negotiations with the Company when they again, met; further protested the limited financial data that the Company had agreed to make available, and the Respondent's refusal to follow the Union's example of binding itself to the NLRB Gen- eral Counsel's view of the Company's bargaining obliga- tion when that position should become known. Maas again protested the Respondent's insistence on opening "actual negotiations" before any financial data had been disclosed, suggested that the Respondent forward to the Union's office "the limited information" the Company was willing to furnish; advise whether the Respondent was willing to deliver to the union auditors such infor- mation as it was willing to provide them subject to the Respondent's previously announced confidentiality re- strictions but with authority to the auditors "to act in compliance with the General Counsel's decision if he finds the Company's restrictions illegal." Maas declared that the Union's negotiating committee would be promptly available for a meeting after receiving its audi- tors' report. With Naylor's 12 August reply to the above, he en- closed the financial information the Company earlier had agreed to make directly available to the Union and again requested that the Union's auditing firm be identified if as yet selected. He expressed regret concerning Maas' re- fusal to meet that day with the company negotiating committee as had been requested in, his 10 August letter. Noting that the Union had set several preconditions before it would even enter negotiations, Naylor accused the Union of stalling in order to keep jobs in place while refusing to bargain. On 17 August, the Union, in a letter from Maas to Naylor, first announced that the Chicago, Illinois ac- counting firm of Gale, Takahashi & Channon (GTC), had been retained to examine the Respondent's financial data.5 5 Naylor, in a letter of 19 August, accepted the Union's selection of GTC even though that- firm was "not a re- gional or national firm as we requested." Naylor's letter continued: I would like to clarify a point as to which you seem confused. The auditors will be permitted to see any of the corporate books they request to see. My letters of July 15 and 29 were clear that your auditors could see the corporate books while the Union could only see the Dubuque plant informa- tion. The auditing firm will be permitted to report their conclusions to you as to the correctness of any product transfers between the Dubuque plant and other Company plants. For example, if they con- clude that the Dubuque plant is paying too much 14 In Naylor's 10 August letter, he requested a meeting with union ne- gotiators on 12 August when the Company would turn over the financial data it had agreed to provide He also asked for the name of the Union's auditing firm so that confidentiality assurances could be obtained, ena- bling the Respondent to then provide that firm with the rest of the re- quested information ss Maas testified that GTC actually had been retained on behalf of the International and Local Unions by Attorney Eugene Cotton on 29 July, but that the Respondent was not so informed until 17 August for product from another Company plant, the firm can report that conclusion to you. They are, how- ever, barred from telling you specific plant informa- tion such as the cost of the plant or the actual number of livestock slaughtered at the other plants. Such restrictions do not interfere with the firm's ability to provide you with an adequate report. In this letter, Naylor again reiterated that the Re- spondent had no legal obligation to bargain,over jobs in the hog kill and cut departments and ancilliary jobs be- cause the Union had had ample opportunity to do so be- tween 30 March and 1 July which, for the Union's own reasons, it had elected not to do. The Company now was, committed to closing those departments but was avail- able to bargain about the remaining 900 jobs. Enclosed with and referred to in Naylor's 19 August letter was a proposed confidentiality agreement between the Respondent and GTC in which GTC was to agree to pay the Company $500,000 if it should fail to maintain the confidentiality of information provided by the Com- pany. In return, the Respondent agreed that GTC would be provided with unrestricted access to the Company's corporate records and subsidiaries. The content of writ- ten or verbal reports to the Union would be restricted to GTC's conclusions about the accuracy of the Dubuque profit-and-loss results as -reflected in the Company's au- dited consolidated financial reports. The proposed confi- dentiality document repeated GTC's agreement, if ac- cepted, that the disclosure of confidential corporate in- formation in excess of what was agreed to there should constitute a breach of the agreement, causing the stipu- lated $500,000 to become immediately due and payable. On the day that Naylor's 19 August letter and the en- closed proposed confidentiality agreement were received, Maas went to Naylor's office and told him that there was no way that the Union would ask any auditing firm to sign a confidentiality agreement requiring it to forfeit $500,000 should it give any information with which the Company disagreed. Naylor replied that that was the way it had to be. The Company needed some confiden- tiality and this was what the Respondent thought was fair. Maas did not agree and the conversation ended. On 24 August Maas met in Chicago with Union Attor- ney Eugene Cotton and Seymour Gale, a senior partner in GTC. The parties rewrote the confidentiality agree- ment, which Maas took back to Naylor's office with a cover letter. The cover letter, dated 24 August, also criticized the confidentiality agreement proposed by the Respondent as inconsistent with what the Company had offered in earlier correspondence In the accompanying rewritten confidentiality agree- ment, which was in letter rather than contract form, dated 24 August, addressed to the Respondent and signed by Gale, GTC agreed to keep in confidence and to not disclose to the Union any specific information concerning the finances or operations of plants other than the Dubuque plant, including the Company's debt situation, compensation of company officers and direc- tors, information concerning plant operations, actual number of livestock slaughtered, and the capacity or the acquisition costs of any other plant. The letter noted that DUBUQUE PACKING CO these assurances were being given at the request of GTC's client, the Union. Unlike the Company's pro- posed confidentiality agreement, the Union's proposal made no provision for payment by GTC of a penalty in the event the Respondent should claim breach. Maas hand delivered the above 24 August confidential- ity proposal and cover letter to Naylor about 25 August. When Naylor refused to agree to it, Maas offered a fur- ther concession-that the Respondent could receive and review GTC's report before it was given to the Union. The Respondent would be permitted to strike anything from the report that breached confidentiality, stating the reason, and the Union would have the right to pursue such matters through other avenues Union Attorney Cotton then joined Naylor and Maas in a telephone con- ference call during which the parties agreed to the Union-proposed confidentiality agreement as augmented by prior company screening of GTC's report. By letter of 26 August to Maas, Naylor recorded the oral promises from Maas and Cotton that GTC would provide a new letter assuring that that firm would submit their proposed report to the Respondent for prior com- ment as to whether such report is within the "restrictions and conditions stated by the Company " Naylor, in his 26 August letter, also contradicted a statement by Gale of GTC to the effect that the Re- spondent had stated that the Dubuque plant had been suffering losses "attributable to the level of labor costs." According to Naylor, that statement was not correct since: .. . we have repeatedly informed you of our multi- million dollar losses and said that we needed eco- nomic concessions from our Unions in order to jus- tify continuing certain operations. We have kept you informed of the many additional steps we have taken to cut costs in ways not linked to our Unions. You have been provided this information in letter form over the past year and we will continue to keep you informed. On 31 August GTC sent Naylor the supplemental letter requested in his 26 August correspondence. In this correspondence, GTC stated its agreement and that of the Union to present any draft reports prepared at the conclusion of its audit to the Respondent for comment as to whether any portion went beyond the proffered confi- dentiality limitations described in Gale's 24 August letter. Gale also offered to modify or delete any parts of GTC's report that the Respondent might claim exceeded those limitations, and to report to the Union the general nature of any subject matter deleted at the Respondent 's insist- ence so that the Union could take countermeasures to assert its legal position In so agreeing, GTC noted that it did not wish to become involved in the existing con- troversy between the Company and the Union. Gale's letter was delivered with an accompanying cover letter, dated 1 September, from Maas. There, Maas noted that GTC's advance presentation of its report to the Compa- ny was authorized solely for purposes of confidentiality. On 3 September Naylor sent the following written re- sponse to Maas: 521 The representations made by Mr. Gale on behalf of his firm are acceptable. The authorized representa- tive to whom your auditors submit advanced pres- entation of the report is Mr. Ed Ulve of the firm of McGladrey, Hendrickson & Co Now that the audit is proceeding, I strongly urge you to make your bargaining committee available for negotiations at the earliest possible date. I assure you that my committee is available now. On 5 September, Gale and Gerard Gangloff, a GTC accountant, first visited the Respondent's Dubuque plant where they met with Naylor and James D. Purdy.56 Al- though accepting certain financial data provided by Naylor and Purdy at the start of their meeting, Gale also presented a list of items that GTC wanted to examine. However, when Gale asked for a copy of Internal Reve- nue Service audits of company tax returns, Purdy replied that IRS audits would not be made available because they were not included in Anderson's 23 June request for financial information. Gale and Gangloff did not reply, but continued with their list of requested materials. 57 In September or October, Stoltz met with Anderson in Miami, Florida, to discuss the labor situation at the Re- spondent's Rochelle, Illinois plant. Nothing was accom- plished, and there was no mention made of the possible closing of the entire Dubuque plant GTC's handwritten draft report was received by McGladrey Hendrickson's Ulve on 22 September. In a telephone conversation on the morning of 23 September, Ulve told Gangloff that he did not believe anything con- tained in the GTC draft report was in violation of the confidentiality restrictions. 58 However, Ulve did inform Gangloff that he strongly disagreed with certain cost al- locations by GTC, specifically those relating to sales ex- penses and certain other items. Ulve requested another meeting with Gangloff so that he could provide further input as Ulve was concerned the GTC had misunder- stood the Company's responses to some of their ques- tions. Gangloff, referring to time restraints and pressures to proceed with negotiations, declined replying that his instructions were to meet with the Union immediately, which he intended to do. Following this conversation, the Company asserts that it found that the agreement did not meet previously set- tled confidentiality restrictions On the morning of 24 September, just before Maas left for the airport to meet Gangloff,59 he received a tele- 56 Purdy, the Respondent's treasurer and chief financial officer until his October 1982 resignation, was a self-employed certified public ac- countant in Dubuque at the time of the hearing He testified at length about the Respondent's financial difficulties and relationships with its banks 51 Items requested by GTC but not furnished by the Company will be discussed below 58 Ulve explained that at the time of this 23 September conversation, he had not yet noted the breaches of confidentiality that were later claimed 59 Gangloff, accompanied by Cotton, was scheduled to arrive at Du- buque from Chicago, early on 24 September to explain the results of GTC's examination of the Respondent's records to the Union A union executive board meeting had been scheduled for that morning and a ne- gotiating session with the Company was set for the next day 522 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD phone call at home from Strausse Strausse directed Maas to tell Gangloff when he met him that Gangloff was not to turn over any documents to the Union until he talked to someone from the Respondent's manage- ment. Maas delivered this message and, soon after arriv- al, Gangloff called Strausse An immediate meeting was arranged at the Company's offices attended by Maas and Gangloff for the Union, and Stoltz, Strausse, Naylor, Ulve, and Alfred E. Hughes, the Respondent's ' general counsel, for the Company. Stoltz began by telling Gangloff that he did not agree with the way he did his work. He did not like the way in which Gangloff had characterized company alloca- tions of desks, advertising, and the company airplane in his report as expenses charged to the Dubuque division and, if Gangloff released that report, he, Stoltz, was going "to sue his ass" and also his firm Stoltz then gave Gangloff two previously prepared letters, dated 24 Sep- tember, telling him that he could show one to the Union but not the other. In the letter to GTC that Gangloff was permitted to show the Union, Stoltz acknowledged receipt by the Re- spondent's auditors of the draft of GTC's proposed report to the Union. Stoltz' letter criticized the nature of the GTC inquiry, contending that in the time spent (4 days on the Respondent's premises) and in its extent, GTC's approach had been superficial, "sufficient to only to enable you to begin to formulate informed questions and to evaluate the Company's response to those ques- tions." Stoltz accused GTC of leaping to conclusions from certain statistical data without evaluating the Com- pany's responses and, in some cases, without even solicit- ing the Company's response. Stoltz' letter continued as follows: Further, our accountants' review of the report indi- cates that,it has certain technical violations of the agreement which must be deleted from the report in accordance with the agreement itself. Those matters relate to the gross profit percentage information on certain plants other than Dubuque . . . and the con- solidated depreciation expense . . . . Those must be removed before any report can be submitted. In view of the fact that the report contains, in our opinion, certain unsubstantiated conclusions, and conclusions which in fact misrepresent true financial situations of the Dubuque plant's operations, we feel compelled to advise you that if the report is re- leased to the Union in that fashion, Dubuque Pack- ing Company will sustain irrevocable actual dam- ages. We have been further advised by our counsel that having called this matter to your attention, and insisting that you not release the report without the full correction of the errors, both as to the technical matters referred to herein, and also as to the unsub- stantiated conclusions, the Company will have a cause of action against your firm for punitive dam- ages as well as the actual damages it will undoubt- edly incur if this report is released in the fashion presented. We deem it advisable to inform you of our position concerning the release of the report in order that the corrections may be timely effected.60 Gangloff asked Ulve what the problem was as he had spoken to him about the review only the day before when there had been no confidentiality problem with the report. He asked exactly what were the difficult areas. Ulve basically repeated Stoltz' remarks that he did not necessarily agree with the report's characterizations of cost allocations for the Company's advertising expenses, plane costs, and the DISC.61 The big change occurring at the 24 September meeting was that the Respondent, which, until then had sought to limit the Union's access to its financial data on the ground of confidentiality, for the first time imposed cen- sorship because of disagreement with the report's sub- stance and the way in which it was prepared-reasons unrelated to confidentiality. This moved the focus of the dispute over Company-imposed restrictions on the GTC report from the required degree of privacy to one relat- ing to professional differences of accounting opinion.62 Specifically disputing the Respondent's reported losses for the Dubuque division which were represented as in excess of $4.7 million in the fiscal year ending 1 Novem- ber 1980,63 GTC, in its draft report, concluded that had its exceptions to certain expense allocations been taken up, that division, instead of operating at a loss, possibly could have shown a profit in excess of $1 million for the same period GTC's quantified, or specifically itemized, exceptions to Company-allocated costs to the Dubuque division include repairs and maintenance, executive sala- ries, professional fees, aircraft, other general and adminis- trative expenses, and commissions paid to its DISC, Key- stone Trading Company.64 In addition to the above quantified exceptions totalling more than $2.4 million, the GTC report also referred to other "significant exceptions" that GTC could not quan- tify for various reasons but which, its report urged, 60 The second letter to GTC, according to Ulve, contained a more de- tailed recitation of McGladrey Hendrickson's differences of opinion with GTC and was submitted to persuade GTC to participate in another meet- ing to further discuss their conclusions As demanded by Stoltz, the matters referred to as "technical violations of the agreement" were ultimately removed from GTC's report Si DISC is an acronym for domestic international sales corporation, an entity intended to promote exports of products from American companies by providing an avenue for reduced taxes The tax `reduction was achieved by shifting income from the Respondent's operating company, here, for instance, the Dubuque division, to its DISC subsidiary, Key- stone Trading Company Keystone, like other DISC's, paid substantially reduced taxes This arrangement whereby the parent company could transfer taxable income to its DISC corporation effectively reduced the parent company's income tax liability 62 Ulve, recognizing in this 10 July letter recommending guidelines to the Company for the Union's upcoming audit that expense allocations in a multiplant company involved considerable management judgment, ad- vised the Respondent that such allocations are to some degree subjective and that reasonable support probably could be developed for alternative methods of allocation 89 Although Anderson's original 23 June request for company financial data was to cover a 5-year period, GTC voluntarily conducted its review for only I fiscal year, that ending 1 November 1980 64 While continuing to dispute all other of GTC's quantified and, as will be discussed , unquantified exceptions to its cost allocation methodol- ogy, the Respondent ultimately agreed that a large DISC-related sum had been inappropriately charged as a Dubuque division cost DUBUQUE PACKING CO should be seriously considered in evaluating the Du- buque Division's profit/loss situation for the year 'under consideration. As described in GTC's later final report: These unquantified exceptions relate to excessive expenses charged to the Dubuque Division for in- terest expense and selling expenses. Depending upon which more acceptable allocation method is used to allocate these expenses to other divisions/subsi- diaries, the Dubuque Division expenses, after giving effect to our quantified exceptions, could be further reduced by an amount ranging from $300,000 to over $6,000,000. Such an adjustment could convert the Dubuque division loss to profit The GTC report noted that the quantified and unquan- tified exceptions indicated in its report may represent substantially all the consolidated profits recorded by the Company for that year. While its observations and criti- cisms were primarily directed toward the Company's re- ported Dubuque division cost allocations for the fiscal year ending 1 November 1980, GTC wished to empha- size that the concepts contained in its report might be equally applicable to the then-current year's operations, to end 1 November 1981, to the same extent. Ulve explained that the Respondent's principal reason for having threatened to sue GTC if it issued its report in its initial draft form was that GTC had used fundamen- tally objectionable accounting methods. Principally ob- jectionable to the Company was GTC's contention that certain selling expenses should have been allocated by the Company to other plants when, in the Respondent's view, those expenses related to Dubuque. E. Resolution of the Auditing Controversy; Respondent's Demand for Further Concessions; and the 19 October Agreement Modifying the Contract On 25 September Maas and the 10-member union bar- gaining committee met with Naylor, Strausse, and Myers, Naylor's assistant.65 Myers' notes of that meeting reflect a persistent unwillingness on the part of the Com- pany to withdraw its threat to sue if the GTC report were released. The Company argued that it merely was exercising rights established in the prior confidentiality agreement while the Union protested that it was paying for an audit that it was unable to see The Respondent repeated its arguments critical of GTC's audit and argued that GTC's report, which claimed that the Com- pany was making rather than losing money, had put the Company's allocation of millions of dollars in a false light. The Respondent contended that the Company had lost $3 million over-all, and that Dubuque, itself, had had a $6 million loss . The Union noted that a $3 million loss was not a big deal to a company of that size. When the Union again stated that it was there to nego- tiate for the entire Dubuque plant, including-the hog kill and cut, the Respondent replied that the kill and cut would close during the next week. 6s After his 24 September meeting with company officials, Gangloff returned to Chicago 523 During the meeting, as described by Naylor, Maas had noted that the Union could not proceed adequately with negotiations if the Respondent continued to, bar GTC from delivering its report to the Union with repeated threats of a lawsuit. Naylor told the Union that Gale of GTC had informed him at one of their earlier sessions that his Company's representatives had been limited both as to time and as to amount of compensation, and that that was why they had conducted a limited examination It was the narrow- ness of GTC's approach, including their failure to seek supplemental information to cover certain of their con- clusions, that the Company found problemmatic. The union representatives were advised at the 25 Sep- tember meeting that the Respondent was willing to pay the cost of another auditing firm, one experienced in the meat packing industry, to review the materials and to have them issue a report. The Company also offered to pay the expenses incurred by GTC in consulting such a firm Noting that the Dubuque division had lost $6.25 mil- lion in 10 months, the Respondent stated that if it had had the same contract and labor costs as IBP (Iowa Beef Packers), the Dubuque plant would be in the black After lunch on 25 September, the parties reassembled and Maas asked whether they could negotiate which jobs were salvageable.ss The Respondent responded by giving the Union the following pre-prepared written pro- posals for midterm contract modifications, contained in the following letter of that date: For the purpose of salvaging as many production jobs at the Dubuque, Iowa plant as possible, the Company proposes the following contract modifica- tions to be effective October 4, 1981: 1. The labor rate to be set at $8.00 per hour. s7 All positions remaining will retain the present as- signed brackets. Such rates shall remain frozen for the duration of the contract. 2. The Contract will be extended to March 1, 1984. 3. All employees will forfeit two weeks of vaca- tion per year All employees will be paid 36 hours of pay for each week of vacation. Employees may accept pay in lieu of time off for all weeks of vaca- tion in excess of two weeks per year. 4. The provisions of the Health and Welfare Plan [HMS, Optical, Dental and Prescription Drugs] shall be returned to the provisions in effect for the 1976-1979 labor agreement Employees shall pay 40 percent of the coverage for dependents All other terms and conditions of the present labor agreement shall remain in full force and effect. 66 According to Naylor, the Union had requested the 25 September meeting to negotiate to save not just the 900 remaining jobs at the Du- buque plant, but also those in the hog kill and cut, and also to pursue the GTC report 69 As noted, when the Company made its 8 June wage freeze/profit- sharing proposal, the contract wage rate was $10 02 per hour With sub- sequent contractual increments, by the 25 September meeting that rate had risen to $10 69 524 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD After the Union returned from the recess taken to ex- amine these proposals, Naylor explained that the, pro- posed $8 hourly wage rate was necessary because other UFCW contracts were being signed at that level or below and the Respondent was going to have to be able to compete with those lesser paying plants. The Re- spondent's proposal was represented as a reflection of -what was going on in the industry as well as in the Du- buque plant. Specific examples were given. Naylor stated that the Respondent did not enjoy making cuts but that it had serious financial problems and did know where the industry was going. The Re- spondent did not "want to walk away from the Dubuque plant; it would be losing a large investment. He told the union committee that the banks would not give the Com- pany any money and other plants were closing. The Re- spondent could purchase all the fresh pork products it wanted from suppliers working under collective-bargain- ing agreements that provided for rates 50 percent below those in the Master Agreement. It was both the Compa- ny and the Union's fault that the master rate had been paid. Naylor repeated that the Respondent did not want to leave Dubuque, but he did not know how many jobs could be saved He ' pointed out that the Union had had an opportunity to modify the contract by freezing wages at the $10.02 wage rate. There was reason to be glad that that proposal had not been accepted as the Company could not have made it at that figure. At the Union's suggestion, the parties agreed to con- tinue their talks on the morning of 28 September. On 28 September GTC sent the Union a lengthy letter summarizing the history of its involvement in the audit- ing controversy, the reasons for its confidentiality agree- ment with the Respondent, and the events of Gangloffs 24 September meeting with company officials where the Respondent first threatened to sue GTC. GTC's letter concluded by noting that while, in that firm's view, the threatened lawsuit would be totally without basis, de- fense of such a suit would be very expensive and a cost that GTC did not feel it appropriate to assume There- fore, GTC was declining to deliver a copy of its report to the Union until the lawsuit threat was lifted. At the 28 September meeting, Naylor handed Maas a letter of that date which announced that the American Meat Institute had highly recommended the accounting firm of Price, Waterhouse & Co. to serve as an expert third party for GTC's benefit. Again asserting that GTC's objections to the certain allocations by the Re- spondent were completely contrary to industry practice and norms, the Respondent, suggested that GTC should obtain the expert opinion of Price Waterhouse officials as to the appropriateness of the Respondent's allocation practices. In return, the Respondent offered to pay ex- penses incurred in consulting Price Waterhouse, and that, if GTC would revise its report to comply with Price Waterhouse's recommendations, the Respondent would withdraw its objections to its release. During the remainder of the 28 September session, the parties discussed the above letter, with Naylor attempt- ing to get the Union to agree to have GTC consult with Price Waterhouse and conform to that firm's opinions. While the Union did not agree, it submitted no counter- proposals of its own 68 At the 29 September meeting, Naylor handed Maas another letter, dated that day, reiterating the Respond- ent's recommendations and offers concerning GTC and Price Waterhouse, and again urging acceptance. Wendell Olson joined Maas and the Union's executive board at the 30 September meeting with Naylor, Strausse, and other company representatives, arriving later in the meeting. The atmosphere was heated, the Union contending that its auditors should be able to re- lease their report to the Union and that the Company should withdraw its threat of a lawsuit. Strausse argued that GTC had been incorrect in its cost allocations for advertising, the DISC, the Company plane, and execu- tive salaries, pointing out that the "bottom line" would have been much different had such items been properly charged. Olson asked if the Respondent would postpone any further negotiating developments for 30 days as there might be some interesting developments, which he would not describe No action was taken on this request. Olson did state that the Union would be willing to accept both the GTC report and any Price Waterhouse report if submitted together. He urged the Company to withdraw its threatened lawsuit and that the matter be concluded. Also on 30 September, the Respondent issued a news release announcing that the hog kill and cut departments would close the next evening, 1 October Most meat de- partments would be affected to some extent, excluding pure beef operations It would be the largest layoff in the Company's history. The release noted that the Respond- ent was presently negotiating with union representatives to see if it would be possible to minimize further job re- ductions at the Dubuque plant, emphasizing that if the Union accepted the Company's latest proposals (calling for the above-described reductions in wages and bene- fits), many of these jobs would be salvaged, but not those related to the hog kill and cut departments. Plans for future reductions were on temporary hold pending negotiations. In this press release, the Respondent emphasized that it had no interest in breaking its Unions, had absorbed mil- lions of dollars in losses while continuing to work with its Unions, expected to continue most of its operations as union plants and believed that its Unions had a vital role to play in the Company's future. It was expected that after these layoffs, the remaining Dubuque employees all would have 14 or more years seniority. With the closing of the fresh pork operations at Du- buque, according to the release, the Respondent antici- pated that the Rochelle plant would be a supply source for both fresh pork for sale and raw materials for proc- essing. However, the Company also would purchase such items on the open market. The release announced that 31 members of manage- ment personnel had transferred to Rochelle, but that no clerical personnel had transferred. 68 From 28 September to 6 October, the parties met together daily DUBUQUE PACKING CO. 525 It was noted in the release that if the requested conces- sions were given, there could be a future for the Du- buque plant However, given the state of the economy, there was no way to provide any guarantees. Thereafter, on 1 October, the Respondent's plant at Rochelle, Illinois, began full operation and, on 3 Octo- ber, the hog kill and cut departments at the Dubuque plant were closed. At the negotiating session on the morning of 2 Octo- ber, Maas and Naylor exchanged letters. Naylor's letter observed that that was the sixth consecutive weekday that the parties had met since "negotiations" were opened on 25 September, when the Company had pre- sented its proposal (for wage and benefit reductions), and that the Union was refusing to bargain in good faith be- cause: 1. Your negotiating committee has, yet to make a single substantive proposal 2. Even though some 517 of your members are being laid off and two complete departments are being permanently closed this week, you have not even requested that the Company bargain about the effects of its decision to permanently eliminate those jobs. 3. Your entire course of conduct this week has been to evade substantive discussions concerning the Company's proposals. Naylor concluded his letter by insisting that negotia- tions become serious when the parties next convene or the Company would conclude that the negotiations had reached impasse and would file an unfair labor practice charge against the Union alleging failure to bargain in good faith Maas' 2 October letter , after again criticizing the Com- pany, contained a counterproposal to break the deadlock. The Union offered to accept the Respondent's proposal that GTC meet with Price Waterhouse, referred to in Maas' letter only as the American Meat Institute's desig- nated firm, for each to hear the other's opinions about the reasonableness of the GTC report concerning the Respondent's allocation practices The costs of this con- sultation would, in accordance with the Company's pro- posal, be borne by the Respondent. GTC then would be authorized by the Union to revise their report to what- ever extent, in GTC's judgment, revision would be ap- propriate as a result - of this opinion exchange. Should Price Waterhouse still disagree with anything in the GTC report it could prepare a statement setting forth its criticisms The Price Waterhouse statement, together with any answering comments that GTC might choose to make, would be attached to the GTC report when de- livered to the Union. Both the Respondent and the Union would agree that neither would object to the re- lease of the report together with those attachments. Naylor requested a recess, promising to return that afternoon with an answer to the Union's counterpropos- al. That afternoon, Naylor delivered to Maas a second letter accepting the Union's proposed procedure, except that Naylor's letter stipulated that the reports from GTC and Price Waterhouse should be treated as one report Maas replied that the Union did not agree that the two sets of reports should be treated as one. Each accounting firm could submit their opinions in separate reports and the Union would receive the two documents. The views of each firm could then be separately preserved.69 At the parties' 5 October negotiating session, Maas gave Naylor and other company representatives copies of his letter of that date, questioning the meaning in Nay- lor's 2 October letter that the reports of GTC and Price Waterhouse "shall, thereafter, be treated as one report to your Union " Noting that there may be two different sets of views expressed by the respective accounting firms, the Union proposed, instead, that GTC staple together its report and the report from Price Waterhouse to deliv- er those documents to the Union in a single envelope. The Union asked for confirmation whether that sugges- tion would fill the Company 's desire for "one report" and move the Company to withdraw its threat of a law- suit. At the 5 October meeting, Maas again told Naylor that the Union would agree to receive the Price Water- house report stapled to GTC's report In that way, both reports could be received and considered together while preserving the separate identity of each: The Respondent accepted this offer at the 6 October joint meeting, when Naylor handed Maas a letter con- veying the Respondent's assurances that the Company had withdrawn its "threat of lawsuit" when it accepted the Union's offer of 2 October.70 The parties' 6 October meeting actually was a labor management meeting, rather than a negotiating session, except that Naylor's above letter, accepting the proposal that the two auditing firms' reports be stapled and deliv- ered to the Union together, was discussed. At Naylor's suggestion, the parties agreed to contact Price Water- house and GTC, respectively, to ask them to start work immediately. Pending receipt of the auditors ' reports until 15 Octo- ber, there were no additional bargaining sessions follow- ing the 6 October meeting . During the course of negotia- tions from 25 September through 6 October,' there had been no discussion of a new bargaining deadline. Although 'the auditors' reports were pending, the Union received the following letter , dated 12 October, from Naylor: This letter is to inform you that we must have your decision on the Company's proposed contract modi- fications no later than October 19,' 1981. This past Friday,71 the Company's Board of Directors con- vened a special meeting to review the huge losses that have occurred at the Dubuque Plant the last few weeks. In light of these losses, and the fact that the Hog Kill and Cut Departments have now been 69 During the 2 October, morning session , Naylor again rejected Maas' often reiterated assertion that the Union was entitled to negotiate to per- serve the hog kill and cut jobs in Dubuque 70 The Union's 2 October letter, described above, had contained a pro- posal for a working procedure between GTC and Price Waterhouse 71 9 October - 526 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD closed, it is essential that we proceed with our de- terminations as to which operations are to be termi- nated or reduced at the Dubuque plant The Price, Waterhouse & Co accountants have completed their review of your auditing firm's pro- posed report. They will present their conclusions to the Gale, Takahashi & Channon firm this afternoon. . . . It is essential that they quickly determine the necessary modifications to your firm's report and proceed with its issuance. Noting that the Company was prepared to immediate- ly resume negotiations, the Respondent noted that 2-1/2 months had passed without meaningful progress. Nay- lor's 12 October letter concluded as follows: We will be available to negotiate about these oper- ations all this week, but we must have a decision by Monday, October 19, 1981 or we will proceed with decisions as to which jobs will transfer and which will remain. Fortunately , we have already had six days of meetings during which your full bargaining committee has already explored the details of the Company's proposal . We will not need to reexplore the subjects already discussed , so this time frame is a reasonable one. The Company then issued two press releases, one about 12 October and the other dated 13 October. The 12 October release generally echoed the substance of Naylor's above-described letter of that date to the Union. In the 13 October release, the Respondent reported the following: Earlier press reports indicated that the plant had lost $9.9 million during 1980. Such reports were in error. The figure of $9.9 million applied only to the fresh pork operations at the Dubuque plant and were not ever identified as covering all plant oper- ations. In 1980, the Company's financial reports showed an operational loss for the Dubuque plant of $6,654,000 before transferring commissions to the Company's Domestic International Sales Company. After the DISC adjustment, the plant showed a loss of $7,447,000 for fiscal 1980. While the Union was still waiting for the auditors' re- ports, it received a letter, dated 14 October, from Com- pany President Stoltz granting GTC permission to imme- diately release its report to the Union together with that from Price Waterhouse. On 14 October, the Respondent also sent a memoran- dum to all employees which, in relevant part, declared: The time in which to take further steps to keep this plant operating is running out. We must have a re- sponse by Monday, (19 October) or we will have no choice but to proceed with transferring addition- al operations from this plant. We must hear from you now. In this memorandum, the Respondent expressing frustra- tion at fighting with the same people whose jobs it was trying to save, noted that while it had prided itself in paying top wages and benefits when profitable, the Union had asked for too much and the Company had granted too much. The memorandum continued. Due to the escalating heavy losses experienced in the last few weeks, at a special meeting of the Board of Directors, it was decided that if an answer was not received from the Union by Monday, Octo- ber 19, we would be forced to proceed with our re- ductions. In June we proposed a modification incorporat- ing a wage freeze At a mass meeting called by your membership, the vote was either postponed or stalled by the International Union leadership be- cause they stated they wished to review the corpo- rate books to determine if the plant's financial posi- tion was truly as bad as the Company had pictured. After several more weeks, the International Union then revised its position and said it would now accept that the plant books would be shown to the Union itself while the corporate books would be shown to an auditing firm selected by the Union. Again more time was lost while the International selected the auditing firm which then proceeded to "review" the Company's books. On October 2, with still no word, the six months deadline, date was reached and the Hog Kill and Cut closed. Yesterday, Price, Waterhouse, one of the largest and most respected accounting firms in the meat in- dustry, confirmed what the Company had been maintaining for many months, and that the Du- buque plant had in fact lost $5 9 million in 1980 alone. On Monday, October 13th, Price Waterhouse submitted its report in triplicate to the Union audi- tors On October 14th, three and a half months after our original proposal , we are still waiting and noth- ing has been accomplished except that 500 plus people have lost their jobs. While we are at a loss to understand the months of delay, we do know we can no longer fight an uphill battle alone. We must have an answer by Monday, October 19th. Again, we have been as honest and truthful as we can be, even though there are some parties who have apparently have not chosen to believe any- thing we have said in the past. There will be some reductions in the future, but there are an additional 500 jobs that are in the balance, and could go either way depending upon the answers we do or do not receive from the Union by October 19th. For the benefit of all, we urge you not to let these 500 additional jobs go the way of the last 500. We cannot fight it alone. These are your jobs we are trying to save and we must have your help. You must tell your bargaining representatives, including the International, that you want the right to deter- mine your own future. We would remind you of what Lewie Anderson, your International Vice- DUBUQUE PACKING CO President, said in an interview with "Meat Industry Insights" in June of this year: The position we are now taking is that we hate to see plants shut down and Union members lose their jobs, but if that is going to help us in the long run so be it. On the evening of 14 October, Price Waterhouse de- livered its completed report of that date to GTC, accom- panied by a cover letter and summary of findings. The Union received GTC's report, titled Analysis of Profit and/or Losses at the Dubuque Division of the Dubuque Packing Company, together with the Price Waterhouse report.7 2 The Union received the GTC and Price Waterhouse reports on the morning of 15 October when they were hand delivered by GTC's Gangloff, who arrived in Du- buque with Union Attorney Robert H. Nichols. Nichols and Gangloff explained the reports to the Union's negoti- ating committee After this, Gangloff remained to review the reports with Maas and John Mancuso, an assistant to Anderson. On the afternoon of 15 October, Mancuso, Maas, and the Local Union's bargaining committee met at a negoti- ating session with Naylor, Strausse, and another compa- ny official. The parties reviewed the accountants' reports and the union representatives asked questions concerning the allocations of DISC commissions, advertising costs, and costs for the company plane. The Union also com- pared the Price Waterhouse and GTC reports. During the meeting, Strausse became upset, telling the Union that the bottom line was that the Company was losing money, as reflected in both reports. The entire afternoon was spent in reviewing the various monetary allocations. During the 15 October meeting, Naylor and Strausse reminded the Union's committee that 19 October 1981 was the deadline. The losses at the Dubuque plant were so severe that by that date the Respondent had to have an answer to its 25 September contract proposal.73 72 The Price Waterhouse report, dated 14 October, was titled, Du- buque Packing Company, Dubuque Division Special Review of Certain Cost Allocation Methods In this report, which contained a series of topi- cal analyses of the Respondent's cost allocation methods as used in its 1980 financial statements, GTC's positions concerning each company cost item and its own accompanying commentary, Price Waterhouse generally accepted the Company's practices, finding them to be "a reasonable and practical application of the Company's experience with its costs ap- plied consistently over a number of years in accord with proper cost accounting theory " Certain exceptions to the Respondent's allocations found by Price Waterhouse were discussed Price Waterhouse noted that if the revisions proposed by GTC were effectuated, the $7,447,000 in losses reported by the Respondent for the Dubuque division for the fiscal year that ended 1 November 1980 would have been reduced to $5,035,000 In contrast, were the revisions deemed appropriate by Price Waterhouse put in place, the Company's recorded losses for that fiscal year would have been reduced only to $5,912,900 Earlier on 12 October, Price Waterhouse had delivered a copy of its report to GTC without its cover letter and "Summary of Findings" sec- tion as they were being prepared The report, in the form delivered 14 October, included these items 73 By letter, dated 15 October, Maas replying to Naylor's 12 October correspondence , noted that a deadline once again had been imposed for the Union either to agree to the Company's "most recent contract roll- back proposals or to suffer further unspecified consequences " Maas, among other things, accused the Company of again accelerating the ne- gotiating process at the point where company representatives had com- 527 Essentially the same individuals met for the next nego- tiating session on 16 October when the Respondent's 25 September proposal for additional concessions was dis- cussed. The Union told the Company that its proposed $8 hourly pay rate was too low, noting that the pay rate then in effect was more than $10. The parties agreed on an hourly $9 rate. As to contract term, which the Company on 25 Sep- tember had proposed extending to 1 March 1984, the Union argued that such an extension was too long and counterproposed an extension for 1 year. Accordingly, it was agreed to extend the contract expiration date by 1 year from 1 September 1982 to 1 September 1983. On 16 October the parties also agreed to reduce the maximum number of weeks of paid vacation from 6 to 4 with a provision that employees would be paid 36 hours for each week of vacation instead of the previous 44. The Company agreed that an employee who had an enti- tlement of only 2 weeks' vacation would continue to re- ceive the 2 weeks without diminution. Employees enti- tled to 4 weeks could sell 2 weeks back to the Company, but would have to take the remaining 2 weeks on vaca- tion. The remaining item of the Respondent's 25 September proposal related to health and welfare benefits where management had proposed that employees pay 40 per- cent of the coverage premium for dependents and that the provisions of the health and welfare plan be returned to those in effect for the 1976-1979 labor agreement. On 16 October it was agreed that the provisions of the health and welfare plan would remain unchanged but that the employees' obligation to pay 40 percent of the cost of coverage for dependents would not exceed a pre- mium of $12 per week. As negotiated, the employees' contributions for that purpose would be $9.50 per week the first year and be increased to $12 thereafter.7 4 All other terms and conditions of the then-existing col- lective-bargaining agreement were to remain in full force and effect. The above terms were reduced to writing that day by Naylor, to become effective, as agreed, on 18 October. Answering Maas' question during the 16 October ses- sion about what the Company would do if its 25 Septem- ber proposal was not accepted by 19 October, Naylor and Strausse declared that the Respondent would buy its raw materials on the open market and that the Dubuque plant eventually would end up with only 450 jobs. After Mancuso unsuccessfully tried to persuade Strausse to extend the 19 October deadline, he and Strausse went to a room to see if they could reach agreement. However, when they emerged, the 19 October deadline still re- mained in effect. Mancuso did not attend the parties' negotiating session on Saturday, 17 October, when the union negotiating pleted formulating their position, but the Union had not had an opportu- nity to do the same However, faced with the Company's "most recent ultimatum," the Union had been able to receive the two reports that morning only by instructing GTC to waive preparation of a full answer- ing statement, as was its right under the parties ' agreement, and to submit its present report and the Price Waterhouse response, together with such rebuttal as GTC could prepare within a few hours 74 The Respondent was self-insured 528 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD committee, trying again, submitted the following de- mands of that date: (1) The rate shall be $10.02 an hour. (2) The Cut and Kill Department and all allied departments shall be recalled. (3) Everything else in the present contract shall remain as i8.76 The company representatives declared their above 16 October offer, reached by negotiation, to be final, repre- senting a change from what the Respondent had pro- posed on 25 September. The Union's membership voted to accept the Compa- ny's 16 October proposal at a meeting held for that pur- pose on Sunday, 18 October, against the recommenda- tion of its leadership, including Mancuso, who urged re- jection. As a result, representatives of the Respondent and the Union executed a memorandum of agreement on 19 Oc- tober, extending the term of the collective-bargaining agreement to 1 September 1983. This agreement, with little modification, embodied the 16 October proposal. F. The Context of GTC's Report Although the Respondent' criticized GTC's report, when delivered, as superficial, the Company actually had arranged that GTC conduct only a special examination, rather than an audit, of its financial records.76 Conspi- cious limitations were imposed regarding what was pro- vided to GTC and regarding what GTC could disclose to its client, the Union. Although Ulve testified that no time period restraints had been placed on GTC,77 which firm had had access 75 Mancuso was not consulted before the Union's 17 October counter- proposal was submitted 78 As explained by Ulve of McGladrey Hendrickson, accounting firm's services include audits , reviews, compilations, and special examinations They differ as follows An audit is a extensive examination of a client's financial records leading to an opinion as to the accuracy of a client's financial state- ment and auditing techniques Audits provide for third party verifi- cation of account balances , inspection of assets and more The end result of an audit is an accountant's report stating that, in the ac-; countant's opinion, the subject company's financial statement fairly presented its financial position and the results of its operations A review involves a lesser degree of investigation and normally consists of interrogation of company officials concerning accounting balances and includes some statistical analyses and analytical review A review could culminate in a report to the effect that the account- ant noted nothing that would lead him to believe that the financial statements were not fairly presented A compilation entails the use of virtually no investigative tech- niques The client's raw financial data is merely assembled into a fi- nancial statement format Here, the accountant disclaims responsibil- ity for the accuracy of numbers used in the compilation A special examination, which category includes what was per- formed here by GTC, is where an accountant is employed to con- duct specific procedures set by the client rather than by the account- ant Such procedures may be extensive or very limited Following such an examination , no opinion would be rendered as to the overall financial statement, but such a report would contain a recitation of the procedures used and the findings resulting from those proce- dures 77 Ulve's testimony that GTC could have issued its report based on an examination of a Company's records for 5 years rather than 1 year if it had chosen, fails to take into account the pressures concurrently imposed by the Respondent to obtain early acceptance of its contract proposals, to the Respondent's complete corporate records and McGladrey Hendrickson's files, GTC, in its final report, stated that it nonetheless had been refused the following information. 1. "Management letters," which are reports from the Company's outside auditors describing the-Com- pany's internal accounting controls and related mat- ters 78 2. Information regarding the recently-acquired Rochelle plant, particularly financial projections.79 3. Copies of the most recent examination reports issued by the Internal Revenue Service.80 4. An analysis of repairs and maintenance for'the current year, describing the expense [this is not readily available to the Company].8 i including the use of Company-imposed deadlines accompanied by threats of large-scale losses of operations and jobs By the time the concessions were being discussed against the 19 October deadline, the Union already had realized the loss of hundreds of jobs in the relocated hog kill and cut In the context of the controversies and delays surrounding GTC's per- missible work procedures, records access and what it could report, it would not be realistic to find that GTC had had time to meaningfully review the Respondent 's records for a greater period than the single year covered in its report 78 Purdy , the Respondent's former chief financial officer, testified in contradiction , that although Anderson's original 23 June request for fi- nancial information had not included management letters, the Respond- ent, in fact,-had given GTC accountants the only existing management letter, dated 27 November 1978, prepared by McGladrey Hendrickson and addressed to the Respondent's board of directors I credit Purdy's account as he was better situated than the General Counsel's witnesses to know what documents of this type had been available 79 Ulve testified that information regarding the Rochelle plant had been denied because not relevant to historical analysis, but he did con- cede awareness that the material had been requested to enable the Union to bargain intelligently concerning Company-suggested contract modifi- cations Although Ulve originally testified that information had not been given to GTC concerning the acquisition cost for the Rochelle plant and expenditures to make that plant operational because such information. had not been requested in Anderson's 23 June letter, after examining that letter, Ulve acknowledged that such information , in fact , had been re- quested but had not been provided While Anderson's 23 June financial data request predated the purchase of the Rochelle plant , it still was pending before the Respondent well after that plant was acquired and, of course , during GTC's involvement 80 Ulve testified that the IRS examinations were not furnished to GTC because not specifically requested in Anderson's 23 June letter and as the Company was not thrilled to give that information to outsiders On cross- examination , however, Ulve conceded that if his firm had been examining a company's financial situation without prior knowledge of its tax as- pects, an analysis of IRS reports would be relevant to his firm 's inquiry, whether an audit or a special review , and that any IRS reports on file would be validly incorporated among the corporate records, and validly requested Ulve also conceded that the withholding of such records had been inconsistent with the guideline recommendations in his 10 July letter to the Respondent 's board chairman where he had noted that "the nature and extent of other audit procedures will be based on the professional judgment of the auditor " In sum, explaining why the IRS reports had not been furnished to GTC, Ulve stated that that data had been withheld because of its sensitivity and because not specifically requested At the same time, however, Ulve conceded that the Respondent had provided GTC with financial reports, source documents, journals and ledgers under the general request for corporate records although also not specifi- cally requested in Anderson's letter - 81 Purdy testified that information concerning repairs and maintenance for the then -current year had been furnished in the form of a computer- ized list showing the dates, vendors and demands relating to each ex- penditure charged to the repairs and maintenance accounts Requested in- formation was not available beyond what had been in the computer DUBUQUE PACKING CO 529 The Respondent's rationale for inconsistently having provided GTC with certain data that had not been spe- cifically requested in Anderson's letter while refusing to furnish other materials on the ground that it had not been specifically referred to there was that the Respond- ent had considered certain documents confidential and did not feel obliged to make them available if not so asked for and agreed to in advance Management deci- sions about what should be furnished to GTC were made collectively by Stoltz, Purdy, and the Respondent's comptroller, Michael McCoy, in consultation with Naylor Ulve denied that the Respondent's later threat to sue GTC had been made because of disagreement with the $6 million in exceptions taken by GTC which would turn a profit for the Dubuque division. The lawsuit had been threatened because the Respondent did not believe that the methods used by GTC in developing its conclu- sions had been justified. In addition, Ulve related that the Respondent had had numerous objections to other con- clusions in GTC's report and that the conclusion con- cerning the $6 million differential was only the most glaring Ulve explained that the Respondent considered each plant to be a profit center and that separate books and records, were maintained for each plant to enable inde- pendent determination as to every facility's profitability. Nonetheless, although the Respondent knew of the finan- cial picture of each of its plants, McGladrey Hendrick- son's work for the Respondent had been directed toward formulating an opinion on the Company's consolidated financial situation rather than that of particular facilities. The Dubuque plant, however, as the headquarters facili- ty was not considered, separately, but as part of the above-defined Dubuque division. GTC's final report, as delivered to the Union on 16 October, differed from its handwritten preliminary draft delivered to Ulve in that the final report did not empha- size the unquantified exceptions as had been done in the preliminary draft. Accordingly, applying the $2,412,000 in quantified exceptions, the Respondent's reported losses in GTC's final report would have been reduced to about $5 million as opposed to the preliminary draft which combined both quantified and unquantified exceptions to reflect not a fiscal year loss but a profit somewhat in excess of $1 million. G Operations at the Rochelle Plant, Reasons for Acquisition, and Closing of Other Plants The Company's hog kill, cut, and pork processing plant in Rochelle, Illinois, situated about 110 miles from the Dubuque facility, began operations at the end of August 1981, as noted, and continued until 15 October 1982, when that plant and the Dubuque facility both were closed and sold. As announced in various media releases and other pro- nouncements before the opening at Rochelle, the Re- spondent used the Rochelle facility to substantially re- place the Dubuque facility. As production in Rochelle increased, there was a corresponding reduction at Du- buque until the hog kill and cut processing departments and related operations there were completely phased out. Larry J. Tangeman, general plant superintendent at Du- buque, became superintendent of the Rochelle facility and about 13 members of Dubuque management also were transferred to Rochelle, as was certain production equipment. The purposes of the Rochelle plant, to slaughter hogs, dress carcasses, and to process pork into hams, bacon, and sausage, were the same as at the Du- buque plant 82 The Union did not seek to negotiate the transfer of Dubuque employees to Rochelle and no Du- buque employees were hired there. The Respondent, in turn, maintains that other factors besides high labor costs at Dubuque motivated the open- ing of the Rochelle plant. The Respondent, which had needed an unobtainable $5 million in borrowed funds to upgrade the Dubuque plant had in the Rochelle plant a newer, modern, better designed facility, available on fa- vorable terms Also, the Company argued that it had done all it could to remain in Dubuque, even transferring work there from other closed plants, and noted that it had not issued the contractually required 6 months' notice of closing of the Dubuque hog kill and cut until the end of March when its banks cut off financing.83 Even then, it had advanced its wage freeze/profit-shar- ing proposal as a way of trying to keep those operations at Dubuque. The Company asserts that the 1 July deadline for re- ceipt of the Union's answer to its 8 June wage freeze/profit-sharing proposal had been necessary to enable the owner of a plant the Respondent intended to lease at the time to prepare in advance for the Respond- ent's occupancy on 3 October, at expiration of the 30 March 6 months' notice The 1 July deadline continued to be viable even after the lease options were dropped because of the continued financial difficulties and the close-following commitment to purchase the Rochelle plant. Had the Union agreed to its June proposals, the work relocation might not have occurred, the Respond- ent argues , because the Company then could have re- turned to its bankers and requested another opportunity at Dubuque In support of the contention by the General Counsel and the Union that the Rochelle plant was a transfer-re- placement for the Dubuque hog slaughter and processing operations opened to retaliate for the Union's failure to accede to the Respondent's June proposal for midterm contract concessions, these parties introduced transcripts of Naylor's testimony both before the U.S. District Court for the Northern District of Illinois in Zipp v. Du- buque Packing Co., an injunction proceeding heard 11 and 18 December 1981, and in an unfair labor practice proceeding before Administrative Law Judge Mary Ellen Benard in Dubuque Packing Co.,84 on 21 January 81 In accordance with the definition derived from the above 8 Septem- ber 1980 award of Arbitrator Merton Bernstein, I find that the transfer of the Dubuque hog kill and cut operations to Rochelle did not constitute subcontracting of such work Arbitrator Bernstein had held that subcon- tracting meant the purchase by one enterprise of the goods or services produced by another enterprise and not the transfer of work from one company unit to another unit of the same Company 83 The Respondent's relationships with its banks will be described below 84 See JD-250-82, dated 18 June 1982 No exceptions having been filed, Judge Benard's decision, relating to events at the Rochelle plant, was affirmed by the Board on 20 July 1982 530 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1982 Naylor's testimony in these matters showed that the Respondent's decision to acquire the Rochelle plant for hog slaughtering and meat processing was made im- mediately after the Union's failure in late June to accept the Respondent's proposed wage freeze and profit shar- ing modifications. The Respondent reached agreement with Swift & Company for the purchase of the Rochelle facility on 10 July and opened it on 31 August. Accord- ing to Naylor, the agreement for 'the purchase of the Ro- chelle plant was made "once it was clear that [the Union] would not modify the contract," and he agreed that, "The reason . . for the acquisition for the Ro- chelle, was directly related to the closing of the kill and cut in Dubuque." In this regard, the General Counsel also adduced the testimony of Jim Fisher, a reporter for a DeKalb, Illinois newspaper who related that he had called Naylor on 11 July to obtain details of the Respondent's purchase of the Rochelle plant. According to Fisher's uncontradicted tes- timony, Naylor confirmed that the plant had been bought by the Respondent, that hog slaughter was scheduled to begin at Rochelle on 31 August, and that processing operations were scheduled to begin shortly thereafter. Naylor told Fisher that when the plant was in full operation, which Naylor expected to occur in early January 1982, the plant would employ about 700 produc- tion employees and about 100 additional supervisory or administrative personnel Naylor stressed that the hog processing operation at the Rochelle plant was going to be a replacement for the like operations then at the Du- buque, Iowa plant and that the reason for this transfer was that labor costs were too high. Naylor told Fisher that the lowest paid production employee at the Du- buque plant was earning $10 44 an hour. A number of the production employees at the Dubuque and some of the union personnel were under the impression that the Rochelle plant was going to be in addition to the hog processing operation at the Dubuque plant, but Naylor emphasized that that was not the case. It is simply going to be a transfer and once the Rochelle plant was going, it would take over about 75 percent of the hog process- ing operations that were then at the Dubuque plant, and about 1400 Dubuque employees would lose their jobs as a result. The Rochelle plant would have the hog slaugh- ter capacity of about 5400 pounds a day. Fisher's news story based on this interview appeared in his newspaper. James D. Purdy, who had been the Respondent's treasurer and chief financial officer in 1981, testified con- cerning the Respondent's decision to acquire the Ro- chelle plant. Purdy related that when, in January of that year, the Respondent's lead bank gave notice to the Company that it wished to end their financing arrange- ment, the Respondent acted to demonstrate willingness to control its affairs and curb its losses, closing its plants in Wichita, Kansas, and South San Francisco, California, on 1 February. Later that same year, the Respondent's Blue Ribbon plant in Dubuque and its Vinton, Iowa plant both were closed. The record, in fact, shows that in other years, the Re- spondent had closed a number of additional plants before shutting down its main Dubuque facility. These other shutdowns had not affected employment opportunities at the Dubuque plant. When the South San Francisco plant, which had done meat processing similar to that done in Dubuque-the production of hams, sausage, and bacon- was closed, some bacon and ham operations were trans- ferred to the Dubuque plant Although the South San Francisco plant had been in operation, the Respondent had followed a practice of moving work back and forth between it and the Dubuque plant, producing the above- described products alternately at each of those plants de- pending on where the products were being delivered and what raw materials cost. The Blue Ribbon plant, referred to in Arbitrator Bern- stein's award, had been opened in Dubuque around 1966, when certain operations such as the bacon line had been transferred there. The Blue Ribbon plant produced grill- ready lines, where bacon was layered on sheets of paper to be turned over onto a restaurant grill. Also, the ham dicing operation used in restaurants to make large batches of ham, macaroni and cheese was produced by Blue Ribbon on a machine transferred in 1970 from the Dubuque plant. When the Blue Ribbon plant closed in the latter half of 1981, the ham dicing machine was re- turned to the Dubuque facility. When the Respondent's Chicago, Illinois plant closed in 1979, work performed there was transferred to the Re- spondent's Milwaukee, Wisconsin plant. Work done at the Respondent's Vinton, Iowa plant was transferred to the Dubuque plant when that plant closed in December 1981. The Respondent also operates what principally was an unprofitable beef fabrication plant at Denison, Iowa, that is considered a part of the "Dubuque Division." In the period from 1978 to 1980, the Respondent added proc- essing operations such as ham boning, frankfurter pro- ducing equipment, and bacon lines. Employees at the Re- spondent's Chicago, Vinton, and Denison plants were represented by different sister UFCW locals, and not by Local 150A Naylor testified that the South San Francisco plant had been closed primarily because of labor costs. The Chicago plant had been closed because of a combination of labor costs and the plant's poor location. The Vinton plant had been closed for a variety of reasons, but that labor costs had not been a particularly significant factor. Basically, the volume of processed meats produced at Vinton had been declining and sales requirements could have been met by producing those goods at the Dubuque plant. By closing the Vinton operation, the Respondent was able to significantly reduce its overhead and put some production volume back into the Dubuque plant to help meet the overhead at that large facility. From 1975 to 1982, the Respondent had had a total 13 plants where it was engaged in slaughter and/or process- ing of beef and pork. The South San Francisco, Milwau- kee, and Denison plants were in engaged only in meat processing and no slaughtering was done on those prem- ises. By the time the present hearing ended, the 11 plants operated by the Respondent at the start of the hearing had been reduced in number to 5. According to Purdy, with limited capital resources and inability to secure $5 million in financing to upgrade DUBUQUE PACKING CO the Dubuque facility, the Respondent retained several options to maintain its level of pork sales. First, the Re- spondent could close the slaughter operation and buy fresh pork on the open market for processing at its exist- ing plant Second, the Respondent could find and rent another slaughter facility Third, it could buy another fa- cility, and, fourth, the Respondent could attempt to build a facility to replace the hog slaughter plant that had been shut down The purchase of slaughtered hogs on the open market was a viable option to the Respondent even in the face of its financial difficulties because, under industry prac- tices, the Respondent would not be obliged to pay at once for livestock , as was required in acquiring live ani- mals for slaughter, but would be able to buy such raw materials for processing at its existing facilities on a schedule of delayed payments. The leasing of a plant with slaughtering capabilities had more favorable cost implications in that it would not be necessary to raise capital to purchase or to build a plant. Rental costs would require only a limited financial commitment, and major capital then only would be needed to pay for cattle or hogs The purchase of a plant was considered by the Re- spondent to be preferable to building a new plant in that, ordinarily, plants are available for sale at discount The Respondent would be able to take immediate occupancy of a purchased facility without the 1-1/2- to 2-year con- struction period delay during which there would not be production, but only aggregating financing costs. Purdy explained that the last option, plant construc- tion, was not practical because there was no available capital. As the banks would not lend the Respondent the $5 million to make necessary improvements to the Du- buque plant, they certainly would not loan as much as the $70 million that might be necessary to build the new plant. Also, as noted, while the plant was being built, it would generate no income. Weighing these alternatives, the Respondent decided to buy the Rochelle plant. In the view of Purdy and Strausse, the Rochelle plant clearly was more efficient than that in Dubuque. The Rochelle plant was about 20 years old, essentially a one-story construction, the second story generally used for storage and coolers. These wit- nesses testified that the Rochelle plant had been designed as a showcase with the very latest hog slaughter technol- ogy. Therefore, the Rochelle plant did not require the kind of modernization investment needed by other more obsolete plants that had been inspected by the Respond- ent. By contrast, the Dubuque plant was 50 years old, con- sisted of five stories, including the cellars. Many addi- tions had been built to that structure through the years.85 85 Strausse testified that unlike the Dubuque plant, there was a more modern, effective procedure than , the rosin dip at the Rochelle facility for the dehairing of carcasses This antiquated procedure at Dubuque used a large tank filled with rosin kept at high temperature Hogs were dipped into the hot rosin which then solidified Then, when the rosin was pulled off, the fine hairs also were removed Fourteen employees were em- ployed at the Respondent's Dubuque rosin dip 531 Purdy also disagreed with Anderson's above-described characterization in his 21 April letter to Maas, of the Ro- chelle plant then owned by Swift as a multistory, poorly designed facility, located in an area where the hog supply was not ideal Purdy testified that Anderson had been wrong. Only cosmetic changes had been needed to the Rochelle power supply, refrigeration, and for some of the meat processing facilities, but that it had been pos- sible to operate the basic slaughter and cutting facility without change. On the other hand, continuing at Du- buque would have involved changing certain basic proc- essing operations. Also, however accurate Anderson's observations concerning the hog supply near the Ro- chelle plant may have been when his letter was written, that problem had ended as the Respondent and Swift no longer were competing against each other in that area for hogs. The above testimony extolling the desirability of the Rochelle plant over the Dubuque facility in terms of mo- dernness, efficiency and investment costs is countered by the fact that in the late 1970s, the Respondent had spent approximately $27 million in improving the Dubuque plant, 86 and approximately $45,000 more was expended on the chain system in the early spring of 1981 to accel- erate hog slaughter capabilities there Strausse conceded that the Respondent's then-Board Chairman Wahlert had been correctly quoted as stating in October 1982, when the Respondent closed the Dubuque facility, that the plant was not antiquated but, was virtually state of the art Wahlert's favorable view of the Dubuque plant was supported by events that occurred after the Respondent finally closed it in October 1982 A new company, FDL Foods,87 acquired the Dubuque plant where, within 6 months of takeover, it opened hog kill and cut oper- ations. When the hearing in this matter ended, FDL was operating a hog kill and cut in the Dubuque plant in the same area of that facility where the Respondent previ- ously had conducted such operations and was continuing to use the above-described rosin method of dehairing.88 When the Dubuque plant was reopened by FDL, no changes were made to the hog kill and cut main chain equipment. FDL did not change the manning at the gam- brel station although, at the time of the hearing, it was operating with the chain speed of 845 head per hour that the Respondent had sought in March 1981 There have been slight increases in total manning on the floor. FDL planned to spend in excess of $2 million to further re- model the hog kill operation, and had obtained Federal funding for this purpose. When FDL opened the Dubuque plant after it was closed by the Respondent, an hourly rate of $6 was paid. 86 Arbitrator Richard Pegnetter's above 6 June 1980 award referred to a company expenditure of approximately $20 million in 1979 to renovate the Dubuque facility 87 FDL is an acronym for "fleur-de-lys," the Respondent's logo 88 A number of FDL's executives had been senior officials with the Respondent, including Board Chairman Robert H Wahlert, Strausse, and Naylor, who became FDL general counsel and corporation secretary FDL was not made a party to this proceeding pursuant to an agreement reached by the parties 532 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD After a period, individual employees were raised to $7 an hour but had practically no fringe benefits. In her Board-enforced decision, supra, involving the Respondent's activities at Rochelle, Judge Benard found that the Respondent, after "stringing along" Local 1218, UFCW, the employees' bargaining representative when that plant had been operated by Swift, violated Section 8(a)(2) and (1) of the Act by recognizing rival Teamsters Local Union 710 at a time when the Respondent did not employ a representative complement of employees there and when the Union did not represent an uncoerced ma- jority of the Respondent's employees; by entering into a collective-bargaining agreement with the Teamsters Local in such circumstances; by granting the Teamsters Local access to the plant to meet with and distribute its literature to employees during working time and by as- sisting that Union in obtaining authorization cards from employees. Judge Benard found that the Respondent had inde- pendently violated Section 8(a)(1) by threatening em- ployees with reprisals because they had been subpoenaed to testify in an injunction proceeding brought under Sec- tion 10(j) of the Act.89 The General Counsel in arguing that the Respondent here violated Section 8(a)(3) of the Act, cites Judge Benard's findings as evidence of the Re- spondent's animus against the UFCW International, its Local Unions, including Local 150A, and employees sup- portive of UFCW. As noted, the Respondent closed and sold its Rochelle, Illinois plant on 15 October 1982 and, having previously issued the contractually required 6 months' notice, also closed and sold its Dubuque, Iowa, plant on that same date. H. The Respondent's Financial Difficulties; Banking Relationships The Respondent contends that the relocation of the Dubuque hog kill and cut was merely a good-faith re- sponse to genuine financial necessity of which its labor costs were but a part. In this regard, the Respondent pre- sented detailed evidence of the difficulties experienced with its banks at the time, and thereafter, as proof of its financial situation and also to show that the hard bar- gaining positions it had taken in seeking economic con- cessions from the Union from 1978-1981 with respect to reducing and ending incentive pay, increasing productiv- ity, the wage freeze, and other matters had been neces- sary reactions to pressures imposed by the Company's lending institutions. Purdy explained that industry practices mandated that slaughtering firms regularly obtain financing for their op- erations. Although the Respondent purchased animals for cash and was required under the Packers and Stockyards Act to pay for such animals within 24 hours of delivery, there was a regularly observed delay in payments re- ceived by the Respondent for its product The Company sold fresh meat on credit (trade) terms, receiving pay- 89 Judge Benard also found that Teamsters Local 710, in accepting the Respondent's assistance , by thus securing recognition and its collective- bargaining agreement , by maintaining and enforcing such agreement, and by other conduct, had violated Sec 8(b)(1)(A) of the Act ment on an average of approximately 20 days. The Com- pany was paid for boxed beef9O in approximately 25 days. The Respondent was paid for processed meats i from 25 to 40 days after it had paid for the live animal. The Company also required financing for its payroll and capital improvements. Historically, for the preceding 50 years, the Respond- ent's long-term operating capital requirements92 were fi- nanced by Mercantile Bank of St. Louis The Company's short-term seasonal needs were met by small loans ob- tained from local banks. The Respondent's last profitable year was 1976. In 1977, the Mercantile Bank stopped being the Respond- ent's sole major lender when the Respondent's needs for operating capital and its general credit requirements ex- ceeded that bank's legal lending limits. Accordingly, in 1977, two new basic arrangements were entered into: (1) the Mercantile Bank provided the Respondent with a $10 million loan maturing over a 10-year term at an interest rate of 8-1/4 percent; and (2) concurrently, a group of banks led by the Mercantile Bank joined together to extend a revolving $15 million line of credit to the Re- spondent. This revolving loan represented preapproved credit up to the stated maximum level, usable at the Re- spondent's option, to the extent desired. This contrasted with the long-term $10 million loan which the Respond- ent received immediately from the Mercantile Bank Both the short- and long-term loans were unsecured. After entering into the above credit arrangements of 1977, the banks took greater interest in the Respondent's affairs and began to require increasing amounts of infor- mation about' the Company's operations. As part of this larger oversight, the banks sought more frequent reports concerning the Respondent's various departments and operations, including the Dubuque plant. In 1979, the revolving credit agreement was increased to a $45 million line. For this higher credit line, the banks, for the first time, required that the Respondent pledge its inventory and accounts receivable as security. The bank's lien on the Company's inventory and ac- counts receivable was taken as the Respondent had in- curred frequent losses and as it appeared to have a dete- riorating ability to make repayment. The banks, as noted, also began to require the Re- spondent to provide more information on a continuing basis. This began with a demand for quarterly reports, then monthly reports. As the banks reviewed the Re- spondent's operations, plant by plant and department by department, they became concerned. These concerns fo- cussed on the quality of the accounts receivable, and the banks demanded that the Company become more strict in writing off accounts. The lenders' anxieties over loan collectibility was reflected in the interest rate on the re- volving credit which had been increased in 1979 to a 90 Boxed beef is cut into primal cuts and packaged in boxes, as op- posed to fresh beef sold in carcass form 9i About 80 percent of the Respondent's pork products were proc- essed 92 Operating capital is the funding required to pay for the acquisition of raw materials, processing, and the finished goods inventory When the Respondent's operating capital from retained accumulated earnings was exhausted, sources of credit were required DUBUQUE PACKING CO 533 rate 2 percent above the prime rate, the rate that major banks charge their most preferred customers Normally, a large, long-established customer such as the Respond- ent could expect to pay the prime rate. At the time, the Respondent's plants at Denison and Dubuque were suffering fairly consistent losses, with the heaviest at Dubuque At the time the memorandum of agreement ending the incentive system was signed on 26 August 1980, the banks involved in the Secured Revolv- ing Credit Agreement of 31 July 1979, through the lead Mercantile Bank, had threatened to cut off financing In a letter, dated 4 December 1980, from the Mercan- tile Bank as agent for the banks participating in to the revolving credit agreement, the Respondent was advised of the following result of the banks' deliberation at a 20 November meeting in Chicago 1. The Banks are unwilling to issue a letter of credit to guarantee your repayment of the perma- nent financing secured by the Beef plant acquired from Illini Beef Packers, Inc.93 2. The Banks are unwilling to extend additional credit at this time.94 3. The Banks will agree to permit the Dubuque beef kill operation to remain open until February 12, 1981,95 upon your acceptance of the following conditions . . The Mercantile Bank's letter concluded by imposing a series of stringent demands for financial data which also anticipated the Respondent's retention of an independent management consultant. On 15 January 1981, the Respondent's board chairman Wahlert, President Stoltz, and treasurer Purdy, met at the Mercantile Bank in St. Louis with bank officials. At that meeting, these officials, as spokepersons for the lead Mercantile Bank, stated their desire to terminate the re- volving credit agreement and also announced that they were calling the 10-year $10 million credit because of de- fault.96 The events of the 15 January meeting were con- firmed in a letter to the Respondent from the Mercantile Bank. On 17 March, replying to an earlier letter by the Re- spondent's president emeritus Robert C. Wahlert, pro- testing the Mercantile Bank's withdrawal of support, a senior official of that bank expressed regret at the sever- ing of a 50-year relationship, but suggested that the Company seek lenders to replace the Mercantile, reiterat- ing that that bank's management had "lost its confidence 93 The Respondent had purchased the beef plant from Illmt Beef Pack- ers on 17 October 1980 As noted, this plant was closed a year later 94 The banks' refusal to extend additional credit meant rejection of a $5 million proposed loan sought to modernize the Dubuque plant This rejection and the Respondent's later inability to obtain such financing elsewhere presented a major problem to the Respondent in continuing at Dubuque 95 As shown above, the Respondent had served the contractually re- quired 6 months' notice of intent to close the Dubuque beef kill operation on 10 June 1980 Although the banks, in the 4 December letter, granted the Dubuque beef kill a reprieve, that operation, as noted, did not end until the Dubuque plant was shut down and sold in October 1982 96 As the prime rate in March 1981 had risen to 20 percent, whatever the equities , it is reasonable to assume that the bank was eager to get out from under a long-term loan that carried an 8-1/4-percent interest charge in the ability of the Dubuque management to effectively manage its affairs in the most competitive meat packing industry." The bank noted that the term loan had been called because of default, but that the default had been waived until 31 March 1981.97 Earlier, after notification at the 15 January meeting that the Mercantile Bank was calling the $10 million loan and that the revolving credit agreement would be cut off, the Respondent took a number of cost-cutting meas- ures to save money and to demonstrate that management was responsive to its financial problems. The Company promptly closed its plants in Wichita, Kansas, and in South San Francisco, California, on 1 February, submit- ted a list of cost-cutting projects to the bank group by correspondence, dated 16 February; and, at the same time, actively tried to find replacement credit sources. The Respondent's 16 February letter to the bank group sought to address the bankers' primary concern, the continuing losses at Dubuque It listed a series of ac- tions already taken to stem such losses and indicated other cost control measures instigated but not fully in place as of that date. Among the 12 items listed as al- ready having occurred was the agreement eliminating the incentive systems, which allowed retuning and re- scheduling of production work-loads with resultant first year savings estimated at a minimum of $5 million. Also included in this category were elimination of cost-of- living increases for nonbargaimng unit personnel, elimi- nation of the overtime premimum for exempt supervisory personnel, reductions in the office and sales force, tight- ened maintenance controls, and the retention of a cost reduction specialist. Among cost control measures started but not yet com- pleted was a projection that the new pork kill chain speed of 845 head per hour, up from 750 per hour, would be in place on 15 March; promised negotiations with Dubuque labor unions concerning total elimination of the pension plan at the Dubuque plant and the freez- ing or elimination of cost-of-living allowances for hourly rated personnel 98 Nonetheless, as stated, on 31 March, the banks termi- nated the revolving credit agreement and the Mercantile Bank called the long-term loan.99 The parties stipulated that after the termination of the credit arrangement with the bank group headed by the Mercantile Bank, the Company sought financing from another group of lenders headed by Manufacturers Han- over Commercial Corporation This was undertaken prior to and during the extension period required under the revolving credit agreement terminated by Mercantile Bank. Broadly, under the terms of its 8 April proposal, Manufacturers Hanover offered to arrange a credit line 97 When the bank called the long-term note on 15 January, it gave the Respondent until 31 March 1981 to repay The Respondent met this obli- gation, which, chronologically, coincided with the Respondent's issuance of the 6 months' notice of closing of the Dubuque hog kill and cut 98 The rest of the letter was directed to measures that would be taken with respect to other company facilities not directly affecting Dubuque 99 Even before its 16 February letter to the bank group concerning cost cutting, the Respondent had sent its 8 December 1980 and 29 Janu- ary 1981 letters to the Union also detailing other cost-cutting measures at the Dubuque plant 534 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD of $50 million for the Respondent and its operating sub- sidiaries subject to the posting by the Respondent of very substantial collateral, Manufacturers Hanover's abil- ity to sell major participation in the loan to other finan- cial institutions, and continuing satisfaction by Manufac- turers Hanover and other loan participants with every- thing else, including the Respondent's financial condi- tion. A new financing arrangement was entered into with the Manufacturers Hanover group in June 1981. Howev- er, on 7 January 1982, a participant lender, The First Na- tional Bank of St. Louis, subsequently renamed the Cen- terre Bank, gave its written notice of withdrawal.'°° By letter of 26 February 1982, another lending group par- ticipating in the Manufacturers Hanover credit, the Banks of Iowa, also gave the Respondent notice of intent to withdraw unless the Respondent's financial figures for the first 6 months of its 1982 fiscal year should warrant a different judgment.'01 Centerre Bank withdrew as a result of the classification of the loan to the Respondent as substandard by the U.S. Comptroller of the Curren- cy102 Following Centerre Bank's notice of withdrawal from the Manufacturers Hanover group, the Respondent un- successfully attempted to replace it with two other St. Louis banks The Commerce Bank of St. Louis and the St. Louis County Bank politely declined to finance the Respondent by letters of 23 February and 16 March 1982, respectively, and Manufacturers Hanover terminat- ed its financing agreement by letter to the Company, dated 27 April 1982.103 ' 100 By 1982 when The First National Bank of St Louis withdrew from the Respondent's financing arrangement, the events alleged in the complaint here already had occurred . 101 Unlike correspondence from certain other banks wherein unfavor able decisions concerning extension of credit to the Respondent was po- litely couched in nonspecific terms, the Banks of Iowa noted that the Re- spondent's credit had been listed as "substandard both by the Comptrol- ler of the Currency for national banks examined, and the F D I C for state banks," and that the Banks of Iowa had been unable to successfully change that classification Noting the losses sustained by the Respondent in the past year and the unencouraging trends in recent years, the Banks of Iowa credit committee recognized the weakness of the Respondent's credit 102 Pursuant to my protective order issued in accordance with the stipulation of the parties, see R Exh 26, certain reports by the Comptrol- ler of the Currency received in evidence in a closed envelope as R Exhs 42(a) and (b) are classified for confidential treatment and, at the conclu- sion of this proceeding, should be returned under seal to the custody of the Comptroller of the Currency 103 Earlier, on 23 January 1981, the Respondent, through the director of community development for the city of Dubuque, submitted a request to the Economic Development Adminstration, Denver, Colorado Re- gional Office, for a "grant/loan package" to finance the $5 million in capital improvements to modernize the Company's Dubuque hog kill de- partment This application, which was long and detailed, set forth the Respondent's financial and credit difficulties, pointing out, among other things, that its then-current credit arrangements would not accommodate plant improvement at Dubuque Although the nine other plants then op- erated by the Company were considered profitable, the Dubuque plant's losses were sufficient to make the Respondent's overall operations only marginally profitable in the most recent fiscal year, causing the Respond- ent's lenders to challenge any extension of its credit limit The 45 million in additional credit sought was necessary to restore the Dubuque plant to profitability This application, which essentially corroborated the Re- spondent's account of its financial circumstances by contemporaneous communication to third parties disinterested in this proceeding, was later rejected by the Economic Development Administration I. Discussion and Conclusions 1. Decisional bargaining about work relocation a Legal principles When this case was brought, as noted, the General Counsel and Union relied mainly on Los Angeles Marine Hardware Co.,104 and, on Milwaukee Spring, here Mil- waukee Spring 1105 and Otis Elevator Co., here Otis Eleva- tor L106 In those matters, the Board found that the re- spective Respondents had violated Section 8(a)(1) and (5) of the Act by deciding during the terms of collective- bargaining agreements, without the consent of the unions representing their employees, to transfer operations from existing unionized plants to unorganized facilities and, consequently, to lay off employees. These actions were influenced by higher contract labor costs. In Milwaukee Spring I, the Respondent also was found to have violated Section 8(a)(3) of the Act. Among the issues here is whether, in the applicable circumstances, the Respondent's decision to relocate was a mandatory subject of bargaining. In First National Maintenance Corp. v. NLRB,107 the U.S. Supreme Court held that an employer's decision "to shut down a part of its business purely for economic reasons" was not a man- datory subject of bargaining even though labor costs might have been an important factor in its decision. The Court noted, however, that Section 8(a)(3) of the Act prohibited "partial closings" motivated by antiunion animus, when done to gain an unfair advantage. Textile Workers v. Darlington Co., 380 U.S. 263 (1965). The Court observed that: Under Sec. 8(a)(3) the Board may inquire into the motivations behind a partial closing. An employer may not simply shut down part of its business and mask its desire to weaken and circumvent the union by labeling its decision "purely economic." After the present hearing closed, but before briefs were received, the Board, on reconsideration, issued its decision in Milwaukee Spring 11,108 of which the parties took note in their posthearing arguments. After briefs were filed here, the Board on reconsideration of Otis Ele- vator I, supra, rendered its decision in Otis Elevator H. 109 Milwaukee Spring II and Otis Elevator II overruled the principles of the earlier respective decisions in those mat- ters. 104 235 NLRB 720, 735 (1978), enfd 602 F 2d 1302 (9th Cir 1979) In Los Angeles Marine Hardware, it was held that, after bargaining to im- passe, the Respondent, regardless of economic necessity or concern for preserving bargaining unit jobs, was not free to relocate work from one facility to another during the contract term without union consent ioe 265 NLRB 206 (1982) In Milwaukee Spring I, supra, the parties stipulated that there had been no union animus 106 255 NLRB 235 (1981) 107 452 U S 666, 682 (1981) 108 268 NLRB 601 (1984) 109 269 NLRB 891 (1984) DUBUQUE PACKING CO 535 Administrative Law Judge Irwin Kaplan in his deci- sion in Inland Steel Container Co. t i o provided the fol- lowing analysis, adopted here: The Board in Milwaukee Spring II, found it un- necessary to address the question of whether the work relocation therein constituted a mandatory subject of bargaining because, inter alia, the parties stipulated that the Respondent had satisfied its obli- gation to bargain with the Union over its decision. . . . Instead, the Board provided a more limited meaning to Section 8(d)10 than had been afforded in Milwaukee (Spring) I, in terms of employer con- straints relative to changes in employment condi- tions during the life of the contract. Now, under the Board's more limited reading of Section 8(d), where the contract contains no express prohibition regarding the changes in employment conditions which the employer seeks to make, "the employer's obligation remains the general one of bargaining in good faith to impasse over the subject before instituting the proposed change." In other words, in such circumstances, if the employer satis- fies that obligation, he is free to implement (his) de- cision unrestrained by Section 8(d) or Union veto power.'' . . . Given the stipulation that the em- ployer bargained to a good faith impasse, and that the contract did not require the assembly operations to remain, the Board concluded, inter alia, in revers- ing Milwaukee Spring I, that the employer's decision to relocate did not modify the collective bargaining agreement in violation of Section 8(d) or otherwise violate Section 8(a)(5) of the Act 12 The Board found Otis Elevator II as the vehicle to treat squarely the subject of whether economical- ly-motivated decisions to relocate and other similar types of management decisions constitute mandato- ry subjects of bargaining within the reach of Sec- tion 8(d). While there, the Board noted that the Su- preme Court in First National Maintenance had ex- cluded from its ruling management decisions such as plant relocations, nevertheless, it decided to take a lead from the Court's overall discussion of man- agement's business opportunities and exigencies, "(to) hold that excluded from Section 8(d) of the Act are decisions which affect the scope, direction, or nature of the business." [Footnote omitted.] The Board then provided a partial list of such economi- cally motivated decisions to be excluded from the reach of Section 8(d) as follows. [D]ecisions to sell a business or a part thereof, to dispose of its assets, to restructure or to con- solidate operations, to subcontract, to invest in labor-saving machinery, to change the methods of finance or of sales, advertising, product design, and all other decisions akin to the foregoing. 110 JD-7-85, issued 14 January 1985, sl op 10-12 Judge Kaplan's Inland Steel Container decision is presently pending before the Board on appeal Having also heard Otis Elevator, Judge Kaplan's experience is par- ticularly germane In Otis Elevator, unlike Milwaukee Spring, the Re- spondent conceded that it did not bargain to a good faith impasse over its decision to transfer certain en- gineering functions from its location in Mahwah, New Jersey, and consolidate them with its research and development facilities in East Hartford, Con- necticut. (Otis Elevator I, supra, pp. 244-245). In re- versing Otis Elevator I, the Board found that the es- sence of (its Otis Elevator II) decision "turned upon a fundamental change in the nature and direction of the business (rather than upon labor costs), and thus was not amenable to bargaining." . . . A fortiori, the Board treated the decision as a non-mandatory sub- ject beyond the limited reach of Section 8(d) of the Act (Id.) 10 Section 8(d) of the Act provides , in pertinent part, that "to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment Provid- ed, that there is in effect a collective-bargaining contract covering employees in an industry affecting commerce , the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract " 11 Whether or not the decision itself is deemed to be a manda- tory subject for bargaining, an employer is obligated to bargain over the "effects of the decision on unit employees " First National Maintenance, supra, at 681-682 i2 Member Zimmerman dissented, on the basis that Respond- ent's decision to relocate the assembly operations was "motivated solely" by its desire to obtain relief from contractual labor costs He reasoned , inter ala, that such matters are amenable to resolu- tion by the collective bargaining process and are therefore manda- tory subjects of bargaining, which require union consent under Section 8(d), during the term of the contract (See, Milwaukee Spring II, supra ) For the same reasons, Member Zimmer- man joined the majority in Otis Elevator II, in finding that the Re- spondent's decision to relocate therein was not predicated on avoiding contractual labor costs and, as such, was not a mandatory subject of bargaining (See, Otis Elevator II, supra b. Analysis and findings In the present matter, examination of the parties' 1979- 1982 collective-bargaining agreement for the Dubuque plant, in effect during the relevant period, revealed that it did not contain language to the effect that functir'fps performed by Dubuque plant bargaining unit employees must remain at that facility-the type of work preserva- tion provision discussed by the Board in Milwaukee Spring II, that contractually would require the Respond- ent to remain in Dubuque. Instead, article XXI of the collective-bargaining agreement, entitled Job Elimina- tions, Combinations and Transfers, which contains the most germane language, provides in relevant part: 21.1 The Company has the right to discontinue, combine, transfer, or split a job or jobs as the neces- sities of the business may require. Before taking such action, the Company shall give the Union in writing the changes desired together with the re- sults to be obtained in making the proposed change. The contract also gave the Respondent authority to do any of the above on temporary basis for up to 30 days 536 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD without providing the Union with the specified written notice. No reference is made in article XXI, to the trans- fer of work away from the Dubuque facility, and while employees whose work should be transferred to a differ- ent department or shift might, under the contract, have followed their work, this reference was only in terms of movement to another department or shift within the Du- buque plant and not reassignment to another facility. However, consistent with Milwaukee Springs II, absent contractual work preservation language, if the Respond- ent has met its obligation to bargain in good faith to im- passe over the proposed work relocation and partial clos- ing before instituting the proposed change, it is free to implement the same unrestrained by the Act. As the Board noted in Milwaukee Spring II, "an employer need not"' obtain a union's consent on a matter not con- tained in the body of a collective-bargaining agreement even though the subject is a mandatory, subject of bar- gaining. See, e g, Ozark Trailers, 161 NLRB 561 (1966)." After the issuance of Milwaukee Springs II, the General Counsel and the Union amended their theory to the extent that they no longer contend that the Respondent's relocation of unit work midterm in the contract was a unilateral contract modification in violation of Sections 8(d) and 8(a)(5) of the Act, nor that threats to relocate bargaining unit work midterm in the contract were, in themselves, violative of Section 8(a)(1) of the Act.112 However, these parties have continued to assert the via- bility of all other conduct alleged in the complaint as un- lawful In support of their contention that the Respondent re- located Dubuque bargaining unit work to Rochelle prin- cipally to avoid the high contractual labor costs at Du- buque, and to avoid bargaining with the Union, the Gen- eral Counsel and the Union argue that the decision to re- locate the hog kill and cut, and related departments as of 1 July was announced as contingent on a reduction of contractual labor costs-viz, the Union's willingness to agree by that date to a wage freeze Had the Union ac- cepted the June wage freeze/profit-sharing proposal, the relocation, as then stated by the Respondent, would not have occurred. Accordingly, the General Counsel and the Union assert that labor costs at Dubuque was not just one of a variety of factors motivating the Respondent to relocate this work to Rochelle, but that the relocation had been dependent on and was actually motivated by the Dubuque labor costs. The General Counsel and the Union further contend that the wage freeze proposed on 8 June' was but the latest in a series of midterm economic concessions that had been sought and attained by the Respondent through a formula where the Respondent's demands for midterm concessions were backed by Company-imposed deadlines and ultimatums. Against threats of operational shutdowns and job loss, the Union had agreed to the, 1978 buy-back increasing incentive work standards by 15 percent, and, later, to the complete discontinuation of the entire incen- 268 NLRB at 603 12 The General Counsel's corresponding motion, at p 40 of her brief, to amend the complaint by withdrawing par 12 and so much of par 13 as refers to pars 6 and 12 is hereby granted tive system. Even so, the Company had continued to seek further midterm contract concessions, repudiating its written promise made, to induce agreement to end in- centives, that no further concessions, would be sought during the contract term if production requirements were met.113 The matters alleged in the complaint, these parties in effect argue, stem from the Company's repudi- ation of that pledge, which repudiation was, in itself, un- lawful. The details of the Respondent's financial difficulties, its problems with its banks, the loss of its credit, line, inabil- ity to obtain financing to modernize the Dubuque plant, and more, all have been set forth at length above. Summarizing, these facts show that 1976' was the Re- spondent's last profitable year In 1977, the Respondent entered into a new credit arrangement for a $15 million short-term revolving credit loan from a banking consorti- um led by its longstanding financier, the Mercantile Bank of St. Louis which, by itself, also then provided a 10- year $10 million loan for long-term capital needs. When the revolving credit increased to $45 million in 1979, the banks, for the first time, required that the Respondent pledge its accounts receivable and inventory as 'collater- al, and began to oversee the Respondent's operations with constantly increasing detail to protect this security. The banks' concern over this loan was reflected in an in- terest rate to the Respondent, of 2 percent above the prime rate. From December 1980, the Respondent's relationships with its banks plummeted and on 31 March 1981, the Re- spondent lost its revolving credit line, was compelled to repay in full the $10 million loan from the Mercantile Bank, and to seek replacement financing Correspondence from the banks in' December 1980 gave the Respondent a reprieve in closing the Dubuque beef kill, and the 30 March 6 months' notice to the Union of "the closing of the Dubuque hog kill and cut co- incided exactly with the loss of the Respondent's credit line and its early repayment of the $10 million loan. This evidence effectively counters arguments by the General Counsel and the Union that the 10 June 1980 notice to close the beef kill had been merely a response to Arbitra- tor Pegnetter's award of a few days before that had been unfavorable to the Respondent. Rather, it signifies that the Respondent's lenders had been pressuring it to close the beef kill and that the continuation of the beef kill while the Dubuque plant remained operative 'was an ex- pression of the Respondent's determination to retain that function in Dubuque. In this regard, it is noted that the Respondent continued to bargain with the Union con- cerning the beef kill, later reached agreement with the Union on beef kill production standards after incentives ended in the hog kill and Cut, 114 and eventually was able 111 It has been found above that production requirements were met to the extent that that contingency would not provide the Respondent with a valid basis for seeking fur her concessions during the contract term 114 Except as asserted t ckground intended to indicate a pattern -of conduct by the Respondent in seeking to close operations when it did not get its way, the beef kill is not an issue in this proceeding In finding that the Respondent showed good faith in retaining the Dubuque beef kill in spite of pressure from its lenders, it is noted that this operation was con- Continued DUBUQUE PACKING CO to continue the beef kill operation for the duration of the Dubuque plant The coincidence of the loss of the Respondent's re- volving credit line and repayment of the $10 million long-term loan with the 30 March 6 months' notice of the closing of the Dubuque hog kill and cut also is signif- icant in defusing arguments that this, too, was dust a vol- untary reaction triggered by the Union's March refusal to agree to or to cooperate in increasing the chain speed as proposed by the Respondent. In the meantime, the Respondent had been trying unsuccessfully since January 1981 to raise an additional $5 million in credit from the Economic Development Administration in order to mod- ernize the Dubuque hog facilities. Representations made in its application for this loan at the time to that third party tend to corroborate the Respondent's Dubuque losses and financial picture as represented to the Union. After its relationship with the Mercantile Bank and that group of lenders ended, the Respondent continued to seek replacement credit and, on 16 June 1981, the Re- spondent on behalf of itself and its operating subsidiaries (other plants), entered into an "Accounts Receivable Fi- nancing Agreement" with a lending group led by Manu- facturers Hanover Commercial Corporation whereby the Respondent obtained a $50 million credit line. This was secured by liens on all accounts receivable inventory, machinery and equipment, certain real property of the Respondent and its operating subsidiaries, provided for repayment on demand and for interest at a premium of 3- 1/2 percent above Manufacturers Hanover Trust Compa- ny's commercial loan rate Up to $5 million of this $50 million credit line was provided by a consortium known as Banks of Iowa. This group, in early 1982, wrote to the Respondent of its reluctance to continue participation after the U.S. Comptroller of the Currency, for national banks examined, and the Federal Deposit Insurance Cor- poration, for state banks, had found the credit to the Re- spondent to be substandard. On 27 April 1982, Manufacturers Hanover Commer- cial Corporation sent written notice to the Respondent that it was electing to terminate its credit arrangement with the Company 60 days hence, as provided in the Ac- counts Receivable Financing Agreement. In February and March 1982, two other banks declined to extend credit to the Respondent.' 15 Although the $50 million credit arrangement with the Manufacturers Hanover group did provide the Respond- ent with a financing source from 16 June 1981 until well into 1982, a most relevant period, this arrangement did not lay all problems to rest. The credit line was costly as it carried a higher interest rate that was combined with an inducement fee to the lender; the Respondent's assets and those of its operating plants were heavily pledged as tinned at Dubuque without job loss even though the Respondent for a year ending in the fall of 1981 also operated another beef kill at Genesee, Illinois 15 As the General Counsel points out in her brief, the financial events occurring in 1982 postdated the activities alleged as unlawful in the com- plaint Nonetheless, these 1982 events were part of a consortium of finan- cial concerns that also preceded, coincided with, and motivated conduct alleged in the complaint Taken as a whole, these ongoing financial diffi- culties must be considered germane to any evaluation of the Respondent's entire financial picture as affecting its relationship with the Union 537 security, and the future and duration of the loan agree- ment was uncertain. Under its terms, that credit could have ended at any time and Manufacturers Hanover, in fact, did end the arrangement early "6 As further illustrative of the Respondent's deteriorat- ing circumstances, when this hearing began, the Re- spondent operated I1 plants. At the hearing's close, this number had been reduced to five. Although much evidence was adduced concerning the delayed issuance of GTC's report about the Respondent's financial situation, when that report was released in its final form on 15 October 1981, the conclusion reached there was not that the Respondent was profitable, but that the loss for the Dubuque division in the fiscal year ending 1 November 1980 approximated $5 million as op- posed to around $7 4 million in losses reported by the Company for that division. As noted, Price Waterhouse reported Respondent's losses for the Dubuque division at $5.9 million for the review year. From the foregoing restatement of the Respondent's fi- nancial situation, it is clear and I find that the Respond- ent's Dubuque operation was in serious economic diffi- culty during the times relevant here, that the Respondent had been losing millions of dollars there, and that it also had found it necessary to close various other facilities. This context provides an essential background against which the Respondent's conduct must be evaluated 117 As noted also in Columbia City Freight Lines,118 Fraser Shipyards,' 19 and UOP Inc.,120 under Otis Eleva- tor II, supra, management decisions, including decisions to relocate work from one facility to another or to sub- contract, that affect the scope, direction, or nature of the enterprise are excluded from the mandatory bargaining obligation of Section 8(d) of the Act. Here, while labor costs clearly were a factor in the Respondent's decision to relocate the hog kill and cut work from Dubuque to Rochelle, and where the Re- spondent repeatedly maintained that its Dubuque em- ployees' wages and benefits were placing it at an eco- nomic disadvantage, 121 the Respondent's decision to re- locate did not turn on labor costs but on the long-term improbability of continuing this work in Dubuque The Respondent, as noted, had been unsuccessful in raising either from the banks or from the Economic Develop- ment Administration the additional $5 million deemed necessary to modernize the Dubuque plant,122 and had 116 The record shows that the Respondent repeatedly advised the Union of difficulties it had been having with its banks "' In 1981, the Respondent closed its following plants (1) South San Francisco, California meat processing plant on 1 February-certain oper- ations transferred to Dubuque, (2) Wichita, Kansas beef slaughtering plant also on t February, (3) Genesee, Illinois beef slaughtering plant on 15 October, and (4) Vinton, Iowa meat processing plant on 5 December operations transferred to Dubuque As noted the Dubuque and Rochelle plants later were closed in October 1982 18 271 NLRB 12 (1984) 119 272 NLRB 496 (1984) 120 272 NLRB 999 (1984) 121 See Fraser Shipyards, supra 122 The Respondent around 1979 had spent approximately $27 million in upgrading the Dubuque facility and had expended around $45,000 in April 1981 on the chain system Although the Respondent's president thereafter had referred to the Dubuque plant as "state of the art" and Continued 538 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD been incurring heavy losses for years. The Respondent's credit line had been lost and its future financing was un- certain. By relocating its hog kill and cut to Rochelle, it could acquire a smaller, newer, more modern plant, better laid out, with the advantage of having all oper- ations located on a single floor. This was in contrast to the five-story building in Dubuque. Also, the smaller slaughter operation projected at Rochelle was more in line with the Respondent's diminished needs. These facts establish that the Respondent's relocation of the hog kill and cut to Rochelle clearly turned on a fundamental change in the scope, nature, and direction of the Re- spondent's business of which labor costs were but a single important factor. Therefore, the Respondent was not obligated under Section 8(d) of the Act to bargain concerning the decision to relocate and its failure to do so was not violative of Section 8(a)(5) of the Act. The Respondent met its bargaining obligation when it notified the Union of its intention to relocate the work to the Ro- chelle facility, when those premises became available, and by offering the Union an opportunity to bargain re- garding the effects of that decision on the Respondent's employees. 2. Waiver This, however, is not to conclude that the disinforma- tion initially provided to the Union by the Respondent concerning its plans to relocate rather than to close the Dubuque kill and cut is without effect. From 30 March, when the Respondent gave notice of its intention to close the hog kill and cut until 10 June, when, after the first vote rejecting its wage freeze/profit-sharing propos- al, the Respondent announced its "alternate plan" of re- locating this work to the leased facilities, the Respondent gave the Union no indication that it planned to do any- thing but completely discontinue the Dubuque hog kill and cut. Meanwhile, the Respondent had quietly ar- ranged for relocation of this work by negotiating the lease options for the Des Moines plant in early May and the DuQuoin plant in early June. The Union's attention was not called to later plans to purchase the Rochelle plant until that, too, had become a fact of life. Against this background, the Respondent argues that the Union waived its bargaining rights concerning the re- location decision because for a prolonged period after re- ceiving the 30 March notice of closing, it had not sought to bargain with the Respondent concerning the Dubuque hog kill and cut. 12 3 In this regard, the Respondent as- FDL Foods, the subsequent purchaser of that facility, thereafter operated essentially the same business there, the record shows that FDL, too, in- tended to spend large sums in plant improvements In any event, these cash investments and the efforts at attempting to obtain additional financ- ing to modernize the Dubuque plant reflect the Respondent 's commit- ment at the time to continue there rather than to move elsewhere, as charged by the General Counsel and the Union 123 Although the Respondent cited much waiver authority, it basically contends, as in Print Quic, 262 NLRB 857, 861 ( 1982), that the obligation to request bargaining about the effects of a management decision is on the Union and that by failing to assert that right for months after the 30 March notice of closing, until 23 June when it requested the extensive financial data, and, more significantly, until 21 July when the parties met, the Union had waived that right Union waiver also was found by the Board for failure to promptly request bargaining in response to Employ- er-announced benefits changes in Kentron of Hawaii, Subsidiary of LTV serts that the Union had not sought to meet, had refused to discuss the Company's informally presented proposals as to how this work might be kept in Dubuque and had rejected mediation by the Dubuque Chamber of Com- merce. The Union's position is that it had been holding the Company to its written promise, given in exchange for the earlier agreement to end the incentive program, that no further concessions would be sought from the Union during the contract term. The above finding that no bargaining obligation de- volved on the Respondent concerning its decision to re- locate the Dubuque hog kill and cut operation to Ro- chelle was based on Otis Elevator II, supra, and like cases, and not on waiver. I conclude that the Respondent having elected for much of the period between its above announcements of 30 March to 10 June, to misinform the Union about its actual plans for the hog kill and cut, cannot be permitted to argue that the Union had waived its right to bargain with respect to those plans. During that period, the Union, relying on company representa- tions, had reason to know only that the Respondent might discontinue the hog kill and cut operation in Octo- ber, which was a decision for partial closing that the Company could make under First National Maintenance. Such a decision carried a finality with respect to the work involved, and it then was up to the Union to decide whether to let this prospect serve as a lever for prying further concessions. However, any effort to gauge now what the Union's reaction would have been in the spring of 1981 had it been informed that the Company actually was planning to relocate rather than altogether discontinue the work, and had made arrangements to that effect, would be based on conjecture. Perhaps the Union, with information that the work in question was going to be carried forward, although elsewhere, might have sought earlier bargaining on the matter as it had on other matters where there had been clearer potential for saving jobs. Perhaps not! In any case, before a respond- ent employer can validly argue that its employees' bar- gaining representative, by inaction, had waived the right to negotiate concerning an employer-announced decision, it must show that the Union had had actual, accurate, and timely notice of just what that decision was. Here, that was not the case. i 24 Moreover, inconsistent with its arguments here, the Respondent at the time neither claimed waiver by the Union, nor did it act as though the Union had abandoned its bargaining rights. Rather, in its 8 June wage freeze/profit-sharing proposal, and thereafter, it contin- ued to seek to bargain with the Union concerning the future of the Dubuque plant and the effects of its deci- sion to partially close that facility. I also do not find waiver under the collective-bargain- ing agreement . As argued by the General Counsel, sec- Aerospace Corp, 214 NLRB 834, 835 (1974) Also see Globe-Union, inc, 222 NLRB 1081, 1082-1083 (1976) 124 I do not find an unlawful refusal to bargain from the disinforma- tion provided by the Respondent concerning its plans as , under the facts of this case, the Respondent would have been free to either discontinue the hog kill and cut or to relocate it without decisional bargaining Therefore, while not condoned , the Respondent 's secretiveness in this regard, as a practical matter, did not serve to reduce its options DUBUQUE PACKING CO tion 5 . 1 of the contract, set forth above, relating to man- agement rights, does not refer to the obligation to bar- gain over interplant work relocation decisions . The Bern- stein arbitration award of September 1980 merely held that removal of work from one Company -owned plant to another did not constitute subcontracting so as to make operative the contractual limitations imposed on subcon- tracting by section 5.1.125 As the work relocation from Dubuque to Rochelle was not subcontracting as defined by Arbitrator Bernstein , his award did not bring the transfer within the ambit of that contractual provision. For the above reasons, I find no waiver of the Union's right to bargain concerning relocation of the hog kill and cut and other operations, either because of its own con- duct or based on the collective -bargaining agreement 126 3 The effect of the Respondent's repudiation of its agreement to seek no further concessions during the contract term, execution of the 19 October 1981 agreement The General Counsel and the Union argue that the Respondent had unlawfully refused to bargain by repudi- ating the above-referred promise set forth in its 21 August 1980 letter to the Union that in exchange for an agreements by the Union and its member employees to eliminate incentives that, if production requirements were maintained , the Respondent would seek no further concessions from the Union for the remaining term of the 1979- 1982 collective-bargaining agreement. On the strength of that promise the Union's membership had been motivated in substantial part , to vote to end incen- tives, which resulted in annual $5 million savings to the Respondent . It has been found above, in agreement with the General Counsel and the Union, that production standards had been maintained sufficiently to fulfill that contingency . The Respondent , nonetheless , twice sought further concessions during the remainder of the contract term, in June and in September . The concessions pro- posed in June related to the proposed wage freeze /profit sharing, while those proposed • in September called for substantial reductions in pay and in benefits It has been found above that the Respondent was com- pelled to relocate the Dubuque hog kill and cut and other operations to Rochelle , and to seek further conces- sions from the Union because of serious financial difficul- ties. It also has been found that , in the circumstances ap- plicable here, the Respondent either could have discon- tinued the hog kill and cut or relocated this work with- out decisional bargaining under Section 8(d) and , accord- ingly, could have ended affected jobs at Dubuque with- out penalty Instead of peremptorily taking these extreme measures in the first instance, the Respondent attempted its Under sec 5 1 , the Respondent's right to subcontract Dubuque plant work was subject to advance discussion with local union officials to whom "complete and detailed " proof of "absolute" economic necessity must be established 126 See Park-Ohio Industries, 257 NLRB 413 , 414 (1981), enfd 702 F 2d 624 (6th Cir 1983 ), where the Board declined to find a contractual waiver by a union of its statutory bargaining rights in the absence of clear and unmistakable evidence of such an intent Also see Metropolitan Edision Co v NLRB, 460 U S 693 , 708 fn 12 thereon ( 1983) A waiver of statutory bargaining rights will not lightly be inferred Universal Secu- rity Instruments, 250 NLRB 661 , 662 (1980) 539 to protect its investment and the jobs at Dubuque by ap- proaching the Union for concessions although this in- volved retreat from its earlier promise. In First National Maintenance127 the Supreme Court noted that: If labor costs are an important factor in . the de- cision to close [or to relocate bargaining unit work], management will have an incentive to confer volun- tarily with the union to seek concessions that may make continuing the business profitable. Similarly, in Milwaukee Spring 11,128 the Board noted that an effect of its decision in that case would be to en- courage truthful bargaining . In the aftermath of that de- cision , it was anticipated that an employer contemplating plant relocation for various reasons, one of which was labor costs, would be encouraged to also refer to that reason in its negotiations with the Union in the interests of reaching an accommodation that might avoid reloca- tion and save jobs. Here, the Respondent, although entitled under the facts of this case, to have closed or relocated the disput- ed operations without decisional bargaining, risked charges of having repudiated its promise by seeking fur- ther concessions from the Union as an alternative to clos- ing or relocation To now seek to penalize the Respond- ent for having attempted to explore with the Union the possibility of taking less extreme measures more protec- tive of jobs and existing operations would be out of keeping with the purposes of the Act which favors the preservation of same through collective bargaining This is exemplified by the above references to First National Maintenance, supra, and Milwaukee Spring II, supra, which promote a policy where employers in financial difficulty are encouraged to voluntarily and freely confer with their employees' bargaining representatives about their economic problems, including labor costs, when ap- plicable I, therefore , conclude that the Respondent , in these circumstances, did not violate Section 8(a)(5) and (1) of the Act in June by repudiating its 1980 promise to not seek further concessions during the relevant contract term. 12 9 For the above reasons, I further find no violation based on repudiation of the Company's promise because the Respondent's 25 September 1981 proposal for re- duced wages and benefits also was a way of keeping re- maining jobs at Dubuque. The situation and purposes were basically the same as that involved in the work re- location to Rochelle . In this context, taking into account the discussion immediately below concerning the finan- cial data furnished by the Company at the Union's re- quest, and noting that the Respondent's proposals were "1 452 U S at 682 128 268 NLRB at 605 129 Nothing in this decision is intended to encourage or facilitate the breach or repudiation of agreements reached by parties through the bar- gaining process Such accords are entitled to the greatest respect and any contravention must be seriously regarded Yet, each situation must be in- dependently evaluated The limited exception observed here is based on special circumstances 540 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD fully negotiated with the Union, were ratified by the membership, and, accordingly, promoted the bargaining process as a way of negotiating the preservation of jobs that otherwise would have been lost, I find that the 19 October agreement for reduced wages and benefits, and its subsequent maintenance and enforcement, were not violative of the Act. 4 The financial data and auditing controversy, threats to sue GTC The General Counsel and the Union contend that the Respondent unlawfully refused to bargain by attempting to withhold financial data requested by the UFCW Inter- national on 23 June until the Union had been compelled to agree to the Company's proposals for further conces- sions. These proposals had been supported by pressures in the form of ultimatum-backed deadlines, and the Union's bargaining position had been limited by the Re- spondent's willingness to provide it with information only for the Dubuque division, rather than the company-' wide data originally sought These parties also argue that the Respondent disrupted the relationship between the Union and its outside audit- ing firm, GTC, by threats to sue GTC if its initial report were released to the Union in a form and content not ap- proved by the Company. In this last situation, the Gener- al Counsel and the Union argue that the Respondent showed conspicuous bad faith by changing the rules of that audit after the report was drafted The Union origi- nally had agreed to the prior submission' of GTC's report to the Respondent to safeguard confidentiality, the only concern theretofore stated by the Company However, the Respondent's objections to the initial report after review, and its threats to sue, were based not on claimed breaches of confidentiality, but on substance, viz, GTC's work methods and certain conclusions. As recently restated in Bohemia, Inc :130 It is well established that an employer must provide a union with requested information "if there is a probability that such data is relevant and will be of use.to the union in fulfilling its statutory duties and responsibilities as the employees' exclusive bargain- ing representative." Associated General Contractors of California, 242 NLRB 891, 893 (1979), enfd 633 F 2d 766 (9th Cir. 1980); NLRB v Acme Industrial Co, 385 U S. 432 (1967) The Board uses a liberal discovery-type standard to determine whether infor- mation is relevant, or potentially relevant, to require its production NLRB v. Truitt Mfg. Co., 351 U.S 149 (1956) Information about terms and conditions of employment of employees actually represented by a union is presumptively relevant and necessary and is required to be produced Ohio Power Co, 216 NLRB 987 (1975), enfd 531 F.2d 1381 (6th Cir. 1976) Information necessary for processing griev- ances under a collective-bargaining agreement, in- cluding that necessary to decide whether to pro- ceed with a grievance or arbitration, must be pro- vided as it falls within the ambit of the parties' duty 130 272 NLRB 1128, 1129 (1984) to bargain . NLRB v. Acme Industrial, supra; Bicker- staff Clay Products, 266 NLRB 983 (1983) However, when a union's request for information concerns data about employees or operations other than those represented by the union, or data on fi- nancial , sales, and other information , there is no presumption that the information is necessary and relevant to the union's representation of employees. Rather, the Union is under the burden to establish the relevance of such information . Ohio Power, supra In Otis Elevator II, supra, and UOP Inc.,13 1 it was held that where' an employer had no obligation to bargain concerning a decision to close a facility, partially or fully, or to relocate bargaining unit work, because such decisions had turned on fundamental change in the nature and direction of the employer's business, such an employer had no obligation to provide the Union with information related to the economic justification for the decision From the above findings, these holdings are ap- plicable here as the Respondent in this matter, for like reasons, was not subject to decisional bargaining con- cerning work relocation. Such a decision was pending when the 23 June request for companywide financial data was received from the UFCW International. As the Respondent, in these circumstances, had 'not been obligated to provide any financial data, it is not subject to penalty for having voluntarily provided finan- cial information more limited is scope than that request- ed, or for having provided such materials on its own terms, in its own time, and subject to such restrictions as it had found necessary to impose. 132 131 272 NLRB 999 lag Arguendo, had the Respondent been obligated to furnish the Union with the requested financial information , it would not have met that burden In this regard, the' Respondent neutralized the Union's stated pur- pose in seeking this information , to enable intelligent bargaining , by pres- suring it to agree to respective proposed concessions in June and October before receiving even what it was prepared to provide, by arbitrarily lim- iting documents to be furnished-ie, withholding Internal Reverie Serv- ice' reports, by improperly limiting the scope of the examination to the Dubuque division although it was necessary to verify whether certain costs incurred by other facilities had been incorrectly charged there, by interposing itself into the confidential relationship between the Union and its accountants , GTC, by prior screening of GTC's report , limiting what GTC could communicate, and by threatening to sue GTC if its report issued without company approval It further is noted that by unilaterally censoring GTC's report and threatening lawsuit against that firm based on disagreement with GTC's conclusions and work methods , rather than on issues of confidentiality , the Respondent exceeded the terms of the confidentiality agreement on which its authority for prior review of GTC's report had been based With respect to the Respondent's objec- tions to GTC 's work methods, it has been found that it was Respondent, not the Union, that had contemplated a less -detailed special examination by the Union's accountants, as opposed to an audit, and the time made available to GTC to conduct its review was much curtailed by company- initiated pressures for agreement , including ultimatum and backed dead- lines The time alloted for GTC to do its work was further reduced by the extraordinary period taken to negotiate the complex terms under which financial information would be provided in the first place, before GTC's examination could even begin However, as the Respondent , in the circumstances applicable here, was not compelled to provide the Union with the requested financial data, its lesser performance in this regard does not put the Company in violation of the Act Also, from the hard line taken by the Respondent concerning Continued DUBUQUE PACKING CO 541 Accordingly, it is found that the Respondent did not violate Section (a)(5) and (1) of the Act by its conduct with respect to furnishing requested financial informa- tion 5. The 8(a)(3) issue Arguing the Respondent's antiunion animus, the Gen- eral Counsel and the Union contend that by relocating the disputed work to Rochelle, the Respondent was able to evade the substantially higher wages and benefits pro- vided in the Dubuque labor contract, and that it was those savings and escape from negotiations with the Union that provided essential motivation for the work relocation. The Respondent, by the work relocation, also was able to retaliate against employees who had rejected its proposed wage freeze concession Animus is further argued from the fact that on 10 June, after the Union's membership initially voted to reject the Respondent's wage freeze proposal, the Respondent, for the first time, announced that 1400 jobs would be lost in Dubuque rather than the approximately 500 jobs previously men- tioned and that the Company no longer would consider itself bound by the 1 July deadline. These parties also point to Judge Benard's decision, supra, where this re- spondent, among other things, was found to have unlaw- fully assisted a rival Teamsters local in becoming bar- gaining representative of its Rochelle employees in order to avoid negotiating with a UFCW local union that pre- viously had represented employees at that facility. It has been found above, however, even in consider- ation of these arguments, that the Respondent did not violate Section 8(a)(5) and (1) of the Act by its reloca- tion decision and other conduct. Consistent with Otis El- evator II, supra; and Milwaukee Springs II, supra, the fact that labor costs were a factor in the Respondent's reloca- tion decision did not vitiate the other overwhelming business and economic considerations indicating that the relocation decision had turned on a necessitated new di- rection in the Company's business. Moreover, the record shows that the Respondent, contrary to the General Counsel and the Union, made appreciable efforts to sus- tain the unionized Dubuque plant. The Company took the initiative in proposing ways around the notice that the hog kill and cut would be closed, even where the Union failed to react to that notice After making the 10 June announcement concerning the prospect of a greater job loss at Dubuque and elimination of the 1 July dead- line when its wage freeze/profit-sharing proposal was first voted down, the Respondent retreated from this po- sition, restored the 1 July deadline and tried again to keep the hog kill and cut at Dubuque by getting the Union's consent to submit the matter to a second mem- bership-employee vote, held on 28 June. It was only after its proposal was twice rejected by negative votes that the Company finalized its decision to relocate. In this connection, it is noted that if the Company's propos- als had been accepted, the existence of the two plant lease options would not necessarily have prevented can- cellation of the relocation plans as such options could have been dropped, as they later were anyway on 3 July The Respondent did not buy the Rochelle plant until 10 July. The Respondent, in fact, did not rush to disengage from the Dubuque plant. Apart from its unsuccessful ef- forts to convince the Union of its economic problems and need for further concessions, it made other contem- poraneous efforts to keep the Dubuque facility viable. Although apparently pressed by its banks to close the beef kill, which it could have done in December 1980 when the 6 months' notice of closing of that department expired, the Company continued that work for the re- mainder of the Dubuque operation. In February and De- cember 1981, respectively, it transferred work to Du- buque from the closing South San Francisco and Vinton plants, and in March of that year, it invested $45,000 to $50,000 to upgrade the Dubuque hog kill chain system 133 This followed the $27 million renovation ex- penditure in 1979 In 1981, it also unsuccessfully tried to raise an additional $5 million from the Economic Devel- opment Administration to modernize the Dubuque plant, made a continuing effort to obtain financing for that op- eration from an increasingly reluctant banking communi- ty, and undertook extensive cost-cutting measures at Du- buque affecting management and nonbargaining unit per- sonnel, as well. As noted the Respondent did not issue the 6-month closing notice for the hog kill and cut until it had lost its credit line and had been obliged to make early repayment of a long-term $10 million loan. Even then, the Respondent worked to keep those operations in Dubuque. While the Respondent showed animus to a sister UFCW local in the operation of its Rochelle plant, as found by Judge Benard in her Board-approved decision, in the context of the above considerations, I find no con- vincing evidence that such animus played a role in the Respondent's decision to relocate the Dubuque kill and cut or in its negotiating positions with respect to the Du- buque plant in June 1981 or thereafter Rather, it appears that the Respondent expended considerable effort and capital to remain in Dubuque. Having found that the Respondent had complied with its statutory bargaining obligation before deciding to re- locate the Dubuque hog kill and cut and did not violate Section 8(a)(5), I find that the consequent layoff of em- ployees was not violative of Section 8(a)(3) and (1) of the Act 6 Miscellaneous issues a. Deferral to arbitration In agreement with the General Counsel and the Union, the issues involved here do not lend themselves to reso- lution by arbitration The present matter, which in large part relates to work relocation to another facility and pressure for concessions as midterm modifications of a providing financial materials, I find no clear and unmistakable evidence of waiver of the Respondent's rights simply because certain information finally was provided 133 Although the Union was opposed to this outlay on the chain system, it tends to show that the Respondent in March, less than 3 months before imposing its l July negotiating deadline, had been quite serious about keeping this work in Dubuque 542 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD collective-bargaining agreement, corresponds to the situ- ation in Milwaukee Spring Ii, where deferral was not dis- cussed. Had an 8(a)(5) violation been found here, it would have stemmed from a rejection of the bargaining process.134 It also does not appear that the questions in issue could be determined under the contractual arbitra- tion procedures as there is no showing that a grievance had been filed concerning the matters involved and as the Respondent had not argued for such deferral,' 3 s' Ac- cordingly, this case appears to be properly before the Board at this time b. Regional Office staff statements as a defense In reaching the conclusions here, no reliance is placed on the Respondent's repeated contention at the hearing and in its brief that a settlement offer and representations made by members of the Board's Regional Office profes- sional staff would have constituted a defense had the Company engaged in bad-faith bargaining with respect to the work relocation As the Board held in Capitol Temptrol Corp.,136 the General Counsel and/or the Board are not estopped from processing complaint alle- gations concerning a Respondent's unlawful conduct be- cause the. Respondent acted on advice received from Board agents. Although the General Counsel argues ad- ditional facts to show that the Respondent did not actu- ally rely on advice received from the Regional Office, but had, acted, independently, 137 so clear is the rule, that these considerations need not be reached In any event, in view of the conclusions here, this asserted defense has been rendered moot. standpoint, the sooner the new plant would be produc- tive and the more economical the transaction. This con- sideration was critical in view of the Respondent's con- tinuing heavy annual losses, and financing difficulties at Dubuque. The Respondent was able to initiate operations at the Rochelle plant on 31 August, more than a month sooner than had been contemplated for Des Moines or DuQuoin. d Bypassing the bargaining representative No merit is found to the Union's contention that the Respondent violated Section 8(a)(5) and (1), of the Act by various written correspondence sent directly to em- ployees urging them to support economic proposals made to the Union , including for wage freeze , pay re- duction, and other concessions , and which further urged employees to communicate such support to the Union. The Union contends that such correspondence was viola- tive as company attempts to bypass the Union and deal directly with the employees. In concluding that this conduct was not unlawful, it is noted that the asserted violation was not alleged in the complaint, was not coercive except that it accurately de- scribed to employees the Respondent 's difficult financial situation and what would occur if the proposals were not accepted,.did not disparage the Union; and amounted to "no more than a legitimate tactic of urging the employ- ees to . . tell their negotiators they wanted them to accept the Company's newest offer ." Coastside Scavenger Co., 273 NLRB 1618, 1629 ( 1985), and cases there cited. c. Negotiating deadlines I find that the Respondent did not act unlawfully by imposing. the negotiating deadlines of 1 July and 19 Oc- tober 138 Although the 1 July deadline originally had been announced by the Respondent in order to give the owner of the Des Moines plant, on which the Respond- ent then held a lease option, advance time to prepare that facility for the Respondent's October occupancy, contrary to the General Counsel and the Union, the Re- spondent's 10 July purchase of the Rochelle plant as an alternative to leasing the Des Moines and DuQuoin plants did not end that deadline's commercial viability. As of the 1 July target date, the Respondent still held lease options for the Des Moines and DuQuoin plants so that the original purpose was then still applicable. No later reason developed for abandoning that deadline when the Respondent dropped these lease options on 3 July as that was done in contemplation of the purchase of the Rochelle facility which was finalized within a few days. With the acquisition of the Rochelle plant the Re- spondent had a more favorable facility to which it could more quickly relocate the hog kill and cut. The faster such a move could be completed, from the Company's 134 See United Technologies Corp, 268 NLRB 557, 560 (1984) IZS See NCR Corp, 271 NLRB 1212, 1213 fn 7 (1984) 136 243 NLRB 575, 589 fn 59 (1979) 13' See G C Br 54 - 138 See Salem College, 261 NLRB 327, 336-337 (1982), Kentron of Hawaii, 214 NLRB at 834-835 e. Alleged delay in the issuance of complaint The Respondent alleged as affirmative defenses in its answer that the General Counsel's delay in issuing com- plaint after the filing of the initial charge here139 was prejudicial and now should bar the complaint under Sec- tion 10(b) of the Act,140 under the equitable doctrine of laches, under the Fifth and Sixth Amendments to the U.S. Constitution, 141 and under Section 10(m) of the Act 142 In support of this, the Respondent raised the speculative argument that if complaint had issued earlier, before relocation of the Dubuque hog kill and cut, that plant might not have closed. The facts essentially are stipulated About 30 July 1981, the instant matter, which then consisted only of Case 33-CA-5524, was submitted by the Regional Office to the General Counsel's Division of Advice pursuant to 139,The original charges in Cases 33 -CA-5524 and 33-CA -5588 were filed by the Union on 26 June and 7 August 1981, respectively The ini- tial consolidated complaint in these matters was dated 28 April 1982 140 Sec 10(b) of the Act creates a 6-month period of limitation for the filing of unfair labor practice charges That provision specifies that "no complaint should issue based upon any unfair labor practice occurring more than six months prior to the filing of that charge with the Board 141 These amendments, which include the Sixth Amendment right to a speedy trial , relate solely to criminal proceedings and are inapplicable to the present civil matter 142 Sec 10(m) provides in relevant part that charges alleging viola- tions of Sec 8(a)(3) of the Act, as here, "shall be given priority over all other cases of like character in the office where it is filed or to which it is referred " DUBUQUE PACKING CO an outstanding directive. That Division remanded the case to the Regional Office on 6 August. On 1 Septem- ber, both Cases 33-CA-5524 and 33-CA-5588 were re- ceived by the Division of Advice on resubmission, pursu- ant to the same directive, for consideration of the merits of both charges and, also, the Union's request for an in- junction under Section 100) of the Act to prevent re- moval of the disputed operations from the Dubuque plant. On 20 November, the Respondent was notified in a telephone call from the Regional Office, confirmed thereafter by a 16 December letter, that no injunction would be sought under the determination made. The confirming letter was sent soon after the Respondent's request for same. The case file record received by the Division of Advice on 1 September was augmented between 29 Sep- tember 1981 and 20 February 1982 by more than seven items of correspondence from the Respondent. An addi- tional seven ,letters were received by the Division of Advice from the Union from 10 September 1981 through 2 February 1982. On 27 January 1982, the Division of Advice notified the Respondent that the Union's request for oral argu- ment had been granted and was scheduled for 9 Febru- ary 1982. The Respondent then, too, was given opportu- nity to make oral presentation The Union and the Com- pany, in fact, did argue orally before the Division of Advice on 9 February and 2 March 1982, respectively, and company representatives participated in a conference call with Advice Division staff on 12 February. On 31 March 1982, the Division of Advice, by memo- randum, instructed the Regional Director to issue com- plaint. This was received at the Regional Office on 5 April and initial consolidated complaint issued on 28 April 1982. It is relevant to note in this regard that, sub- sequently, the conduct of this hearing was continued at the parties' request for a series of intervals totalling a year to enable the pursuit of settlement of the many complex issues then pending between the Company and the Union both here and before other tribunals.143 Al- though settlement was not possible, certain beneficial ac- cords were reached. However worthwhile, these mutual- ly agreed delays also affected expedition of this proceed- ing. In NLRB v. J. H. Rutter-Rex Mfg. Co.,144 the Su- preme Court held that "the Board is not required to place the consequences of its own delay, even if inordi- nate, upon wronged employees to the benefit of wrong- doing employers. NLRB v. Electric Cleaner Co., 315 U.S 685, 698 (1942); Labor Board v. Katz, 369 U.S. 736, 748 fn. 16 (1962)." Section 10(b) of the Act, which "extinguishes liability for unfair labor practices committed more than six months prior to the filing of the charge, does not relate to conduct subsequent to the filing of the charge," 145 14' See G C Exhs 1(z) through l(gg) 144 396 U S 258, 264-265 (1969) 145 NLRB Y Font Milling Co, 360 U S 301, 309 fn 9 (1959), Proctor & Gamble Mfg Co v NLRB, 658 F 2d 968 (4th Cir 1981) 543 Accordingly, as the charges in this matter were timely filed with respect to the alleged events, Section 10(b) does not bar complaint. Also, "the doctrine of laches has no application to cases brought before the Board, an agency of the United States Government engaged in the exercise of public or governmental functions."148 It is clear from the Supreme Court's decision in Rutter-Rex, supra, that the complaint here is not barred by any delay in issuing the complaint in this matter The stipulated facts support the General Counsel's contention that this matter, in fact, was not unduly delayed but merely was carried over to enable the parties to more fully pursue their arguments before the Division of Advice The parties took full advantage of this opportu- nity to supplement their presentations by extensive corre- spondence, by telephone, and by oral argument. In less than a month after the last oral argument, by the Re- spondent, the Division of Advice issued its determination directing issuance of complaint, which document, too, was served in less than a month following receipt of this determination. As the Respondent has sought from-the Office of the General Counsel the fullest deliberation of its factual supplementation, a course also followed by the Union, it seems inappropriate for the Respondent to later argue that the time it had sought for consideration of its case constituted undue delay inconsistent with Section 10(m) of the Act. I make no such finding.147 For the above reasons, in reaching the conclusions here, no reliance is placed on the Respondent's defense asserting delay in the issuance of complaint. CONCLUSIONS OF LAW 1 The Respondent, Dubuque Packing Company is, and at all times material has been, an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2 United Food and Commercial Workers International Union, AFL-CIO, Local 150A, is, and at all times mate- rial has been, a labor organization within the meaning of Section 2(5) of the Act. 3. The Respondent did not engage in conduct violative of Sections 8(a)(1), (3), and (5) and 8(d) of the Act. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed148 ORDER It is ordered that the consolidated complaint here be dismissed in its entirety.149 146 Merrell M Williams, 265 NLRB 506, 508 (1982), and cases there cited 141 Also see Ventura Coastal Corp, 264 NLRB 291, 296-297 (1982) 148 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses 148 Pursuant to the protective order noted in fn 102, above, classified documents received as R Exhs 42(a) and (b) should be returned under seal to the Comptroller of the Currency when litigation of this proceed- ing has ended 544 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD PAGE LEFT' BLANK INTENTIONALLY.