Lamb-Grays Harbor Co.

LAMB-GRAYS HARBOR CO. 355 Lamb-Grays Harbor Company and John W. Wilkin- son, Petitioner, and International Association of Machinists and Aerospace Workers, Lodge No. 1183, Union Lamb-Grays Harbor Company and International As- sociation of Machinists and Aerospace Workers, Lodge No. 1183, Petitioner. Cases 19-RD-2658 and 19-RC-11635 June 15, 1989 DECISION ON REVIEW AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On February 5, 1988, the Regional Director for Region 19 issued a Supplemental Decision on Chal- lenged Ballots and Order Directing Issuance of Re- vised Tally and Issuance of Certification of Results of Election in the above-entitled proceeding, in which he sustained the challenges to ballots cast by 47 economic strikers whose jobs had been eliminat- ed during an economic strike. In so doing, the Re- gional Director found the 47 economic strikers in- eligible to vote under Kable Printing Co.,' because the Employer eliminated their jobs for reasons un- related to the strike. Thereafter, in accordance with Section 102.67 of the National Labor Rela- tions Board Rules and Regulations, the Union filed a timely request for review of the Regional Direc- tor's decision. The Union asserted that the Region- al Director should have permitted the 47 economic strikers to vote, arguing that the Employer elimi- nated the strikers' positions based on considerations at least partially related to the strike, and, there- fore, under Kable Printing Co., as modified in K & W Trucking Co.,2 the striking employees remained eligible to vote. By Order dated September 23, 1988, the Board granted the Union's request for review.3 The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the entire record in this case and finds the following: The Lamb Group is composed of three operating companies: Lamb-Grays Harbor Company, located in Hoquiam, Washington; Meridian Machine Works, located in Meridian, Mississippi; and Lamb- Cargate, Inc., located in New Westminster, British 1 238 NLRB 1092 (1978). E 267 NLRB 68 (1983) 8 The Employer timely filed a "conditional" request for review, which by its terms was to be deemed withdrawn if the Board denied the Union's request for review or otherwise adopted the Regional Director's Order. The Board's September 23, 1988 Order provided that the Employ- er's request for review would be held in abeyance pending the Board's ruling on the issues raised in the Union's request for review Columbia. Lamb-Grays Harbor Company, the Em- ployer in this proceeding, is engaged in the design and manufacture of machinery for the pulp and paper industry, particularly the finishing work done to the paper. Lamb-Grays Harbor is com- posed of four divisions: the pulp and paper finish- ing business; corporate services; new products; and the Hoquiam plant, at which manufacturing, re- search and development (R&D), and maintenance and repair (MRO) work are conducted. Manufac- turing represents approximately 75 to 85 percent of the operations at the Hoquiam facility. For many years, the Employer and the Union have been parties to successive collective-bargain- ing agreements covering the Employer's mainte- nance and production employees at the Hoquiam plant. Prior to the October 1, 1986 expiration date of the most recent contract, the Employer and the Union unsuccessfully attempted to negotiate a new collective-bargaining agreement. When the con- tract expired on October 1, 1986, the employees at the Hoquiam plant commenced an economic strike. Negotiations between the parties continued during the strike, and any manufacturing work required was done at the Employer's other facilities. From January through March 1987, the Employ- er lost three significant contracts to Valmet, a com- pany owned by the government of Finland. Valmet had acquired Warsilla, the Employer's largest com- petitor in 1986.4 Valmet lowered its bids until it underbid all competitors, including the Employer. Three days after losing the third contract to Valmet, Frank Lamb, president of the Lamb Group, met with counsel and discussed the possi- bility of discontinuing manufacture of product line at the Hoquiam facility. According to Lamb, it was then that he realized they would have to discontin- ue manufacturing at Hoquiam. By letter dated April 6, 1987, the Employer noti- fied the Union of its decision to discontinue manu- facturing operations at Hoquiam, and that, hence- forth, manufacturing would be performed at the Employer's other two facilities, which could manu- facture product line more efficiently and less ex- pensively, while R&D, maintenance and repair, and spare parts work would continue to be performed at Hoquiam. Thereafter, the Employer withdrew its most recent bargaining proposal, and substituted a new offer consistent with its plan to reorganize the Hoquiam facility and employ a maximum of 28 qualified employees. The parties bargained to im- 4 In 1983 the Employer lost almost all of its market to European com- petitors, including Warsilla. In 1984, Frank Lamb assumed control of the Lamb Group and, as a result of advancing technology, lowering costs, and improving sales, the Lamb Group was able to regain its market share. 295 NLRB No. 40 356 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD passe and, on May 12, 1987, the Employer imple- mented its final offer .5 On May 19, 1987, the Em- ployer extended an offer of employment to 28 of its striking employees, whom it considered to be the most qualified to work within the revised organiza- tion.6 Four strikers accepted the Employer's offer. Although the Employer then contacted all remain- ing strikers with offers to return to work, only three additional strikers accepted, leaving 21 un- filled positions. On July 7, 1987, the Union was no- tified that 21 named strikers , all of whom were among the original 28 to whom the Employer ex- tended offers, would continue to be employed, though they remained on strike; however, all re- maining striking employees should "consider them- selves terminated." Frank Lamb testified that for years the Lamb Group justified manufacturing at the Hoquiam plant because of emotional and sentimental reasons, e.g., four generations of his family had lived in the city; Lamb knew most of the employees all his life; and his family and most of the plant management lived in Hoquiam. Prior to the strike, the Employer attempted to curtail production at Hoquiam by not building up its work force and allowing attrition to reduce the employee complement in an effort to reduce costs and overhead . Lamb was unable to state whether the possibility of discontinuing manu- facturing had been discussed prior to October 1986, although for 20 years management had considered the Hoquiam plant less than ideal for manufactur- ing. David Lamb, corporate services manager, tes- tified that to his knowledge the only discussion re- garding discontinuing manufacturing occurred after or around the time Frank Lamb met with counsel at his office. Regarding whether business reasons for discon- tinuing manufacturing were present prior to the strike, Frank Lamb testified that the Employer's need to utilize its facilities more fully meant closing down one facility; he selected manufacturing oper- ations at Hoquiam because it was the facility least economically justified . Hoquiam had excess manu- facturing capacity, it was the furthest from the market, and it was the most expensive at which to manufacture. Further, the other plants had been operating at only 75-percent capacity and could absorb the work being done at Hoquiam. Accord- ing to David Lamb, the Hoquiam factory was the most obvious choice for a reorganization because it would not qualify as a supplier for the Canadian market, it was an older, high-cost facility, and it 5 No unfair labor practice charge was filed concerning the Employer's implementation of its final offer. 6 No unfair labor practice charge was filed concerning the Employer's selection of employees for recall. was not laid out as efficiently for the production of the standard product lines. Frank Lamb testified that had the Union accept- ed the March 25, 1987 proposal and signed a col- lective-bargaining agreement, the decision to dis- continue manufacturing would not have been al- tered. However, curtailment of manufacturing work at Hoquiam would not have occurred as rap- idly. According to Frank Lamb, he would have ta- pered off the crew at Hoquiam "as fast as your emotions would allow you," perhaps in 6 months, and, had the parties settled the contract in March, he probably would have brought back a small por- tion of the work force and assigned them manufac- turing work, if it existed, or work transferred from other factories. There was no evidence that the strike had any impact on the Employer's business, including de- creasing orders, or that it even inconvenienced the Employer's customers. Frank Lamb testified that competition, rather than the strike, was the major "force" in his decision-the strike was not the deci- sion-making factor . In response to the question whether there was anything related to the strike that influenced his decision to assign work to the Hoquiam plant, he replied "No," they were not as- signing manufacturing work to the Hoquiam plant nor did they intend to do so . Moreover, Frank Lamb testified that he did not contemplate com- mencing manufacturing at Hoquiam any time in the future even if business conditions improved. Indeed, Frank Lamb stated that historically it had been difficult to recruit machinists , and the chances of getting back the employees he let go were almost nonexistent . David Lamb also testified that he saw no foreseeable prospect of resuming manu- facturing of product line at Hoquiam, nor could he envision any circumstances under which manufac- turing operations might resume. Spanich, the Em- ployer's vice president of manufacturing, supported the Lambs' testimony, stating that he had no reason to believe that Frank Lamb would authorize start- ing up manufacturing operations at Hoquiam. Since the decision to discontinue manufacturing at Hoquiam, the Employer has not sold or leased the welding shop, the main production building, or the foundry building, although one wing of the foundry building had been remodeled as a test center for the Employer's automatic guided vehi- cle. The Employer has, however, made efforts to dispose of or lease the vacant foundry building and has investigated shifting operations from the weld shop, as it is the most marketable facility . Further, Burich, the shop superintendent, testified that "it made economic sense" to retain the equipment be- cause the Employer could utilize all the machinery LAMB-GRAYS HARBOR CO. 357 after the reorganization, explaining that in mainte- nance and repair work "it is a very big drawing card to have the size of machinery that we have in our shop. . . . It is a reason why we can be com- petitive in MRO (maintenance and repair) and R&D areas." Economic strikers may lose their status as em- ployees for voting purposes under Section 9(c)(3) of the Act if: prior to the election the employee obtains permanent employment elsewhere; or the employer eliminates the employee's job for eco- nomic reasons, or discharges, or refuses to reinstate the employee for misconduct rendering him or her unsuitable for reemployment.? Under Kable Print- ing Co., when an employer eliminates the positions of economic strikers for economic reasons, those strikers' voting eligibility is determined by examin- ing the underlying cause for the elimination of their positions to ensure that the economic justifi- cations warranting forfeiture of their employment status are not predicated wholly on considerations flowing from the strike itself.8 The Union, however, argues that the Board's decision in K & W Trucking modified the standard for analyzing the eligibility of economic strikers by stating that the Kable anal- ysis focused on whether the elimination of the jobs of economic strikers was wholly predicated upon considerations unrelated to the strike.9 The Union urges us to apply the standard set forth in K & W Trucking and find in the instant case that the strik- ing employees whose jobs have been eliminated are eligible to vote because the Employer's decision to terminate manufacturing operations at Hoquiam did not arise from considerations completely unrelated to the strike. We decline to do so. Determining the eligibility of economic strikers is governed by the standard set forth in Kable Printing, which does not require an employer to prove that its decision to eliminate the jobs of economic strikers was based on reasons totally unrelated to the strike. K & W Trucking, in which the Board recited a Regional Director's statement of the test set forth in Kable, and pur- ported to follow and apply Kable, simply was an inadvertent misstatement of the rule laid down in that case. Consequently, we correct K & W Truck- ing to the extent that it sets forth a standard that is inconsistent with Kable. By permitting strikers to vote when wholly strike-related reasons result in the elimination of their jobs, the Board is merely carving out a narrow exception to the general rule that employ- 7 Gulf States Paper Corp., 219 NLRB 806 (1975), citing W. Wilton Wood, Inc., 127 NLRB 1675 (1960). 8 Kable Printing Co., 238 NLRB at 1096. 9 267 NLRB at 68 ees who have no reasonable expectation of future employment are ineligible to vote. When, on the one hand, employees' jobs are eliminated for rea- sons wholly relating to a strike, their return re- mains possible depending on whether the union wins the election and the parties negotiate an end to the strike. If so, it is entirely possible, if not likely, that the strike-related reasons will disappear and the employees' services will again be neces- sary. By contrast, where an employer eliminates the strikers' jobs for reasons that are not wholly strike related, and no unfair labor practice charge has been filed, the strikers' chances of recall would appear minimal because the nonstrike-related reason(s) for eliminating the jobs will continue beyond the strike's end. Although as explained above, the Kable Printing test does not place on an employer the burden of showing that its elimination of strikers' jobs was entirely unrelated to the strike, we do place on the employer the limited burden of showing that the jobs were in fact permanently eliminated,10 and that its nonstrike-related reasons for doing so were substantial, and not frivolous. Imposing at least this burden on the employer seems appropriate before disenfranchising employees otherwise eligible to vote. In the instant case, the Employer's decision to discontinue manufacturing operations was primarily based on legitimate business concerns unrelated to the ongoing economic strike, and was not wholly predicated on considerations arising from the strike. The Employer's decision to reorganize its operations and eliminate manufacturing at Hoquiam was triggered by the loss of three significant con- tracts in early 1987, and had been preceded by a decrease in orders and an increase in competition during the previous year." Further, there was no 10 See, e.g., Gulf States Paper Corp., supra, in which the Board found evidence that the employer would have been forced to lay off some of its employees, that it had been operating with 75 instead of its usual 130 unit employees, and that there had been a decrease in the number of orders being placed, all because of economic conditions, was insufficient to show that the jobs of the unreplaced stokers had been permanently re- placed terminating their employment. See also Globe Molded Plastics Co., 200 NLRB 377 (1972), in which, despite the depressed condition in the plastics industry, there was no contention nor evidence that the strikers' work had been abolished permanently, or that they had abandoned inter- est in their jobs Although the employer had shown that certain work had been lost and obtaining new customers was difficult, possibly because of the effectiveness of the strike, the Board concluded that this did not constitute the "elimination of jobs for economic reasons," which justified disenfranchising strikers otherwise eligible to vote. 11 We note that the Union introduced into evidence an October 14, 1986 letter from the Employer to its employees addressing the effects of the strike and urging the employees to accept the Employer's outstanding contract proposal. In this letter, the Employer suggested that the less senior employees might be sacrificing their jobs, informed employees that decisions were being made daily to relocate work to other facilities, and asked. "[H]ow much longer can we leave our contract proposal outstand- Continued 358 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD evidence that either the loss of the contracts or the decrease in orders was related to, or caused by, the employees' strike. To lower costs and increase op- erating efficiency, the Employer eliminated the manufacturing operations at Hoquiam because the other facilities could manufacture the product line more efficiently and less expensively, and the Ho- quiam facility was furthest from the Employer's markets. Moreover, it is clear that the Employer has no intention of resuming manufacturing at Ho- quiam. Except for a maximum of 28 employees necessary for R&D and maintenance and repair op- erations, the Employer does not anticipate hiring more employees, even if business were to increase. The efforts by the Employer to sell or lease its unused facilities, though unsuccessful as yet, fur- ther support the conclusion that the Employer has eliminated the manufacturing operation permanent- ly. There is nothing in the record to suggest that the Employer would not have eliminated manufactur- ing operations at Hoquiam regardless of whether the Union signed a collective-bargaining agreement or declined to engage in a strike. Frank Lamb testi- fied that the absence of a strike might have delayed the implementation or completion of the reorgani- zation for perhaps as much as 6 months, and that some of the striking employees might have re- turned to work for that period. However, Frank mg, the strike costs us money, too. The current path in bargaining leads to nowhere, and it takes you and the Hoquiam manufacturing oper- ations with it." There was, however, no further testimony concerning this letter, and it appears that the Employer 's statements merely constitut- ed a tactic to encourage the employees to accept the contract proposal, rather than evidencing a connection between the reorganization and the strike. The reference to relocating work to other facilities is consistent with evidence establishing that manufacturing was reassigned to the Em- ployer's other facilities during the strike . Prior to early 1987, there was nothing to suggest this relocation was anything but temporary. Lamb's unrebutted testimony establishes that faced with increasing competition, the loss of three sig- nificant contracts, and underutilized facilities , cessa- tion of the strike would not have altered his ulti- mate decision to discontinue manufacturing at Ho- quiam. That the strike may have accelerated the implementation of the reorganization does not es- tablish that the Employer's decision to discontinue manufacturing at Hoquiam was based wholly on considerations arising from the strike.12 Accordingly, we agree with the Regional Direc- tor's conclusion that the 47 strikers whose jobs were eliminated for legitimate economic reasons were ineligible to vote in the election herein, and, therefore, that the challenges to their ballots should be sustained.) s ORDER The Regional Director's Supplemental Decision on Challenged Ballots and Order Directing Issu- ance of Revised Tally and Issuance of Certification of Results is affirmed. The Union's motion to reopen the record is referred to the Regional Di- rector for investigation and ruling in the first in- stance. la In Kable Printing the Board held that the striking employees were eligible to vote. Unlike the instant case, however, there the Board found that the employer had no intention to abolish any part of its operations prior to the onset of the strike, and concluded that the economic consid- erations generated by the effectiveness of the strike and which prompted the employer's action, were insufficient to justify disenfranchising unre- placed economic strikers. In contrast, in K & W Trucking, the Board held that the striking em- ployees whose jobs had been eliminated were not eligible to vote, be- cause the employer implemented its plans to eliminate those jobs prior to the strike. See also Meridian Plastics, 108 NLRB 203 (1954), and E J. Kelley Co., 98 NLRB 486 (1952), cases predating Kable Printing. is In view of the result , the Employer's request for review is, by its terms, withdrawn, accordingly, we have not considered the matters raised by the Employer.