Industrial Fabricating Inc.

National Labor Relations Board - Board Decisions

Oct 29, 1957

119 N.L.R.B. 162 (N.L.R.B. 1957)

162 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to members of Local 48 rather than to employees assigned by Acousti
to perform such work .8
DETERMINATION OF DISPUTE
Upon the basis of the foregoing findings, and the entire record in
the case, the Board makes the following determination of dispute
pursuant to Section 10 (k) of the Act:
1. Local Union No. 48, Sheet Metal Workers' International Asso-
ciation, AFL-CIO, and its agents, including T. E. Reid, are not and
have not been lawfully entitled to force or require Acousti Engineer-
ing of Alabama, Inc., to assign the work of installing metal pan
acoustical ceilings to members of that labor organization rather than
to Acousti's own employees.
2. Within ten (10) days from the date of this Decision and Deter-
mination of Dispute, Local Union No. 48 and T. E. Reid shall notify
the Regional Director for the Tenth Region in writing whether or
not they will refrain from forcing or requiring Acousti Engineering
of Alabama, Inc., by means proscribed by Section 8 (b) (4) (D) to
assign the work in dispute to members of Local Union No. 48, Sheet
Metal Workers' International Association, AFL-CIO, rather than to
employees of Acousti.
8 United Brotherhood of Carpenters and Joiners of America, AFL-CIO, and its Agent,
Cecil Shuey; et at., 116 NLRB 1063, 1067.
Industrial Fabricating Inc.; Industrial & Foundry Sales Inc.;
Eaton Metal Abrasive Co.; Unified Industries Inc.; Pressed
Steel Flasks, Inc.; Plastic Tool Corporation of America; Vac-
uum Electronics Inc.; Paragon Industries Inc.; Frank Mac-
kniesh and International Union Local 909, International Union,
United Automobile, Aircraft and Agricultural Implement
Workers of America, UAW-CIO, affiliated with AFL-CIO.
Case No. 7-CA-1133. October 09, 1957
DECISION AND ORDER
On October 10, 1956, Trial Examiner A. Norman Somers issued his
Intermediate Report in the above-entitled proceeding, finding that
the first-named Respondent, Industrial, had engaged and was en-
gaging in some of the unfair labor practices alleged in the complaint,
within the meaning of Section 8 (a) (1), (3), and (5) of the Act,
and recommending that it cease and desist therefrom and take certain
affirmative action, as set forth in the copy of the Intermediate Report
attached hereto. The Trial Examiner also found that the remaining
8 Respondents had not engaged in any unfair labor practices and
were not liable for the unfair labor practices engaged in by Indus-
119 NLRB No. 19.
INDUSTRIAL FABRICATING INC. 163
trial, and, accordingly dismissed the complaint against them (quali-
fiedly as to 2 of them, Sales and Mackniesh). Thereafter, the
Respondents and the General Counsel filed exceptions to the Inter-
mediate Report and briefs.l
Pursuant to the provisions of Section 3 (b) of the Act, the Board
has delegated its powers in connection with this case to a three-member
panel [Chairman Leedom and Members Bean and Jenkins].
The Board has reviewed the rulings made by the Trial Examiner
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and briefs, and the entire record
in the case, and hereby adopts the findings, conclusions, and recom-
mendations of the Trial Examiner only insofar as they are consistent
with our decision herein.
1. We agree generally with the Trial Examiner that the Act was
violated in this case. But we do not agree in all respects with the
inferences and conclusions he drew from the record. We shall first
summarize the facts.
Prior to 1951 the employees of Industrial, Mackniesh's wholly
owned subsidiary, were unorganized. Early in 1951 they began to
engage in concerted activity leading to their selection of the Union
in a Board election. At about the same time they refused to recognize
the authority of a new foreman, although they continued to work at
their customary tasks. The Union's international representative
promptly induced them to abandon this insubordination. Learning
of these events and the part played by the Union, Mackniesh had
interrupted a* Florida vacation to return to the plant in Michigan
and discharge the employees, saying that no union could tell him how
to run his plant. Upon reconsideration, however, he reinstated the
employees. Later in 1951, after the Board had certified the Union
as the exclusive representative of the employees, and while Mac-
kniesh was negotiating a contract with the Union, he had threatened
to remove the plant if the Union insisted on its demands. And in
1952, in the course of negotiating the succeeding contract, Mackniesh
had again uttered the threat to remove the plant. Because these
events occurred more than 6 months before the charge, which was
filed and served on July 14, 1954, we consider them only as back-
ground, and make no unfair labor practice findings based thereon.
Unlike the Trial Examiner, however, we are satisfied that this back-
ground reveals Mackniesh's opposition to the rights of his employees
guaranteed by the Act.
Upon completing an order from Ford Motor Company early in 1954,
as the Trial Examiner found, Industrial's General Manager Smith
1 The Respondents in their brief requested permission for additional time to file a reply
brief. The request is hereby denied.
164 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
told Pierson, a prounion employee, and Morgan, a foreman, that he
took a bleak view of Industrial's prospects as long as the employees,
adhered to the Union and its shop committee of three "radicals." In
addition, Pierson's testimony shows that before completing the Ford
order Smith told him the plant would close when the order was com-
pleted, not because of lack of work, but because "we can't get along
with the Union"; and Smith also promised various benefits and a.
continued operation of the plant "if the boys wanted to trade and let
their Union go." Morgan's credited testimony was to the same effect.
At about the same time Mackniesh, acting through another of his
corporations, Sales, obtained a second order from Ford with more
favorable specifications (for example, a milder steel, such as the em-
ployees were accustomed to working with, was to be used instead of
the very tough "Flexor" steel used in the original order). Mackniesh
had organized Sales in 1951, upon the advent of the Union, in part to
"provide an escape from the Union when the trouble came," as appears
from the credited testimony of office employee Harp. Industrial was
Mackniesh's only corporation equipped to execute this type of order,
and in addition had by then acquired the necessary setup and "know-
how." But Mackniesh had been exasperated by meetings with the
Union over two grievances by Industrial's employees which he thought
baseless, and had told the Union that he was "sick and tired of such
grievances and that the plant would be closed if they, continued."
He therefore decided not to award-the second Ford order to Industrial,
but determined instead to shut the plant down temporarily because
of the chastening effect it might have on the union activity of the em-
ployees. As consequent layoffs began at Industrial early in April
1954, prior to a complete shutdown later in the month, Manager Smith
again told employee Pierson that operations would continue if the
employees got rid of the Union's shop committee, and that the em-
ployees would get paid holidays, vacations, steady employment, and.
other benefits if they abandoned the Union. Orders already in proc-
ess from two customers other than Ford were then recalled and, with-
out notice to the Union at any time, the plant shut down completely
in mid-April 1954.
Meanwhile, Mackniesh solved the problem of performing the second
Ford order by awarding it to another subsidiary, Respondent Pressed..
Mackniesh had organized Pressed in 1952 to make a different product.
But the Pressed plant adjoined Industrial's, and the two corporations
were closely associated in other respects as well. In order to change
this and provide an escape hatch for getting away from the Union,
as the testimony shows, Mackniesh early in 1953 had organized still
another subsidiary, Respondent Unified. But he did not want his
name to appear in the organization, according to ,the credited testi-
mony of Mitchell, a Pressed official. Instead, Mackniesh got John
INDUSTRIAL FABRICATING INC. 165
Miller, a welder on Industrial's payroll who was promised the posi-
tion of general manager of Pressed, to organize Unified. Mackniesh
then sold Unified his stock in Pressed on an unsecured note, reserving
the right to recapture his stock in the event of default. (Although
Unified has been in default for the past 2 years, Mackniesh has not
reclaimed any of this stock.) Virtually complete control of both Uni-
fied and Pressed at the top level is exercised, as the record shows, not
by Miller, but by Mackniesh, who has also become owner of one-third
.of the stock in Unified. In September 1953 Mackniesh moved Pressed
and Unified together from Industrial's location to Howell, 40 miles
:away, in order to get out of the Union's jurisdiction in the event of
further labor troubles, as appears from the credited testimony of
Mitchell and Harp. Since then, if not before, the identities of these
two corporations have become merged, and we agree with the Trial Ex-
aminer's occasional references to them in hyphenated fashion as a single
,entity.
It was to this Howell subsidiary that Mackniesh awarded the sec-
ond Ford order in April 1954. Although Pressed lacked the person-
nel, machinery, and experience needed to execute the second Ford
order, Mitchell advised Mackniesh that he thought the order could
be filled at Pressed if they had the necessary tools. Mackniesh there-
upon determined to take care of whatever Pressed needed for the job,
and proceeded to transfer the necessary machinery, managerial and
-other personnel, and "know-how" from Industrial to Pressed at vir-
tually no charge.
On April 30 the Union held a grievance meeting with Mackniesh,
-as owner of Industrial, to get an explanation of the removal of the
machinery from Industrial to Pressed and the shutdown. Mackniesh
replied in part, "I hope the men in the shop are satisfied now that
Bunker [Leo Bunker, a leading member of the Union's shop commit-
tee, whom Mackniesh considered responsible for the `exasperating'
grievance meetings] has succeeded in shutting down the factory."
Mackniesh added that the plant would not reopen if he could not
make money with it, and that the problem was the Union.
In May 1954, while its plant was shut down, Industrial recalled
employee Thuma, a leader on the Union's shop committee and, an
all-round craftsman whose job had been hydraulic press* operator.
When Thuma reported for work, however, Manager Smith curtly told
him there was nothing for him, and that he would be called when
needed. On June 1, ' still during the shutdown, Thuma was again
recalled. On this occasion' Smith told this ' skilled craftsman to
sweep the floor and do other menial tasks formerly done by the janitor.
No explanation was offered to Thuma at the time, or indeed to the
Board at the. hearing, for. this apparent demotion. Thuma, then
working elsewhere and unwilling to give up his steady job for the
165 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
part-time janitorial work Smith had offered, replied that the contract
provided for his recall when his old job opened up. Smith thereupon
accused Thuma of refusing to obey orders, discharged him, and subse-
quently refused to entertain grievances by the Union on his discharge.
Later, Smith told Mitchell that he had the Union where he wanted it,
and had finally succeeded in firing Thuma by putting him on sweeping.
Still later, employee Bunker told Smith at a grievance meeting that.
he had known for a long time that management wanted to get rid
of the Union. Smith replied that he felt he could not deal with.
Thuma.
Early in July 1954 Mackniesh decided to try reopening the Indus-
trial plant temporarily and on a part-time basis. Manager Smith
told both Mitchell and Morgan that this was pursuant to a plan to^
"starve out" the old employees. At about the same time Smith told
Pierson that he would be recalled soon, but only for a 3-day week
and a 2-week month until the plant was sold. In late July 1954
Industrial accordingly reopened on this part-time basis, after Pressed
had completed the second Ford order. Pierson, a layout man, was,
offered a demotion to the job of welder at reduced pay and on the
part-time basis of which he had been told by Smith. Being steadily
employeed elsewhere, he rejected the offer. Industrial failed to follow
the seniority clause in its union contract with respect to three em-
ployees (Marvin Bunker, Glen Olney, and Clement Dack) passed
over for their juniors. Upon reopening, the customary incentive
bonus was reduced to a negligible amount, without notice to the
Union and without explanation.
At a grievance meeting with the Union in August 1954 Manager
Smith of Industrial stated that he was not recognizing any more
grievances, and that he would decide whether a matter was or was
not a grievance. In December 1954 Smith threatened employee Leo
Bunker with reduction in pay or layoff unless he withdrew a
grievance previously filed.
On May 9, 1955, the employees, far from having abandoned the
Union in response to Mackniesh's antiunion conduct, engaged in a
protest strike against Industrial's long-standing refusal to negotiate
about the incentive bonus, its failure to recall the three senior em-
ployees, its discharge of Thuma, and other disputed matters.
Mackniesh thereupon decided to organize still another corporation, in
order to permanently replace Industrial with a nonunion operation.
Although he was careful to keep his name out of all the formal papers
and to avoid any public identification with the resultant corporation,
Respondent Paragon, the evidence shows and the Trial Examiner
found that it was Mackniesh who initiated and controlled Paragon
as a replacement for Industrial. Thus, Mackniesh told a friend,
Cross, who had never before been in business for himself and at 77 was
INDUSTRIAL FABRICATING INC. 167
in partial retirement, that he was going to sell Industrial, that an-
other friend (Vanek) was interested in "investing" in a company to,
buy out Industrial, and that still another friend (Wilcox or his
associate Magnotta) was an attorney who was also willing to enter
the transaction. Cross indicated an interest, but wanted Mackniesh
to join the new company. Mackniesh declined this request, saying
that he did not want anything to do with the company. However,,
Mackniesh agreed to help the business both operationally and finan-
cially. Cross was willing to risk only a few hundred dollars himself,.
and accordingly put up $300 in cash and a note for $400 more. The
record contains some evidence, amounting only to hearsay, that Vanek,,
the only other stockholder, made some actual investment in the new
corporation. In any event, it is clear that the new corporation
acquired its principal operating capital by means of a $10,000 loan
niade by Cross to Mackniesh, personally, a loan which Mackniesh,,
acting through Sales, put in a special fund for Paragon's use.
Virtually the entire risk was thus Mackniesh's. On June 27, 1955,.
Cross, Vanek, Magnotta, and Wilcox accordingly launched the
Respondent Paragon to conduct the same type of business as Industrial
had been engaged in : the manufacture of foundry flasks. The incor-
poration papers had been prepared by Magnotta at Mackniesh's
direction.
Meanwhile, Mackniesh had located an available building in Milan,
100 miles distant from Eaton Rapids, and took Cross to see it in May
1955, whereupon Cross leased it for Paragon. Mackniesh also ar-
ranged for General Foreman Every, who had no managerial experi
ence, to quit industrial and assume the position of general manager
of Paragon. Paragon accepted Mackniesh's offer of Industrial's ma-
chinery at Industrial's book value minus depreciation, to be paid for
out of future profits. Paragon did not know, or inquire, what the
selling price was when it closed the deal.
Since its inception, Paragon has depended almost entirely on -Mac-
kniesh and Smith for its managerial "brains" and its orders. It has
set aside part of its plant in Milan for the headquarters of Sales,
Mackniesh's selling subsidiary. At the time of the hearing 8 months
later, Paragon had paid Industrial a total of $250 and still owed
Industrial about $17,000 for the machinery. There is no evidence that
Mackniesh has pressed Paragon for further payments, or for a reduc-
tion of costs so as to increase the profits available for making such
payments.
These events required ' a period of about 4 months for their full
fruition. Meanwhile, having got them under way, Mackniesh had
settled the Industrial strike on June 20, 1955, by what appeared to
be almost complete capitulation to.the Union's demands (except that
Thuma was not offered his old job,.but merely a job as a new em-
168 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ployee). Included in the settlement were lump sum payments to the
reinstated strikers for the incentive bonuses which, but for Industrial's
unilateral action, they would normally have earned since the reopen-
ing in July 1954. But events were to prove that the strike settlement
did not signal peace.
On July 25, 1955, with the current contract about to expire and with
the Union unaware of Mackniesh's plan to substitute Paragon for
Industrial and to close Industrial down permanently, the Union sent
Industrial a request for collective-bargaining negotiations on a new
contract. Accordingly, Industrial held a meeting with the Union on
August 10. Even at this meeting Industrial did not disclose the plan
for it to go out of business in favor of Paragon, but instead indicated
merely that the Union's demands were too steep for it to accept and
still stay in business. Smith, Industrial's representative at the meet-
ing, believing that the Union might recede from its demands, arranged
for a further meeting on August 25. When Smith reported to Mac-
kniesh about the meeting, however, Mackniesh decided that the time
had arrived for permanently closing Industrial because of the Union's
demands. But apparently Paragon was not yet quite .ready to take
over, so Industrial, instead of belatedly advising the Union of its plan,
merely arranged for a. postponement of the scheduled August 25
meeting to September 16. Gradually reducing its complement of
employees from a high of 10 early in August to a total of 2 by Sep-
tember 16, and with Paragon at last ready to begin operation, Indus-
trial held the scheduled meeting with the Union on September 16
only to advise the Union for the first time that it was closing down
permanently and at once. Industrial has not engaged in any manu-
facturing operations since then.
2. We agree with the Trial Examiner, for the reasons set forth'in
his Intermediate Report and additionally for the reasons found below,
that Industrial violated Section 8 (a) (5) and (1) by its unilateral
action in April 1954 in shutting the plant down without notice to the
Union, which the Board had certified as the employees' statutory
representative. But, unlike the Trial Examiner we further find that
the entire record shows the underlying discriminatory motivation for
Mackniesh's use of the various corporations which he organized and
controlled-to effectuate this shutdown.
. The Trial Examiner based his refusal to find an 8 (a ) (3) violation
largely on the holding of the Sixth Circuit in the Adkins Transfer
case,2 and also on the holding of the Fourth Circuit in the Mount
Hope case.3 In the Adkins case, however, the court pointedly observed
on page 328 that the company "had no feeling against the labor
union," that its "relations with ; the union were friendly and co-
N. L. R. B . v. Adkins Transfer Company , Inc., 226 F. 2d 324.
e Mount Hope Finishing Company v. N; L. R . B., 211 F. 2d 365.
INDUSTRIAL FABRICATING INC. 169
operative," and that the indubitable reason for the company's shut-
down was economic. And in the Mount Hope case, the court was
careful to point out at page 374 that the company had committed no
unfair labor practices and that the economic reasons for the shut-
down in fact antedated the union's organization. Here Mackniesh
had- furnished Industrial's employees with a clear background, of
union hostility by showing them in 1951 and 1952 that union activity
would occasion reprisal against them. By the spring of 1954 he had
begun to organize the new corporations, Respondents here, to utilize
in order to accomplish this discriminatory purpose. And Manager
Smith made this discriminatory purpose clear to the employees by
statements that unless they got rid of the Union the plant would
close, not because of lack of work, but because management could not
get along with the Union. Using Sales and Pressed-Unified, which
Mackniesh had set up to cloak his discriminatory designs, he then
transferred the second Ford order out of town to the latter organiza-
tion, despite its complete lack of experience and competence on such
work. But for his antiunion animus, we are satisfied that Mackniesh
would have performed the order on both occasions at Industrial, his
only properly equipped subsidiary, and instead of trying to -run away
from the Union would have applied his considerable skills to the
problem of legitimately making a profit on an operation that had
shown a loss on the first run, before the necessary experience was
acquired. Indeed, Mackniesh in effect admitted his discriminatory
motivation at a meeting with the Union on April 30, when he attrib-
uted the shutdown to the Union's actions.
We cannot accept the Respondents' argument that the picture should
be viewed from so close up that only separate, unrelated brush daubs
are revealed. We are convinced that the entire record considered as
a whole shows that responsibility for the unfair labor practices rests
not only on Industrial, which the Trial Examiner found was alone
responsible for violating Section 8 (a) (5) and (1) in this instance,
but also on Mackniesh and those corporations he used to aid and abet
his unlawful designs.' We are also unable to accept the Respondents'
further argument that an independent entity, Sales, obtained the
second Ford order and for economic reasons, apart from the presence
of the Union, decided to award it to Pressed-Unified, which was not
equipped to perform it, rather than to Industrial, which was so
• Dickey, formerly d/b/a Ohio Hoist and Mfg. Co . v. N. L. R. B., 217 F. 2d 652, 653
(C. A. 6) ; N. L. R. B. v. Fred P. Weissman Co., 170 F. 2d 952, 954 (C. A. 6) ; N. L. R. B. v.
Arthur J. Cotten and Abe J. Colman d/b/a Kiddie Kover Manufacturing Company, 105
F. 2d 179, 183 (C. A. 6). See also Lewis, Jack and Joe Levitan, d/b/a California Foot-
wear Company & Trina Shoe Company, 114 NLRB 765, enfd. in this respect 246 F. 2d 886
(C. A. 9) ; Diaper Jean Manufacturing Company , 109 NLRB 1045, 1049, enfd. sub nom.
N. L. R. B. v. T. A. Tredway and S. E. Taylor d/b/a Taylor Manufacturing Co., 222 F. 2d
719 (C. A. 5).
170 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
equipped and would normally have performed it in the absence of
discriminatory considerations.
The basic purpose and design of Congress in the Act was to protect
employees in their right to organize collectively in an attempt to better
their working conditions. Although the employees' decision to or-
ganize may result in economic expense to their employer, Congress
cannot have intended to permit the employer for that reason to take
anticipatory action to nip such organization.,. in the bud. To hold
otherwise would be to strip all meaning from the Act and nullify
the congressional objective of protecting the right of employees to
organize for collective bargaining. On the other hand, it is recog-
nized that the opposite extreme must likewise be avoided, and that
a law-abiding employer must be permitted to protect his legitimate
economic interests against a strike by his employees. For example,
he may hire new employees on a permanent basis to replace the strik-
ers, even though the effect of his action is to make jobs unavailable
for the strikers when and if they seek to return. And as a member
of an employers' association organized for joint collective bargaining
on a group basis, he may shut down temporarily when the Union
engages in a strike against a fellow employer in an attempt to destroy
the established bargaining unit. In these 'respects the employees'
union activity is not unlawfully discouraged by the employer. But
whatever may be the correct general rule for balancing the conflicting
interests of an employer and his employees in strike situations-a rule
on which reasonable men may differ-we are satisfied that the Re-
spondents here did not, and in fact could not, reasonably believe they
were yet confronted with an imminent strike situation. In any event
the Respondents acted prematurely, thereby unlawfully trenching on
the guaranteed rights of the employees. Accordingly, we find that
Mackniesh, Industrial, Sales, Pressed, and Unified violated Section
8 (a) (5), (3), and (1) in April 1954 by acting in concert to effectuate
the layoffs at Industrial's plant.-'
3. We agree with the Trial Examiner, for the reasons set forth by
him, that Thuma was discriminatorily discharged in June 1954. The
Respondents argue principally that, although the janitorial position
offered Thuma "may have been out of line with Thuma's regular
duties," the record was clear that the work offered was "merely pre-
paratory to a. general rehiring" and not a demotion. However, the
Respondents do not cite the portions of the record on which they
rely, and we find no record support for their argument.
4. We do not agree with the Trial Examiner that the unexplained
failure to recall three senior employees (Marvin Bunker, Olney, and
Dack), who had been discriminatorily laid off in April 1954, upon
the reopening of the plant in July 1954 was "simply a grievance under.
5 See Wallick and Schwalm Company, et al., 95 NLRB 1262, enfd. 198 F. 2d 477 (C. A. 3).
INDUSTRIAL FABRICATING INC. 171
the contract." We agree with the General Counsel that the proper
inference to be drawn from the record considered as a whole, in the
light of the Respondents' antiunion animus and the absence of ex-
planation of this apparently discriminatory conduct, warrants an
inference of further discrimination in this instance.6
5. We likewise do not agree with the Trial Examiner that the July
1954 offer to Pierson of part-time work at a demoted position with
reduced pay was not discriminatory. The Trial Examiner apparently
based this finding on his inability to "discern a motive to single out
Pierson for discriminatory treatment as a means of discouraging
membership in the Union." However, the record shows that the
Respondents had singled out Pierson as a target for antiunion co-
ercion early in 1954, again in April 1954, and again on two separate
occasions in July 1954, and had included him in the discriminatory
layoff of April 1954. Accordingly, we find that the Respondents
constructively discharged Pierson in violation of Section 8 (a) (3)
and (1) of the Act.
6. We agree with the Trial Examiner that the virtual elimination
.of the incentive - bonus . upon - the ^ resumption of operations in July
1954, without notice to or discussion with the-Union, and without any
explanation, violated Section 8 (a) (1), (3), and (5). We do not
rely on the later strike-settlement agreement as proof of discrimina-
tion, as the Respondents erroneously seem to assume in their brief.
7. We further agree with the Trial Examiner that the Respondents
violated Section 8 (a) (5) and (1) by refusing in August 1954 to
bargain with the Union about any more asserted grievances unless
Manager Smith agreed that the particular matter was a grievance,
and by elaborating on this refusal in December 1954 by compelling
the withdrawal of a written grievance under threat of layoff or reduc-
tion in pay. We find no record support for the Respondents' argu-
ment against the Trial Examiner's credibility findings, which he made
after observing all the witnesses involved.
8. We do not agree with the Trial Examiner's findings that the trans-
fer of operations from Industrial to Paragon and the permanent shut-
down of Industrial were not violations of Section 8 (a) (5), (3), or
(1) of the Act. It is clear that in May 1955 Mackniesh initiated the
formation of Paragon to replace Industrial, for the reason that Indus-
trial's employees had remained loyal to the Union despite a crescendo
of antiunion conduct. Benefiting by his previous experience in trans-
ferring work from Industrial to a known subsidiary, Pressed,
Mackniesh tried to conceal his identification with Paragon. But the
record as detailed above and as set forth in the Intermediate Report
convinces us that the driving force in setting up the Paragon corpora-
E There is no claim that the Respondents failed to reinstate any other employees upon
reopening the plant in July 1954.
172 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tion and the controlling force in its operation, as well' as the mana-
gerial ability and the financial risk, were his.
This is not the case of an employer who decides to go out of busi-
ness rather than deal with his employees' statutory representative.
Nor is it the case imagined by the Trial Examiner, where an employer
rearranges his business conduct for economic reasons apart from a
consideration of his employees' lawful and protected exercise of their
statutory rights.' Rather, this is the case of an employer who sur-
reptitiously continues in business at .a different location and under an
assumed name in order to thwart the statutory guarantees and evade
his obligations to the Union, while attempting to cloak his unlawful
manipulations by various devices and stratagems so as to give the false
appearance of having gone out of business for economic reasons. We
find that Mackniesh, Industrial, Sales, and Paragon thereby violated
Section 8 (a) (5), (3), and (1) of the Act.
9. We agree with the Trial Examiner that it is unnecessary to decide
whether or not the Union's strike of May 1955, subsequently settled,
was an unfair labor practice strike, inasmuch as the General Counsel
does not argue that the issue is other than academic for purposes of
remedy. Nor is any independent or additional violation of the Act
involved, as he seems to argue.
10. We do not agree with or adopt the Trial Examiner' s general
"Conclusion of Law" that Industrial violated Section 8 (a) (1) "by
other acts" in addition to those specifically found.
THE REMEDY
Having found that Respondents Mackniesh, Industrial, Sales, Uni-
fied, Pressed, and Paragon have engaged in certain unfair labor prac-
tices, we shall order them to cease and desist therefrom and take cer-
tain affirmative action to effectuate the policies of the Act.
We shall order the Respondents to offer Thuma, Pierson, Marvin
Bunker, Olney, Dack, and .the employees discriminated against in
1955 as a result of the transfer of Industrial's operations to Paragon,
reinstatement to their former or substantially equivalent positions,"
at Industrial's plant if the Respondents reopen it and otherwise at the
Paragon plant, without prejudice to their seniority or other rights and
privileges, dismissing if necessary all employees at Paragon' s plant.
If there is not sufficient employment then immediately available for
these employees, all available positions shall be distributed among
them in accordance with the Respondents' usual method of operation
7 Cf. Waterway Terminals Corporation , 118 NLRB 342 , where we held that the fact that
an employer was motivated by economic considerations and not antiunion animus did not
excuse conduct which had the necessary effect of interfering with his employees ' statutory
rights.
8 See The Chase National Bank of the City of New York, San Juan, Puerto Rico, Branch,
65 NLRB 827.
INDUSTRIAL FABRICATING INC. 173
-under curtailed production, without discrimination against any em-
ployee because of union affiliation or activities, following the system
.of seniority, if any, customarily applied in the conduct of the Re-
spondent's business. Any employees remaining after such distribu-
tion, for whom no work is immediately available, shall be placed upon
.a preferential list prepared in accordance with the above principles,
.and shall thereafter in accordance with such list be offered employ-
ment in their former or substantially equivalent positions as such
-employment becomes available and before other persons are hired for
.such work.'
We shall also order the Respondents to include an offer to pay the
expenses entailed in moving the employees and their families and
household effects, in the event that the Respondents do not reopen
the Industrial plant.
We shall further order the Respondents to make whole the em-
ployees referred to above, and also the employees discriminatorily
deprived of the customary incentive bonus in July 1954 and thereafter
and not covered in the strike settlement of June 1955, for any loss of
pay suffered by reason of the Respondents' discrimination against
them, by payment of a sum of money equal to the amount each would
normally have earned as wages (including the customary incentive
bonus) for the period of the discrimination, less his or her net earnings
'during such period.10 In the case of an employee to be reinstated,
if there is insufficient work available, the terminal date of the back-pay
period is to be the date of the employee's placement on the preferential
list as above set forth. In accordance with our customary practice, we
exclude from the computation of back pay the period between the
issuance of the Intermediate Report and our present Order with
respect to the employees discriminated against but not so found by
Trial Examiner."
It has been found that the Respondents refused to bargain with
the Union as the certified representative of an appropriate unit of their
employees at the Industrial plant, in violation of Section 8 (a) (5)
and (1) of the Act. We shall therefore order the Respondents, in the
event that they resume operations at the plant, to bargain with the
Union upon request. However, it has also been found that the Re-
spondents closed the Industrial plant, discriminatorily locked out the
employees, and removed their operations to the Paragon plant, all for
the purpose of evading their statutory obligation to bargain with the
9 Respecting this and other remedial provisions based on Respondents' violation of
Section-8 (a) (3) and (1), see Wallick and Schwalm Company, supra.
10 F. W. `Woolworth Company, 90 NLRB 289 ; Crossett Lumber Company, 8 NLRB 440.
,To be considered as earnings , of course , are any amounts the Respondents may already
have : paid a discriminatee , for example , by way of settlement of his back pay claim.
Computation shall be pursuant to the Board's customary formula.
11 For example, see Convair, A Division of General Dynamics Corporation , 111 NLRB
1055, 1059.
174 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Union. Normally , in a situation of this kind , we would order the
employer to bargain with the union as the representative of the same
unit of his employees at the new plant, without further proof of the
union's representative status there . In the instant case, however,
because of the considerable distance separating the two plants and
the possibility that a considerable number of Industrial 's employees
may choose not to accept employment at the Paragon plant if and
when the Respondents comply with our order of reinstatement, we
shall, in order to accommodate the remedy to the realities of the situa-
tion, condition our bargaining order upon proof that , upon compliance
by the Respondents with our order of reinstatement, the total number
of Industrial employees who have accepted employment at the Para-
gon plant, together with the remaining employees at the Paragon
plant who in the meantime may have selected the Union , shall consti-
tute a majority of the total employees in the unit at that plant.
In view of the nature and extent of the unfair labor practices com-
mitted, the commission by the Respondents of similar. and other unfair
labor practices may be anticipated. The remedy should be coexten-
sive with the threat. It will therefore be ordered that the Respond-
ents cease and desist from infringing in any manner on the rights
guaranteed in Section 7 of the Act.
As to the remaining three Respondents, Abrasive, Plastic, and
Vacuum, we have not found that they participated in any way in the
unlawful scheme of the other - Respondents to deprive Industrial's
employees of their statutory rights. Like the Trial Examiner, we
shall accordingly dismiss the complaint against these three Respond-
ents in its entirety.
ORDER
Upon the entire record in the case and pursuant to Section 10 (c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondents Industrial Fabri-
cating Inc., Industrial & Foundry Sales Inc., Unified Industries Inc.,
Pressed Steel Flasks Inc., Paragon Industries Inc., Frank Mackniesh,.
and their officers, agents , successors, and assigns:
1. Cease and desist from :
(a) Discouraging membership in International Union Local 909,
.International Union, United Automobile, Aircraft and Agricultural
Implement Workers of America, UAW-CIO, affiliated with AFL-
CIO, or any other labor organization , by laying off , discharging, fail-
ing to recall, demoting, reducing or eliminating the customary bonus
of, or locking out any of their employees, or by discriminating in
any other manner in regard to their hire or tenure of employment or
any term or condition of employment , except to the extent permitted
by the proviso to Section 8 (a) (3) of the Act.
INDUSTRIAL FABRICATING INC. 175
(b) Refusing to bargain collectively with International Union
Local 909, International Union, United Automobile, Aircraft and
Agricultural Implement Workers of America, UAW-CIO, affiliated
with AFL-CIO, as the statutory representative of all production and
maintenance employees of Industrial Fabricating Inc., excluding
office and clerical employees, professional employees, guards, watch-
men, and. supervisors as defined in the Act.
(c) In any other manner interfering with, restraining, or coercing
their employees in the exercise of the right to self-organization, to
form labor organizations, to join or assist International Union Local
909, International Union, United Automobile, Aircraft and Agricul-
tural Implement Workers of America, UAW-CIO, affiliated with
AFL-CIO, or any other labor organization, to bargain collectively
through representatives of their own choosing, and to engage in other
concerted activities for the purpose of collective bargaining or other
mutual aid or protection, or to refrain from any or all such activities,
except to the extent that such right may be affected by an agreement
requiring membership in a labor organization as a condition of em-
ployment, as authorized in Section 8 (a) (3) of the Act.
2. Take the following affirmative action, which the Board finds will
effectuate the policies of the Act :
(a) Offer Arlo Thlmma, Oscar Pierson, Marvin Bunker, Glen
Olney, Clement Dack, and all employees discriminated against as
a result of the transfer of work from Industrial Fabricating Inc.
to Paragon Industries Inc., immediate and full reinstatement to their
former or substantially equivalent positions, with the necessary
traveling and moving expenses, in the manner set forth above.
(b) Make whole the employees referred to in the preceding para-
graph for any loss of pay suffered by reason of the Respondents' dis-
crimination against them, in the manner set forth above.
(c) Make whole the employees discriminatorily deprived of any
part of their incentive bonus in July 1954 and thereafter and.. not
covered in the strike settlement of June 1955, for any loss of pay suf-
fered by reason of the Respondents' discrimination against them.
in the manner set forth above.
(d) Make whole the employees laid off in the discriminatory shut-
clown between April and July 1954 for any loss of pay suffered by
reason of the discrimination against them, in the customary manner
as set forth in the Decision.
(e) Upon request, bargain collectively with International Union
Local 909, International Union, United Automobile, Aircraft and
Agricultural Implement Workers of America, UAW-CIO, affiliated
with AFL-CIO, as the exclusive representative of all employees
in the aforesaid appropriate unit with respect to rates of pay, wages,
hours of employment, and other conditions of employment, and, if
176 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
an understanding is reached, embody such understanding in a signed
agreement. If the Respondents elect not to reopen the plant of Indus-
trial Fabricating Inc., bargain upon request with the said Union as
the exclusive representative of all employees in the same unit at the
plant of Paragon Industries Inc. as set forth above, provided that,
upon compliance with our order of reinstatement, the total number
of former employees of Industrial Fabricating Inc. who have ac-
cepted employment by Paragon Industries Inc., together with the
new employees of Paragon Industries Inc. who in the meantime may
have selected the Union, shall constitute a majority of the total em-
ployees in the appropriate unit.
(f) Preserve and upon request make available to the National
Labor Relations Board or its agents, for examination and copying,
all records necessary to analyze the amounts of back pay due under
the terms of this Order.
(g) Post at the plant of Paragon Industries Inc., or Industrial
Fabricating Inc. if the Respondents reopen it, copies of the notice
attached hereto marked "Appendix." 12 Copies of said notice, to be
furnished by the Regional Director for the Seventh Region, shall be
duly signed by the Respondents' representative immediately upon
receipt and shall forthwith be posted by them and maintained for a
period of at least sixty (60) consecutive days thereafter in conspicuous
places, including all places where notices to employees are customarily
posted. Reasonable steps shall be taken by the Respondents to insure
that such notices are not altered, defaced, or covered by any other
material.
(h) Mail signed copies of the notice to each of the employees
referred to above in paragraphs 2 (a) through (d), at his last known
address.
(i) Notify the Regional Director for the Seventh Region in
writing, within ten (10) days from the date of this Order, what steps
have been taken to comply herewith.
AND IT IS FURTHER ORDERED that the complaint against Eaton Metal
Abrasive Co., Plastic Tool Corporation of America, and Vacuum
Electronics Inc. be, and it hereby is, dismissed.
22 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order."
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify you that :
INDUSTRIAL FABRICATING INC. 177
WE WILL offer immediate and full reinstatement to Arlo Thuma,
Oscar Pierson, Marvin Bunker, Glen Olney, Clement Dack, and
all employees discriminated against as a result of the transfer of
work from Industrial Fabricating Inc. to Paragon Industries Inc.
If the plant of Industrial Fabricating Inc. is not reopened, the
reinstatement offered will be at the plant of Paragon Industries
Inc., together with the necessary traveling and moving expenses.
WE WILL make whole all the foregoing employees for any loss
of pay suffered as a result of the discrimination against them.
WE WILL also make whole the employees discriminatorily de-
prived of any part of their incentive bonus in and after July 1954
and not covered in the strike settlement of June 1955, for any
loss of pay suffered as a result of the discrimination against them.
WE WILL bargain collectively upon request with International
Union Local 909, International Union, United Automobile, Air-
craft, and Agricultural Implement Workers of America, UAW
CIO, affiliated with AFL-CIO, as the exclusive collective-
bargaining representative of the employees of Industrial Fabri-
cating Inc. in the appropriate unit described below and, if any
understanding is reached, embody such understanding in a signed
agreement; or if we. elect not to reopen the plant of Industrial
Fabricating Inc., we will bargain collectively upon request with
the said Union as the exclusive collective-bargaining representa-
tive of the employees of Paragon Industries Inc. in the appro-
priate unit described below, provided that upon our compliance
with the order of reinstatement, the total number of former
employees of Industrial Fabricating Inc. who have accepted em-
ployment by Paragon Industries Inc. together with the new em-
ployees of Paragon Industries Inc. who in the meantime may
have selected the said Union, shall constitute a majority of the
total employees in the appropriate unit.
The appropriate collective bargaining unit is :
All production and maintenance employees, excluding office
and clerical employees, professional employees, guards, watch-
men, and supervisors as defined in the Act.
WE WILL NOT discourage membership in the above-named Union
or any other labor organization by discriminating in any manner
in regard to hire or tenure of employment or any term or con-
dition of employment.
WE WILL NOT in any other manner interfere with, restrain, or
coerce our employees in the exercise of the right to self-organiza-
tion, to form labor organizations, to join or assist International
Union Local 909, International Union, United Automobile,
Aircraft, and Agricultural Implements Workers of America,
476321-58-vol. 119-13
178 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
UAW-CIO, affiliated with AFL-CIO, or any other labor organi-
zation, to bargain collectively through representatives of their own
choosing, and to engage in other , concerted activities for the
purpose of collective bargaining or other mutual aid or protec-
tion, or to refrain from any or all such activities , except to the
extent that such rights may be affected by an agreement requir-
ing membership in a labor organization as a condition of employ-
ment, as authorized in Section 8 (a) (3) of the Act.
INDUSTRIAL FABRICATING INC.,
INDUSTRIAL & FOUNDRY SALES INC.,
UNIFIED INDUSTRIES INC.,
PRESSED STEEL FLASKS INC.,
PARAGON INDUSTRIES INC.,
FRANK MACKNIESH,
Employer.
Dated---------------- By-------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered , defaced, or covered by any other material.
INTERMEDIATE REPORT AND RECOMMENDED ORDER
THE CASE AND THE ISSUE INVOLVED
In essence , the question presented here is whether Respondent Industrial Fabri-
cating, Inc. (called Industrial) in the operation of its plant at Eaton Rapids,
Michigan, committed unfair labor practices; and if it did, whether the remaining
eight Respondents, or any of them, by virtue of their alleged -interrelationship with
Industrial, or otherwise, are answerable with it as coemployers for the alleged
wrongs.
The foregoing were the basic issues raised by the complaint and answer, the
subject of evidence taken at the hearing before the duly designated Trial Examiner,
held in Lansing and East Lansing, Michigan, from February 15 to March 12, 1956
(in which all parties participated through counsel) and the focus of discussion in
briefs submitted and in oral argument presented before him in Washington, D. C.,
on June 18, 1956.1
FINDINGS OF FACT
1. THE CERTIFIED LABOR ORGANIZATION
International Union, Local 909, International Union, United Automobile, "Aircraft
and Agricultural Implement Workers ,of America, UAW-AFL-CIO; affiliated with
AFL-CIO, is a labor organization. It was formed in about 1951 to organize the
employees of Industrial in Eaton Rapids, but its membership extends to, other
plants in that general area. The International representative having jurisdiction
over it is Harold Marsh, whose headquarters' are at Jackson, Michigan.
After a rather inauspicious introduction at Industrial, to be detailed later, it was,
following an election, duly certified by the Board on May 17, 1951, as the bargaining
representative of Industrial's production and maintenance employees. Its status as
such representative ever since is. not disputed. .
The complaint of the General Counsel is' founded upon the various charges filed
by the Union from July 9; 1954, until December.14, 1955. .
1 Also, in accordance with arrangements made at the hearing, ' the Trial Examiner,
accompanied by counsel for the respective parties, visited the plant premises in the three
cities here involved , in order to provide a sensory dimension in following the testimony.
INDUSTRIAL FABRICATING INC. 179
U. JURISDICTION : PRELIMINARY FINDINGS
Since Industrial is the "basic" Respondent, this portion of the discussion will be
confined to the jurisdictional facts pertaining to it.
Industrial is a Michigan corporation formed in 1945. During the 11 years of its
operation, it was situated in its own building at 817 Hall Street in Eaton Rapids,
Michigan. It started as a metal fabricator; engaged; as Respondent' Frank
Mackniesh, its president, put it, in "making anything to do with metal." In 1946,
it embarked on what ultimately developed into its major function, the making of
fabricated (custom made) foundry flasks, for use by automotive concerns in setting
up molds for automotive parts. In 1953 Industrial made over $172,000 and in
1954 over $142,000 worth of such flasks which it delivered in Detroit to concerns
like Ford, General Motors, and Chrysler.
Since the mammoth interstate ramifications of these consumers is both conceded
and, in any event, a subject of official notice, the basis for the existence of the
Board's jurisdiction over Industrial is beyond question. N. L. R. B. v. Fainblatt,
et al., 306 U. S. 601. The volume of materials thus supplied to these interstate
concerns, over $100,000 per year, is also sufficient to satisfy the Board's self-
imposed standards for the assertion of jurisdiction. Whippany Motor Co., Inc.,
115 NLRB 52. But there is this qualifying factor: As Industrial operated during its
first 6 years, it not only made and delivered its product but sold it to the consumer
as well. On August 31, 1951, however, Mackniesh, president of Industrial and
owner of the controlling interest in it, formed Respondent Industrial & Foundry
Sales, Inc. (called Sales) wholly owned and controlled by him. Sales, upon its
formation, became the selling intermediary between Industrial and the consuming
companies. This brings into play the possible applicability of the Board's doctrine
as enunciated in Brooks Wood Products, 107 NLRB 237. There a selling interme-
diary between an intrastate producer and an interstate consumer is declared to have
the effect of causing the producer to be "not once but twice removed from interstate
commerce," and for that reason to take the producer out of the ambit of the
Board's self-prescribed jurisdictional limitations. Whether Sales had such effect on
Industrial hinges upon whether Sales, though a separate entity, is part of an inte-
grated enterprise with Industrial. If it is, then Industrial falls within the Board's
jurisdictional standards regardless of Brooks. See Herman M. Brown Service Com-
pany, 115 NLRB 1371. The answer must await consideration of the facts as a
whole, and we came back to this question under part V of this Report.
III. THE RESPONDENTS
There are nine Respondents here. The sole individual is Frank Mackniesh, who
is asserted to be the connecting link, indeed the controlling agent, among all the
corporate respondents. The General Counsel's efforts to trace this interconnection
accounted for the bulk of the 1 month's hearing, and the path followed, by reason
of the difficulty of his task, was long and tortuous. The Trial Examiner has sought
to strike a fair balance between a comprehensive reproduction of the evidence and
the necessary space limitations of a document of this character. The result still
involves the reader in a tour of tedious details before he reaches the merits. But,
in this narrator's opinion, it is a path which must be traversed if the issues are to be
determined on the basis of a fair exposition of the relevant evidence.
1. Frank Mackniesh
Mackniesh is by background an engineer, who brings to his calling gifts of imagi-
nation and initiative, of which each. of the corporations here involved is in some
measure a reflection.
2. Industrial Fabricating, Inc. (Industrial)
Industrial, as previously stated, was formed in 1945, and, at all times until its shut-
down in the fall of 1955, was located in its own building at 817 Hall Street, Eaton
Rapids. (It was erected in 1952 adjoining the building at 815 Hall Street, but
was to accommodate another Mackniesh venture to be described later.) The original
stockholders of Industrial were Mackniesh, James J. Dervin, and Joseph Miller,' each
owning one-third of the stock. In 1946 Mackniesh acquired Joseph Miller's interest
and from then on, at least, Mackniesh has been in control of Industrial. While
Dervin at all times retained his one-third interest, he is a pallid figure in the events
here considered. Though he was one of the three directors, he was not an officer,
nor do we hear of him ever visiting the plant or doing other than deferring to Mac-
kniesh. Mackniesh selected and hired the successive general managers at Industrial,
180 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and it was from him that they looked for and received their instructions. The general
manager was usually the third director along with Mackniesh and Dervin. At least
that is so in respect to Charles J. Smith, nephew of Mackniesh, who was general
manager of Industrial during the last 31/4 years preceding its final shutdown in 1955.
The record indicates and it is hereby found that Smith was subject to Mackniesh's
instructions and that his decisions as general manager and as a codirector and officer
of Industrial on labor and fiscal matters were, basically, the activation of Mac-
kniesh's policy. For purposes of this case therefore, despite the residual one-third
interest of Dervin, we must, in terms of the totality of his control, regard Mac-
kniesh as being all of Industrial. But, as appears, Industrial was far from being
all of Mackniesh.
3. The corporate Respondents claimed to be derivatively liable
Of the remaining 7 Respondents, we can at once dismiss as to 2, Eaton Metal
Abrasive Co. (Abrasive) and Vacuum Electronics, Inc. (Vacuum), for the reasons
stated in the footnote below.2
Of the five corporate Respondents which remain, the only nonproducer is Sales,
which is a selling agent . And of the four producing Respondents, all but Paragon
originated in Eaton Rapids, where Industrial was located, and later moved to Howell,
which identifies them as the "Howell group." Paragon originated in 1955 in Milan,
about 100 miles from Eaton Rapids, and is still there. We turn to them individually.
a. Industrial & Foundry Sales, Inc. (Sales)
As stated, with the formation of Sales on August 31, 1951, Sales appropriated from
Industrial the selling function of the latter's product, and when the other four pro-
ducing companies were formed, it was their selling agent as well. The mode of
functioning was to obtain specifications for the desired product from the customer,
refer them to the producer for "bidding," and on approval of the latter's bid, trans-
mit the amount thereof to the customer as the price, adding thereto the commission
of Sales as selling agent. On completion of the order, the producer delivers the
product to the consumer in Sales' name, and out of the proceeds received by
Sales from the consumer, Sales pays the producer for its work.
This, of course, placed in Sales the power to control the amount of Industrial's
business through its power to determine on what orders it would permit Industrial
to bid, or which of its bids to accept. And it is the General Counsel's contention
that the purpose of vesting this power in Sales was to enable Mackniesh to transfer
Industrial's operations as. a device for coping with the Union. Mackniesh's conten-
tion is that the proliferation of his ventures simply made it economically feasible
to have a central selling agency for all of them. In support, he cites Abrasive,
which was already in existence when Sales was formed (footnote 2, supra) and
Pressed Steel Flasks, Inc. discussed later, which came into being in 1952. The details
bearing on motive may be deferred, but the following should be noted in passing:
Since the stillborn character of Abrasive as a going concern (footnote 2) must
already have become evident in the 15 months preceding the formation of Sales,
one may discount it as a factor entering into Mackniesh's deliberations in forming
Sales. As to Pressed Steel Flasks, Inc., so far as appears, it was already in con-
templation when Sales was formed, but it did not get under way as a going concern
until about a year later. It 'would thus seem that until then, in actual operation
at least, Industrial and Sales were exclusively preoccupied with each other, Sales
selling all that Industrial made and Industrial making all that Sales sold.3
2 Abrasive was formed June 5, 1950, to make pellets out of wire for cleaning and harden-
ing of metal. Mackniesh was an incorporator and 30-percent owner. After a single job,
which yielded a pittance, it sold the cutting machine, its only asset, for a nominal sum,
and has been inoperative since.
Vacuum was formed by Mackniesh in 1954. Its purpose was to give longer life to
vacuum tubes but, so far as appears, it has had little or no paying patients. Mackniesh,
its sole owner, is also its entire working force. It has an enclosure in the plant in
Howell, Michigan, owned by Sales, which houses the Howell-situated Respondents which
are discussed later. Mackniesh uses the enclosure as his laboratory for Vacuum and also
as his personal quarters when he visits the Howell-situated ventures.
a Mackniesh testified that Sales, during the early period of its existence, serviced some
companies which are strangers to the case. No particulars were given as to identity,
amount, or dates. It is highly improbable that they conditioned the character of Sales or
form a basis for qualifying the conclusion stated in the text.
INDUSTRIAL FABRICATING INC. Yc8].
Sales' working force, apart from Mackniesh , never exceeded one person, and
he was termed its "sales engineer ." The first such was Peter Kitzens. Before Sales
was formed , he had been general manager of Industrial , and this included handling
its selling functions . When Sales was formed he was taken off Industrial 's payroll,
and put on Sales'. Kitzens severed all relations with the flask venture in 1953 and
was replaced as sales engineer for Sales by one Owen Hale . The latter left after a
year and he , in turn, was replaced by Smith. While acting as sales engineer for
Sales , Smith held down two other jobs: The first was that of general manager of
Industrial , which position he held from June 1, 1952 , until after the shutdown of
Industrial in September 1955; and the second was general manager of Plastic Tool
Corporation of America (Plastic ) later discussed , which he held from about January
1954 to November 1954 ( when Plastic moved out of the Eaton Rapids extension to
a plant in Howell, housing other Respondents here involved ). But as long as Smith
was general manager of Industrial and Plastic he was on their payroll , not Sales';
and when Plastic moved out of Eaton Rapids, leaving Smith as general manager
only of Industrial , he was on Industrial 's payroll exclusively until it shut down in
September 1955. Smith testified that when he represented Sales during his tenure
as general manager of Industrial and Plastic despite the designation of his calling
card as "sales engineer" for Sales, he was not engaged , as he put it , in "sales develop-
ment" for Sales , but in a "holding operation" to retain the customers for the product
turned out by the producing companies he was managing . Whatever his mental
reservations , Smith was then "sales engineer" for Sales as his calling card represented
him to be, and it is so found.4
Apart from the common functional control of Sales and industrial through Mac-
kniesh and Smith, there is also the common corporate control for Mackniesh and
Smith are officers and directors of both Sales and Industrial ( the third officer and
director of Sales being nominal, a secretary in the office of Attorney Colman, and
the third in Industrial being the one-third owner Dervin).
Counsel for Sales and Industrial conceded that the two may well be regarded
as integrated but for the fact that Sales acted as the selling intermediary for the
producing companies treated below.
b. The "Howell group"
The designation above applies to three producing companies which, originating
in Eaton Rapids , occupied Industrial 's 815 Hall Street extension adjacent to its
plant, but ultimately were moved to a plant in Howell, Michigan , erected and owned
by Sales.
(1) and (2): Pressed Steel Flasks ( Pressed ) and Unified Industries ( Unified)
These two are treated as one, because although separately formed, the first has
been absorbed by the second.
Pressed was incorporated by Mackniesh in 1952. Its purpose was to make foundry
flasks, but of a light, standard type in contrast with the heavy fabricated type made
by Industrial . When Pressed was formed Mackniesh was its sole stockholder and
principal officer , and in anticipation of the launching of Pressed , Industrial built the
815 Hall Street extension . When Pressed was settled there it first made jigs and
fixtures for aircraft ; later, when a market therefor was opened up, it also made the
light flasks.
Like Industrial 's, the business of Pressed was procured through Sales , and as long
as Pressed was wholly owned by Mackniesh there was no question of the common
ownership and control of all three . That was so until March 5, 1953 , when Mac-
kniesh sold his stock to Unified , which is treated below.
Unified was incorporated March 6, 1953, for the sole purpose of acquiring the
stock of Pressed , and this objective was realized March 5, 1953 . The incorporator
of Unified was John Miller, a former general manager of Industrial, who, after re-
signing, returned to it as a welder in 1951 . During this second tenure as an employee
of Industrial , he helped erect the extension to Industrial 's plant which was to house
the as yet unestablished Pressed. In anticipation of his becoming the general man-
ager of Pressed , he had a hand in hiring at least one of the employees for Industrial,
with the understanding that the latter would be on Pressed 's payroll as soon as it
' Ultimately Smith was put on Sales ' payroll, but that happened only after Industrial
shut down in the fall of 1955, and was supplanted , in the production of its type of flask
for Sales, by Respondent Paragon Industries , formed June 1955. This takes us to an
altogether different phase of the narrative to be related in a separate context later.
182 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
was .established . That was Thomas G. Mitchell , hired in February 1952 , and he,
pursuant to that arrangement , went over to Industrial in June 1952 . Mitchell, later
an officer of both Pressed and Unified, ultimately broke relations with them and
testified for the General Counsel at this hearing.
Originally Miller was Unified 's sole stockholder , holding 1,000 shares at $1 a
share. To this company , and solely on its own obligation , Mackniesh sold his stock
interest in Pressed for $30,000 , payable in 3 years . Half this debt was paid in the
first year , and no part has been paid since. Under the terms of the sale , Mackniesh
has a right to recapture the stock of Pressed in the event of default in payment.
But he has not done so , because, as he testified , he did not wish to jeopardize the
loan. But he has, in the meanwhile , become a one-third owner of the stock of
Unified.
In September 1953 Pressed and Unified moved to a plant in Howell erected by
Sales. In so doing they vacated the 815 Hall Street building to accommodate Plastic
Tool Corporation, which is the next corporate Respondent discussed. At Howell,
Unified and Pressed continued to make jigs and fixtures for aircraft , and the Pressed
type of flask . Unified-Pressed 5 were not normally equipped to make Industrial's
custom-made type of flask, but, in 1954, with machinery transferred to Howell for
that purpose from Industrial , they made such a flask . This was done when Sales
awarded Pressed a reorder of a job previously done by Industrial, through the proc-
ess of "approving " its bid as against Industrial 's. The attendant cut back in produc-
tion at Industrial , including a complete shutdown there for a while, is the first of
the illegal lockouts claimed by the General Counsel. Whether it warrants that char-
acterization is a subject for later context.
To complete the operational picture of Unified-Pressed, to this day Unified has
continued to make jigs and fixtures , but since late 1954 no flasks whatever have been
made at the Howell plant, either by Unified or Pressed.
Unified-Pressed , both in Eaton Rapids and at Howell, operated with a separate
working force from Industrial but with employees of closely similar skills. Indus-
trial employees were frequently assigned to perform operations for Unified -Pressed.
When the job lasted less than a half hour, it was "on the house" ( Industrial's).
When the job lasted more than a half hour the arrangement was to charge it to
Unified-Pressed , but this would seem to have been more honored in the breach.
Unified-Pressed were permitted the free use of such of Industrial 's machinery as
they lacked and in 1954, when they made for Sales the Industrial type of flask, they
did so with the free use of Industrial 's machinery although they paid for its haulage
to Howell,
(3) Plastic Tool Corporation of America (Plastic)
Plastic was formed early in 1953, to make plastic molds and parts and also plastic
fixtures for automobiles and aircraft . The incorporator was Mackniesh, and he
has at all times wholly owned and controlled it.
During 1953, the venture was on an experimental basis. During this stage of
experimentation , Plastic shared the 815 Hall Street extension with Unified-Pressed.
As noted, when the latter, on September 1, 1953, moved to Howell , Plastic remained
at 815 Hall. In 1954 , for approximately the whole year , Smith was general man-
ager of Plastic in addition to Industrial , with his salary pro-rated between the two.
But he operated Plastic with a separate working force from Industrial 's and under
a separate payroll. At the end of 1954, Mackniesh moved Plastic to the Howell
plant to fill a slack in the business of Unified -Pressed. Plastic work requires a
breaking -in process for employees , but the source of manpower would seem to be
the same as for Industrial and Unified . Numerous employees on Plastic 's payroll,
when it was at Eaton Rapids, had been prior employees of Industrial . And when
Plastic was moved to Howell, all of its work was taken over by Unified . Unified
thereupon automatically absorbed whatever employees Plastic then had, and the
plastic and metal work are done by the same working force.
Since its removal to Howell, Plastic, as Mackniesh put it , has been but a name.
However, it is a potent one, for it is the name which apparently procures for Unified
the bulk of its plastic business , and will continue to do so until Unified acquires a.
name of its own in that trade.
(4) Control of the Howell group
Mackniesh has continued as sole stockholder and principal officer of Plastic, but
since the time he sold his stock in Pressed to Unified, he was not among the officers
6 They will hereafter be referred to in this hyphenated form unless the sense of the
record requires a separate designation for each.
INDUSTRIAL FABRICATING INC. 183
or directors of either. The officers of Unified and Pressed have been Miller, his
wife, and Tom Mitchell . Mitchell is now gone but his corporate title stays with
him until the next annual report is filed with the State . Until then , matters will
be as before , for the corporate title was nominal , carrying no responsibility or
power in fact.
Title and power at Unified-Pressed would not necessarily seem to have had a
common lodging. At two extremes of the pole are Mitchell , who had title but no
power , and Mackniesh , who had no title but all the power . Intermediate was
Miller , who had such power as Mackniesh chose to give him , substantially that of
a general manager at Howell , but subject to Mackniesh 's ultimate supervision.
Power normally gravitates to the predominant interest , and Mackniesh 's was pre-
dominant enough to effect such a pull . He had the power to call in the stock of
Pressed because of Unified's long default in payment of the purchase price, the
power of the plant landlord through his corporation Sales, and the power, again
through Sales , to control the volume of business of Unified-Pressed. Persons close
to the scene confirmed that the pull was there and was exerted in matters fiscal
and labor.
Mitchell testified that the line of command was from him to Miller , and from
Miller to Mackniesh . Mackniesh instructed Miller concerning what jobs to quote,
how to quote them, and to revamp them . A notable instance of this would appear
to have occurred in 1954 when Unified-Pressed was awarded the job which brought
about the transfer of machinery from Industrial to Unified -Pressed and the shutdown
at Industrial : Mackniesh instructed General Manager Smith of Industrial and Miller
of Unified-Pressed concerning the contents of the bid they were to submit to him.
In labor matters , Miller and James Bucher testified to numerous instances of
Mackniesh 's power in that field. Thus there was an occasion when Miller, when
asked for a raise deviating from already charted policy , did not feel free to act until
prior clearance with Mackniesh . There was another occasion in which Mackniesh
called together in his office at the Howell plant ( see footnote 2, supra ) the persons
involved with Miller in a dispute over claimed overtime pay, stating he wanted all
"beefs" aired , and "somebody is going to get their [ bottom] eaten out." On another
occasion , Mackniesh interceded to dissuade employee Bucher from resigning and,
on being told the cause was Miller, openly instructed Miller "to stay off [Bucher's]
back."
Mackniesh injected himself into production as well. At one time he upbraided
several employees for slowness , with the warning that "either we were going to
get things out the way we should or there was going to be some changes made."
No one took this as an intrusion by a person outside the line of command, for, as
Mitchell put it, "if a man controls your increase in salary, he can control company
law." 6
Testifying to Mackniesh 's transcendent power over all the corporations discussed
until now was James W. Harp, a young college graduate, who did the general office
work for Industrial until the summer of 1953. He was also an officer of Industrial,
and sat with Mackniesh and the principals of these companies during their dis-
cussions . And Respondents have not challenged Harp 's honest as a person or
truthfulness as a witness . The inventory for all of these companies would be
purchased by Industrial and allocated among the other companies , and debited to
them in the books. Also, Harp would receive the various orders which came in
6 These instances, so far as appears, were not denied . But apart from that , it must be
noted that they were related by Mitchell and Bucher in a manner warranting credit. In
that connection , the Trial Examiner has scrutinized their testimony in the light of certain
impugning factors, to which he has given weight . Mitchell and Bucher have suits pend-
ing against Unified for alleged overtime . Mitchell 's relations with Miller are strained, to
say the least . Yet high-spirited as he seems to be , he nevertheless conveyed the im-
pression of being a self-respecting craftsman , jealous of his rights , often contentiously so,
but neither warped in his observations nor disposed to testify to other than what he
observed.
Bucher, before being hired by Industrial , had served a sentence for housebreaking.
Smith knew this when he hired him. Indeed , Bucher was sent to Smith by his parole
officer. There is no suggestion that Bucher has been other than completely rehabilitated.
He has honored the terms of his parole and has been in no further trouble. And he has
made good on his jobs. He was transferred to Plastic and became foreman in charge of
the plastic work, a position which he retained under Smith at Eaton Rapids and under
Miller at Howell , until he left of his own accord . He is now employed with a plastic firm
in Detroit.
184 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and would refer them to respective principals, depending upon the,product involved.
At the discussions, although he found the technical aspects of the corporations
beyond his depth, he obtained a clear impression as to who was at the helm in fact:
"Mackniesh owned the whole deal, as far as I know. . . . He was the one who
said what was to be done etc.. . As far as I was concerned it was just one big
Company split into a bunch of little ones." He derived this impression, he said,
from "the way things were carried on. They would get together and Mr. Mackniesh
would be there and tell who would be responsible for what. I mean I wasn't
analyzing it at that time because it was just a situation that was growing."
Harp, as did Mitchell before him, also testified concerning the avowed purpose
of grooming Pressed as a potential successor to Industrial's heavy flask operations,
should the occasion arise. But this last is deferred to a later context.
c. Paragon Industries (Paragon)
Paragon was formed in June 1955, and as stated before, is located in Milan,
Michigan, about 100 miles from Eaton Rapids. It enters the picture at the terminal
stage of our narrative, and will be treated when that point is reached in the time
sequence.
IV. THE ALLEGED WRONGDOING
A. Introductory
The unfair labor practices alleged originate in early 1954.7 The terminal event
is the shutdown of Industrial in September 1955. For purpose of convenience in
analysis, the grouping of the events will be three-fold: (1) Those in the spring
of 1954 culminating in the alleged lockout of the employees at Industrial flowing
from the transfer of certain operations to Unified-Pressed in Howell; (2) the
period from the resumption of operations at Industrial in June or July 1954 to
the outbreak of the strike on May 9, 1955, which was settled June 20, 1955; and
(3) the period culminating in the permanent shutdown of Industrial on September
16, 1955, with its attendant replacement by Paragon as the producer of heavy
flasks for Sales.
B. The asserted "background" events
The General Counsel claims that the reception of the Union at its advent in
1951 and, indeed, the negotiations themselves reveal a deep-seated antiunion animus
which conditioned Industrial's later conduct. While the proffer of evidence in
that regard was largely excluded for remoteness, enough was admitted to permit
a fresh appraisal of the General Counsel's contention concerning their character as
"background."
1. The advent of the Union at Industrial
Up to 1951 there was no union at Industrial. Until then, also, as previously
noted, there was no other corporation at the Eaton Rapids location (except the
negligible Abrasive, footnote 2, supra, in which Mackniesh had a minor interest
anyway). Early in 1951 Mackniesh and Kitzens, then general manager of Indus-
trial, were on vacation in Florida. During their absence, the foreman, Art Kauf-
man, declared a vacation for himself. Mackniesh and Kitzens thereupon fired him
and replaced him with one Les Bisel , who until then had been a rank-and-file
employee. As it happened, the men had just been organized into the Union, and
had selected Leo Bunker as chairman of their committee. According to Bunker's
testimony, led by him, all of the men, if we are to believe his first, and some
of them, if we are to believe his second version, refused to recognize the new
foreman's status and proceeded with the performance of their assignments without
benefit of Bisel. They abandoned their individualistic course when informed by
Harold Marsh, international representative of the Union, that they were out of
bounds. But the next day, Mackniesh and Kitzens returned to the plant from
Florida in response to a call from James W. Harp, the general office employee,
reporting what he had observed. Mackniesh paid off the whole crew and told
them they could report the following morning in the office to be hired as new
employees through Bisel. Report they did, but not in the office. Management
found them at their workplaces. Whether they broke through the building as
Respondents contend, or otherwise, we need not determine. They were evicted
7 The original charge was filed July 9 and received by Respondents Industrial and
Unified on July 14, 1954. Hence only events occurring January 14, 1954, or thereafter,
can be the subject of any unfair labor practice finding.
INDUSTRIAL FABRICATING INC. 185
under threat of tear gas , and in the wake of this event occurred union picketing,
litigation brought by Industrial in the State court , and ultimate return of the
men to work without impairment of seniority, so far as appears. The General
Counsel sees in all of this evidence of a deep-seated hostility in Mackniesh to the
unionization of his employees , which dominated his future course. Indeed, Mac-
kniesh is quoted as saying, when he discharged the men, that no union could tell
him how to run his plant. Mackniesh, contrariwise, solemnly avows that he never
knew of any union in the plant until the committee asked for a bargaining session
after the men's discharge, only to be refuted by Harp, who testified that in the
telephone message which brought Mackniesh and Kitzens back from Florida, he
mentioned the Union as well as the men's exploit.
The General Counsel might well have taken up Respondent counsel's sugges-
tion that he forget the whole thing: It is beyond question that in the heat of all
this, Mackniesh gave his promise to bargain with the Union if it won a Board elec-
tion, which he kept.
2. The 1951 and 1952 contract negotiations in the light of contemporaneous
establishment of the new companies
It has been previously noted that Industrial entered into contracts with the Union
in 1951 and 1952. But the General Counsel sees a flaw here as well. He stresses
that in the negotiations for each contract Mackniesh countered certain economic
demands of the Union with the statement that if the Union insisted on the given
demands, he would remove the operations of Industrial from Eaton Rapids. If we
were to grant the General Counsel's premise that this suggests an antiunion animus,
then tending to offset it even on his own hypothesis should be the fact that Mac-
kniesh acquiesced in an impressive array of clauses devoted to union solidarity
and job security. Thus the contracts contain clauses granting a union shop and
checkoff of dues, a grievance procedure with arbitration as the culminating step,
a seniority system, and even leaves of absence, without impairment of seniority,
to employees absent on union business.
The General Counsel contends that the removal threat, roughly contemporaneous
with the formation of the corporations in question, reveals a purpose to use these
corporations as groundwork to enable Mackniesh to make the threat good. What-
ever the legal significance of such a purpose (a subject for later discussion), the
record, in this narrator's view, supports the finding that such a purpose existed
even though the corporations had still another purpose-limitation of tax ability.
Reference has already been made to the credited testimony of James W. Harp
attributing to Mackniesh and his cohorts avowals that both these factors motivated
formation of the companies other than Industrial. And the Trial Examiner would
assume still another motivation , inherent in the corporate concept itself , limitation
of liability to extenders of credit in the amount of the assets put into each venture.
While these merely fiscal motivations might well have been sufficient to impel
resort to the corporate structure without the added impetus furnished by their
potential utility in coping with the Union, the latter motivation would seem to
have had a force of its own in conditioning the turn of events. This appears in the
credited testimony of Harp and Mitchell. Harp testified that in the deliberations
presided over by Mackniesh, it was stated that the new companies would "provide
an escape from the Union when the trouble came" because by vesting in the
Sales company the function of procuring the order from the customers and confining
Industrial purely to making such flasks as Sales ordered with it, Sales was empowered
to withdraw orders from Industrial and place them with another of the companies
equipped, actually or potentially, for foundry work. Indeed, Harp testified that
this was a specific purpose attributed to Pressed. Further details concerning Pressed
were supplied also by Mitchell: Pressed's tenure at the Hall Street extension before
it moved to Howell had been limited, under a lease, to a year. Mackniesh explained
to Miller that this was because they planned to move Pressed to another plant,
which would act as a "standby" for making foundry equipment, in the event of
labor trouble. And when Howell, which is 40 miles distant from Eaton Rapids,
was finally chosen as the location, Miller explained to Mitchell that the reason was
to "get out of the jurisdiction of the Jackson office of UAW [the headquarters of
International Representative Marsh]"; finally, well before the temporary transfer
of Industrial's operations to the Howell plant in the spring of 1954, there was
delivered from Industrial to Unified-Pressed at Howell an automatic welding ma-
chine (called a "weldomatic") whose utility was confined to the making of the
heavy, Industrial type of flask . Miller explained that it was needed for heavy
186 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
flasks should anything happen at Eaton Rapids .8 The limited scope of the conclu-
sion drawn should at once be made clear: All that is found is that Mackniesh, among
other advantages, visualized the corporations as useful in coping with the Union
should the need for it in his opinion arise.
C. The diversion of operations to Howell in 1954 and the attendant temporary
shutdown of Industrial at Eaton Rapids
As already noted, for a while in 1954, Unified-Pressed, at Howell, with machinery
loaned it gratis by Industrial, performed a large order for the heavy Industrial type
of flask. Also Smith, of Industrial, rendered technical assistance on the project at
no charge to Unified-Pressed. Ralph Every, the general foreman of Industrial,
helped in this operation; and in so doing he was carried on the Unified-Pressed
payroll as a welder. The attendant cutback in production at Industrial, climaxed
by a shutdown from mid-April to about July 1954, is claimed by the General Counsel
to be an unlawful lockout in derogation of Industrial's obligation to bargain with
the Union, as well as discriminatory against Industrial's employees in intent and
effect. We proceed to the details.
1. The Ford job as performed first at Industrial and then at Unified-Pressed
In December 1953, after a long period in which no business was done with
Ford Motor Co., Mackniesh procured an order from it. At the outset of the job
General Manager Smith of Industrial told the assembled working force that as an
opening wedge to a permanent account with Ford, the bid on the order had been
very close. Smith advised the men that in consequence, the incentive bonus would
be so tightened that they would earn little or no premium pay on it.9
Industrial performed the job at a loss, resulting mainly from delay in produc-
tion. Mackniesh testified he felt that the cause of the loss was a deliberate slowdown
by the men in resentment over curtailment of the bonus, though he admitted that this
was but an assumption. Employees, supported in that regard by Philip Morgan,
who was shop foreman at the time, testified there was no slowdown in fact; that,
to the contrary, the men had cooperatively agreed to forego the bonus in order to
have the Company acquire the Ford account as a means of bolstering its sagging
business and preventing layoffs.
Opposing theories have been advanced for the loss sustained on the job, and the
Trial Examiner does not conceive it as being within his province to resolve them.
The fact is that the job performed by Industrial at a loss was performed by Unified-
Pressed on the reorder at a profit. But this, urges the General Counsel, was not
the cause but the occasion for giving that work to Unified-Pressed, and that the
true cause was the desire, through the attendant cutback and shutdown at Industrial,
to discredit the Union and alienate the men from it, more particularly their local com-
mittee. He contends that Industrial was reconciled in advance to the likelihood
that it would not profit on the original Ford job, as evidenced by Smith's statement
to Foreman Morgan that to help realize the objective of the close bid, the Company
was willing to forgo profit for quality; and he stresses that one factor of delay was
a specification for tougher steel on the original order, which was dispensed with on
the reorder.1e Hence, as he claims, Mackniesh and Smith knew that Industrial could
have performed the reorder at a profit no less than did Unified-Pressed. But in so
8 Most of this is undenled. Some portions are qualified by Respondents. E. g., Mackniesh
testified he might well have used the term "standby" in describing the purpose of the
Howell plant, but only to indicate that it would be used to house such of his ventures as
could not be accommodated at the Hall Street extension in Eaton Rapids. He and others
testified the weldomatic was part of some "obsolete" equipment delivered for storage at
Howell, for which there was no storage space at Eaton Rapids. Without undue elabora-
tion, It is sufficient to state that Mitchell's testimony is credited as being more In accord
with the probabilities, and also on the basis of the relative quality of their testimony
taken as a whole.
P According to the testimony of employees, Smith told them that the bonus on the Ford
job would be eliminated altogether. The difference, in terms of the issue here, is not
crucial, but there is documentary evidence that bonus earnings, though slight, were made
by some employees in the Ford job (e. g., Arlo Thuma). The Trial Examiner accordingly
adopts the Smith version that he stated bonus would be tightened, rather than eliminated.
10 The steel concerned a small but important part of the flask (called the roll-off). The
steel required in the first job was Flexor, a very tough steel, to which the men and manage-
ment were unaccustomed and the machinery unsuited . The second order dispensed with
this requirement in favor of the milder steel used in the past.
INDUSTRIAL FABRICATING- INC. 18.7
contending, the General Counsel would seem to be opposed by his own witness,
Thomas G. Mitchell; who was privy to the deliberations culminating in the perform-
ance of the Ford job at Howell. Mitchell testified that at a conference attended,
in addition to himself, by Mackniesh, Smith, and Miller, he was told that the job
for the Ford flask had been performed at Eaton Rapids at a loss, and he was asked
whether he (acting for Unified-Pressed) could run it profitably. Upon Mitchell's
replying he could if he had the machinery, he was assured there would be no
problem on that score. Mackniesh then instructed Smith to quote on behalf of the
Industrial what was required in order for it "to make money," and directed Miller
on behalf of Unified-Pressed to quote the price at which Industrial had done the
original job (which apparently was the only price at which Ford would place the
order).
2. Conclusion concerning motivation for 1954 shutdown
That the above, taken in connection with evidence already detailed in the separate
discussion of the Respondents, persuasively bears out the General Counsel's con-
tention that the relationship among the conferees, far from being competitive as
between Unified-Pressed on the one hand and Industrial on the other, was simply
that of persons acting under the direction of a single person, Mackniesh, is one
matter. Granting that to have been so, and the Trial Examiner, after long and
careful deliberation, is persuaded and finds it was so, there is still the question of
whether Mackniesh acted to execute an antiunion vendetta or simply to make a
profit. The Trial Examiner has given weight to the testimony, not insubstantial in
character and quality, which would indicate that Mackniesh and Smith looked for-
ward, not without some grim comfort, to the chastening effects, as they viewed it,
that the shutdown would have on the men and their feeling toward the Union. In-
deed, statements made by Smith to Foreman Morgan and Oscar Pierson, an employee,
as credibly testified to by them,l' tend to show that by the time the first Ford order
was finished at Industrial, Smith expressed a rather bleak view of the prospects of
Industrial opening up as long as the men adhered to the Union, or at least to its exist-
ing shop committee, whom he referred to as "radicals." 12 The testimony of Foreman
Morgan gives some indication that Industrial was bent on effectuating the shutdown
even to the point of recalling orders from two customers other than Ford, which
had reached the state of layout preparations immediately preceding actual com-
mencement of production; and this happened immediately after a grievance meeting
early in 1954, over the discharge, on the ground of incompetence, of one Marvin
Bunker, a brother of Leo Bunker, the chief union committeeman. The grievance,
as it happened, was adjusted to the satisfaction of both sides.13 But the fact that
the decision to shut down the plant came immediately after this grievance, tends
to blur the outlines- of Industrial's motivation therefor. Especially is this so in the
face of the fact that at a grievance meeting preceding that of Marvin Bunker, Mac-
kniesh stated he was "sick and tired" of these grievances and the shop would be
closed if they were continued, and similar exasperation greeted a later grievance
over the discharge for incompetence of Ed Twitchell, a welder.14 The statement,
to be sure, was out of bounds, even though the grievance which evoked it was one
which Leo Bunker was pushing for himself, and with dubious merit at best. (He
11 Smith's denial of that testimony , vague in character , simply did not stand up against
the testimony of Morgan and Pierson , which was persuasively specific as to occasion and
circumstances. Morgan, additionally, was a disinterested witness, who so far as appears,
would have been happier not to have been called upon to testify.
12 The committee consisted of Leo Bunker, Arlo Thuma, and Harold Lord. Bunker and
Thuma were the dominant and aggressive members.
13 Leo Bunker's brother was reinstated , but, in view of his unsuitability for machine
work, to a less skilled position at material control.
14 The Trial Examiner has taken note of the character of Leo Bunker's testimony con-
cerning the meeting over the Twitchell grievance. Most of it (especially Bunker's quoting
Smith as demanding that the Union be "dissolv[ed]") has been rejected. What stands
out, in this Trial Examiner's mind at least, is that Twitchell was identified by Foreman
Morgan, testifying for the General Counsel, as one of three persons who were promoted
under the seniority provision of the contract to responsibilities beyond their capacities
and whose ineptness as welders Morgan thought largely accounted for the loss on the
Pord job. Considering management's mood at the time, a grievance critical of action taken
against Twitchell would likely be treated with impatience. Indeed the one aspect of
Bunker's testimony on the point having the most credible ring is a detail of the conversa-
tion, elicited by Respondent's counsel on cross-examination, to the effect that Smith
referred to the union contract as an obstacle to the weeding out of "deadwood" ( meaning
the three inept welders identified by Foreman Morgan).
188 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
was protesting, on the basis of his superseniority as committee chairman, the assign-
ment to two men, on an overtime basis, of a corrective operation on a job which
they had performed and which was in their particular specialty.)
But we are concerned here with a question of motivation, and the complex strands
of inner causation are not unraveled that easily. These grievances, pushed in the
setting of the beating which Industrial was evidently taking on the Ford job, would
tend to be among the congeries of factors entering into Mackniesh's deliberations
concerning the prospects of completing a second Ford job, with the bid as tight as
the first, at a profit. And while lack of merit in a grievance does not justify an
employer's threat of reprisal for presenting it, it is another thing to say that the
fact that the threat was made erases the significance of an actual loss on a job as
the explanation for not having the job done again at the same place.
The reef on which, in this appraiser's view, the General Counsel's contention
founders is that Mackniesh sincerely thought that the Ford operation, under its
exceedingly tight specifications, could not be performed profitably at Industrial but
that it could be so performed at Howell.
To adopt the General Counsel's position that the transfer to Howell also had
union punishment as a motive involves accepting either of two alternative posi-
tions: The first is that Mackniesh did not truly believe that the Ford reorder could
not be performed at a profit at Industrial. To support that alternative, the General
Counsel, as already stated, relies primarily on testimony that on the original order
much time was consumed with experimenting with an unprecedentedly tough steel,
which was dispensed with on the second order (footnote 10, supra), and also on the
fact that for the second job the time-consuming preliminaries of setting up the jobs
and fixtures were dispensed with because they had already been set up during the
first job. That may be so. But it will be recalled that the General Counsel's own
witness, Mitchell, testified that his advice during a management conference was a
decisive element in Mackniesh's making the decision to perform the job at Howell.
If "teaching the Union a lesson," to use the General Counsel's term, was one of
the motives, it would seem reasonable to expect that something would have been
said about it at that time, and there is no evidence that there was. The General
Counsel's showing would rather seem to add-up to management's being mistaken
in its view that Industrial could not perform the job profitably at Eaton Rapids,
and that is so only if we attach as much weight to certain factors as does the General
Counsel, which his own witness, Foreman Morgan, apparently did not. The further
jump from there to the conclusion that Mackniesh was not sincere in his feeling that
he was facing a second loss at Industrial assumes that the error in management's
calculations, if error there was, was too patent to be honestly entertained. But this
assumption would be unfounded, particularly in the light of the stress laid by the
General Counsel's witness, Foreman Morgan, on the ineptness of some of the
welders (in addition to the toughness of the steel) as accounting for the loss on
the first Ford job (see footnote 14, supra).
The second adjunct to the General Counsel's contention would have to be that
however sincere Mackniesh was in the view that the second Ford job could not be
performed at a profit in Industrial, he would still have carried on at Industrial
but for his resentment of the Union. To accept that proposition is to ignore the
all-pervasive motivation of the entrepreneur-to make a profit. That the Union
entered into Mackniesh's calculations in his decision is a reasonable, indeed a com-
pelling, inference from the record. But the crucial consideration is not the fact
that it played a part but how it did. It is one thing to take a step with union
destruction as the objective; it is another to take account of the existing situation as
bearing upon one's determination of whether a given operation can be profitably
run. See N. L. R. B. v. Adkins Transfer Co., 226 F. 2d 324, 328 (C. A. 6).15 And
the latter, it seems to this observer, is as far as the calculation concerning the
Union carried Mackniesh. In terms of whether he could perform the second Ford
order at Industrial at a profit, it may be assumed that he did not, as indeed he
could not, insulate his thinking from Leo Bunker and his largely self-interest gen-
erated absurdities. That, undoubtedly, is what Mackniesh meant when, upon being
asked at a grievance meeting on April 30, 1954, concerning the removal of foundry
equipment from Industrial to Unified-Pressed, he responded, "I hope the men in
the shop are satisfied now that Bunker has succeeded in shutting down the factory."
And that, upon balanced appraisal, would seem to be what Mackniesh and Smith
had reference to when they did mention the Union in answering questions con-
cerning the prospects of reopening at Eaton Rapids. The key would seem to be
supplied in Foreman Morgan's testimony concerning Mackniesh's and Smith's state-
15 See also Mount Hope Finishing Co. v. N. L. R. B., 211 F. 2d 365 , 371-72 (C. A. 4).
INDUSTRIAL FABRICATING INC. 189
anent to him on that point, when the plant closed down: They stated they would
close down the Eaton Rapids plant for a while, and, "they would just leave it set if
they couldn't make money with it." Industrial did reopen after the second Ford
job was completed at Howell. This, normally, would indicate that the shutdown
was pinpointed to the Ford operations. But tending to deprive Industrial of the
benefit of such an inference, is that Unified-Pressed thereafter- performed two
additional fabricated flask jobs for companies other than Ford. These jobs, how-
ever, were minor in scope, and the Trial Examiner finds merit in Respondent
counsel's explanation that they were carried along in the momentum of the active
use being made of Industrial's foundry equipment at Howell at the time.
On careful consideration of the record as a whole, it would appear that the
evidence pointing to a desire to avoid a second loss on the Ford job as the sole
motivation for the transfer to Howell is at least in even balance with the evidence
pointing to reprisal against the Union as one of the motives. That being so, the
General Counsel's contention that the latter was a motive fails for want of the
requisite quantum of proof to satisfy his affirmative burden. Hence, the transfer
of the Ford job to Unified-Pressed and the attendant shutdown- at Industrial is
found not to have been a discriminatory act in violation of Section 8 (a) (3).
So to say does not vest with legality everything that Mackniesh and Smith said
and did contemporaneously with and after the shutdown. Just as statements, other-
wise illegal, do not conclusively and in disregard of all else, illegalize the motivation
for the shutdown, so too does the legitimacy of the shutdown not immunize certain
conduct surrounding it. For example, there is the use to which Mackniesh and
Smith put the shutdown after it occurred, which will occupy our separate attention
later. And there is also the failure of management to give the Union advance
notice of its intention, to which we turn now.
3. The failure to give prior notification to the Union as a violation of
Section 8 (a) (5)
Though the assignment of the Ford order to the Howell plant, with,the attendant
shutdown at Eaton Rapids, was not illegally motivated, as has been found, there
is merit to the General Counsel's position that the failure to notify the Union of
the contemplated step was in derogation of the obligation of Industrial to bargain
collectively with the Union. Granted the legitimacy of the motive for the step
taken, there is still the question of the legitimacy of the procedure followed. The
step in question had adverse economic effects on the_ employees, which they were
entitled to seek to mitigate and perhaps avoid altogether through negotiation with
their employer. The transfer of machinery and operations to the Howell plant
opened up, as the record shows, new jobs there, for which the employees at
Industrial might have wished to bid. Further, discussion with the men would
have afforded them an opportunity to give their version concerning the reason for
the loss on the Ford job in order to persuade management that the loss-producing
factor would not be present on the second order and therefore that operations at
Industrial should continue. It would have put them in a position to seek to dispel
the notion in management that the loss on the Ford job was occasioned by a
deliberate slowdown, and thereby to move the latter to give fresh weight to factors
calculated to induce it to continue the operation in question at Eaton Rapids. The
factors included matters already alluded to, such as the difference in the toughness
of the steel on both jobs and the head-start on the second job derived from the
fact that the setup table with the jigs and fixtures was already completed. They
could also have included a proposal to adjust still further the scheme of compensa-
tion for the given job so as to make it sufficiently cheap to insure a profit.
The conclusion that the failure to give the Union advance notice of the step
was in default of the obligation to bargain collectively with the Union does not
depend on independent evidence that further negotiations would have resulted in
such an adjustment in this case. The bargaining obligation rests upon the assump-
tion that such possibilities inhere in any situation involving the accommodation of
adverse interests within a given venture. It rests upon the proposition that the
parties, through open discussion, will thereby better explore possible alternatives
before either takes action which is fraught with adverse consequence toward the
other. And it is bottomed upon the assumption that seemingly insoluble difficulties
will likely yield when treated to the "exchange of ideas" inherent in the process of
"democratic collective bargaining." 16 Indeed, it is but an extension to the field of
labor relations of the principle-in our jurisprudence, which makes all-important the
16 S. Rept. 573 on S. 1958, 74th Cong., 1st sess. (1935), p. 5.
190 DECISIONS. 0P: NATIONAL LABOR RELATIONS BOARD
right to be heard. Basically it is that the action adverse to a given interest should
be,-withheld until that interest is heard. And this, indeed, is what-is reasonably to
be. deemed to underlie the body of doctrine declaring that though a transfer of
operations be devoid of antiunion reprisal as its motive, it should be preceded by
disclosure of intent as part of-an employer's bargaining obligation to`the employees'
statutory representative. See Bickford Shoes, Inc., 109 NLRB 1346; Diaper Jean
Manufacturing Company 109 NLRB 1045, enforced sub nom. N. L. R. B. v. T. A.
Tredway and S. E. Taylor d/b/a Taylor Manufacturing Co., 222 F. 2d 719 (C. A.
5); Brown Truck and Trailer Manufacturing Company, Inc., etc. 106 NLRB 999,
1016; California Footwear Company, 114 NLRB 765; Twentieth Annual Report of
the National Labor Relations Board, 1955, at 97. It is -accordingly found that the
failure to make such prior disclosure to the Union or the committee of the intent to
transfer operations to Howell was in contravention of Industrial's bargaining obliga-
tion, and thereby constituted a violation of Section 8 (a) (5) and (1) of the Act.17
D. Conduct of Industrial between the 1954 shutdown and the strike of May 9, 1955
As previously noted, operations were resumed in about July 1954 only to be dis-
continued altogether in September 1955 concurrently with the transfer, later dis-
cussed, of all of Sales' heavy flask requirements to a newly formed company,
Respondent Paragon. We are concerned with occurrences during the interim period.
In the main, they denote a progressively deteriorating relationship between manage-
ment and the working force, culminating in a 6-week strike beginning May 9, 1955.
The strike was settled June 20, 1955, under terms marked by a singular capitulation
by management on nearly all scores. The union representatives testified that the
strike negotiations were a belated realization of their desire to have management
negotiate with them concerning matters which were left seething following the
April 1954 shutdown. (E. g., the elimination or drastic curtailment of the incen-
tive bonus generally, the failure to follow seniority in recalling certain employees,
and the discharge of Committeeman Arlo Thuma, later considered.) Whether the
strike is to be definitively characterized as an "unfair labor practice strike" we need
not decide, for the near-completeness of management's capitulation (the only excep-
tion being Thuma's case) makes that issue academic for purpose of remedy. The
strike and its settlement are simply a retrospective viewing post for the occurrences
which preceded insofar as the General Counsel urges them as a basis for independent
finding of unfair labor practices.
17 It will be, noted that effect has previously been given to the decision of the Sixth
Circuit in N. L. R. B. v. Adkins Transfer Company, Inc, 226 F. 2d 324 (C. A. 6), as
supporting the proposition that an employer who transfers or sublets a given operation
for economic reasons is not to be deemed to have been engaged in an act of antiunion
reprisal because it took account of the cost of operations under union demands as one of
the factors governing its decision. Insofar as Respondents' counsel urge this case as a
basis for relieving an employer of an obligation to make disclosure to its employees'
bargaining representative of its purpose and to afford it a reasonable opportunity to discuss
it, counsel would appear to be stretching the holding and its rationale beyond warrant.
For in Adkins, the discontinuance of the function there involved comes in the wake of
bankrupting wage demands which the record conclusively showed were inexorable and
would be backed up by a strike which would have shut down the plant completely. This
was not the situation here. It is not to be assumed that the court intended to rule out as
a component aspect of the parties ' reciprocal bargaining obligations, the mutual explora-
tion of more moderate alternatives before resort to the drastic ultimate. Indeed, the very
right an employer has to consider the Union as bearing upon the factor of labor cost gives
added point to the need for open discussion concerning it with the Union before the adverse
action is taken. The Union can advance suggestions which could move management to
revise its calculation on that score , or alternatively , if itself persuaded that management's
calculation is sound, the Union can propose wage adjustments to mitigate the cost factor
to the extent needed to insure a profit , and thereby , to continue operations. Underscoring
the distinction here mentioned are two decisions of the Fifth Circuit. The first is
N. L. If. B. v. Houston Chronicle, 211 F. 2d 848, on which the Adkins case largely relies
(pp. 327-328), and the second is N. L. R. B. v. T. A. Tredway and S. E. Taylor d/b/a
Taylor Manufacturing Co., 222 F. 2d 719, which sustained the Board's determination in
Diaper Jean, Manufacturing Co., 107 NLRB 1045, that though a proposed transfer of
operations be legally motivated , an employer 's bargaining obligation entails making _
advance disclosure of such intention to the bargaining representative as a basis for
mutual discussion.
INDUSTRIAL FABRICATING INC. 191
1. Statements contemporaneous with the shutdown
It has, already been stated that- quite apart from the legality of its motivation,
management was neither blind nor averse to the chastening influence which they
envisioned the 1954 .shutdown would likely have on the men in their relationship
to the union committee. Indeed, while the layoffs were occurring early in April
1954,. and before the actual shutdown later that month, Smith stated to employee
Oscar Pierson that the shop would run if the men got rid of those "radicals" (see
footnote 12, supra). In another conversation, Smith told employee Pierson that if
the men abandoned the Union, they would receive more benefits, such as paid holi-
days and vacations and steady employment.18 Statements attributed by Leo Bunker
and Arlo Thuma to Smith at a meeting on April 9 and to Mackniesh at the April
30 meeting previously mentioned to the effect that the plant would not reopen while
there was a union contract, are not credited.19
2. The alleged discrimination against Oscar Pierson and the discriminatory discharge
of Arlo Thuma, upon their recall following the 1954 shutdown
Some persons employed before the 1954 shutdown were not recalled when opera-
tions resumed. The General Counsel claimed that the persons thus left out were
discriminated against. The claim is rejected, for it appears that Industrial reopened
under considerably reduced work requirements, and there is no showing that dis-
criminatory motives governed the selection for recall. It is true that there was a
question of whether Industrial honored the seniority of persons not otherwies here
involved?a But this would seem to have been simply a grievance under the contract,
which was finally, and apparently satisfactorily, adjusted as part of the settlement of
the 1955 strike.
There remains only for consideration the cases of Oscar Pierson and Arlo Thuma,
who, although recalled in line of seniority, as a result of their interviews with Smith,
wound up off the company payroll altogether. The General Counsel's claim that
this last was due to antiunion discrimination is considered below.
a. Oscar Pierson
Pierson, employed since 1950, had by the time of the shutdown 'in April 1954,
advanced to the position of a "layout" man, a step above a welder and below that
of working foreman. He was officially notified to return about July 24, but about
2 weeks earlier, he called on Smith on his own. Smith then "warn[ed]" Pierson
he would be recalled shortly but that the work would be part time-3 days out of
the .week and perhaps 2 weeks out of the month, and that this would continue until
the plant • was sold. In that connection Smith referred to a sign which, for some
period, had been in front of the premises advertising the plant for sale. Two weeks
later, when Pierson called pursuant to a letter from Smith, the latter repeated, in
substance, what he had said on Pierson's first visit. At the same time, he told Pierson
he would be stepped down to a welder's position at reduced pay. Pierson, who was
then steadily employed elsewhere, decided not to come back.
18 Leo Bunker testified that Smith made the same statement to him during the discussion
of the Twitchell grievance, but this was another detail he did not recall until cross-
examination. Bunker's testimony is not credited. Pierson's testimony which is credited,
was. corroborated by Foreman Morgan, in whose workroom the statement was made.
Morgan was a disinterested and temperate witness, as already noted (footnote 11, supra).
ie The Trial Examiner has already noted that the Union may well have entered into
management's deliberations. Indeed, Foreman Morgan credibly testified that Smith, when
the Ford job was completed, expressed a preference to operate without a union. But
Bunker's free-swinging attribution to management of antiunion statements in virtually all
his conversations leaves the Trial Examiner dubious about crediting his uncorroborated
testimony on controverted matters, especially in the light of the contradictions in much of
his testimony, many of them inane. And he does not deem Thuma's testimony adequate
corroboration , for his confidence in Thuma's reliability is shaken by, among other things,
the latter 's lack of candor when confronted with his own handwriting contradicting his
testimony on another matter (namely, whether he received a bonus on the Ford job).
Bunker's testimony concerning Mackniesh 's statement at the April 30 meeting was not
corroborated by Harold Lord, the only other committeeman who was present. The latter,
a painstaking and honest witness, quoted Mackniesh simply as saying the plant would be
closed and operations moved elsewhere "unless we got things straightened out," without
explaining the last statement.
20 Marvin Bunker , Glen Olney , and Clement Duck.
192 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The General Counsel contends, in essence , that the warning of a reduced work-
week was in execution of Smith 's plan , which he had confided first to Foreman
Morgan and later to Tom Mitchell of Unified-Pressed , to discourage the old crew
from returning by "starving" them out with part-time employment , leaving them
an income too meagre to live on but enough to bar them from receiving unemploy-
ment compensation . But the controlling factor in Pierson 's deliberations would seem
to have been uncertainty as to the duration of his tenure in view of the fact that the
plant might be sold and his refusal to submit to a demotion.
The likelihood that the plant might well be sold was not a fictitious one, for
Mackniesh creditably testified that he then actively contemplated the sale of Indus-
trial. The step down in grade would seem to have followed in downward rotation
from similar reductions experienced by top level personnel, due to the contraction
in business. Thus the job of general foreman had been dispensed with, its func-
tion being absorbed by Smith. Ralph Every, who had been general foreman (and
who spent a month on Unified-Pressed's payroll assisting on the Ford job), on
resumption of operations at Industrial became a working foreman responsible for
layout work as well.21 And Foreman Morgan too was told he would have to
take a cut in pay. While much was left to be desired in the way Smith announced
Pierson's proposed demotion, assigning him no reason therefor, this is not the
issue. The Trial Examiner, on all the evidence, cannot say that there was discrimi-
nation against Pierson in fact; much less can he discern a motive to single out
Pierson for discriminatory treatment as a means of discouraging membership in
the Union. The claim that the statute had been violated in respect to him is
rejected.
b. Arlo Thuma
(1) The discharge
The discharge of Arlo Thuma on his recall would seem to have been a festering
point between Union and management, which even the strike did not settle. Em-
ployed since 1947, he was the apparent dean in length of service. A committeeman
from the Union 's inception in 1951, he was among the three committeemen men-
tioned by Smith to Pierson as "radicals" whose tenure in that office lessened the
chances of Industrial's resuming operations (footnote 12, supra).
Thuma, when laid off on April 29, 1954, was a hydraulic press operator and
an apparently all-round craftsman in the metal fabricating field. Sometime in May
1954, he received a written notice to call at the Industrial office. He reported
within 3 days, 2 days after the time specified in the notice but 4 days within the
grace period provided by the contract. Not finding Smith at Industrial, Thuma
waited at the adjoining building, where Smith was managing Plastic. Smith finally
appeared and told Thuma, "I have got a little job for you over here at Industrial."
Thuma followed Smith toward the Industrial building, whereupon Smith turned
around and told him he had nothing for him and would call when he needed
him.22
Thuma received a second notice on June 1 and he responded within the period
provided by the contract. Smith asked Thuma if he was ready to go back to work,
and when Thuma replied he was, Smith brought him to the plant and told him
to sweep the floor, clean up the grease and wash the windows. These chores had
been part of the duties of Glen Olney, the regular janitor, who had been laid
off a few days earlier than Thuma. Thuma replied that under the contract, he
was supposed to be recalled when his job reopened. Smith thereupon accused
Thuma of "refus[ing] to do a job," and Thuma disputed this characterization
of his attitude. Smith thereupon discharged him. Smith rejected grievances involv-
ing Thuma.23 However, a year later, in the settlement of the 1955 strike, Smith
suggested that Thuma be asked whether he wanted to come back, but as a new
employee. When this suggestion was relayed to Thuma by the Union, he re-
jected it.24
21 Although Every had shared some of the layout work with Pierson during his tenure
as general foreman, the sense of the record indicates that the reduced work demands now
enabled him to do all of the layout work required.
2' Smith did not indicate that Thuma's calling a day after the time specified in the
notice was a factor in this change in signals, nor has it been so claimed.
2' As later appears, when the grievance concerning Thuma was presented in August,
Smith stated he would recognize no further formal grievances.
2' Smith, who was the first to testify concerning the matter, did not mention he attached
the qualification that Thuma's return be as a new employee, but he never denied the later
testimony of Bunker and International Representative Marsh that such was the stricture
attached to his suggestion.
INDUSTRIAL FABRICATING INC. 193
(2) Conclusion concerning Thuma's discharge
Respondent based the defense of its action upon the duty of an employee to
obey ,his. employer's instructions. The principle invoked is incontrovertible, and,
in recognition of it, the Trial Examiner has subjected the General Counsel's position
to the closest scrutiny both in his questions to Thuma at the hearing and to the
General Counsel on oral argument. The following aspect of the General Counsel's,
position stands up: The sweeping and cleaning assignment, completely out of line
with Thuma's regular duties, was not brought or sought to be brought within range
of his duties by an explanation of why this assignment was being made. The
incident occurred several weeks before actual resumption of operations. So far
as appears, there was no previous occasion when a production employee had been
called upon to clean up the plant, nor did Smith explain to Thuma the occasion
for his asking him to perform that task, or for that matter, indicate that it was
only a chore and not a demotion. While Olney, the janitor, was not put back to
work until after the 1955 strike (as part of the adjustment of the three seniority
cases previously referred to, footnote 20, supra) there was no indication then that
his services were being dispensed with. There is a question therefore, unanswered
by Respondents, as to why Thuma, who was working elsewhere at the time, should
have been called away from that job well before his regular services at Indus-
trial were required, to perform a menial task which, so far as appears, could have
been performed more cheaply and better by the janitor or any day laborer.
On the other hand, statements made by Smith to other persons tend to indicate.
that his action was prompted by other than normal operational considerations.
Thus, shortly after Thuma's discharge, Smith told Mitchell of Unified-Pressed,
according to the latter's undenied testimony, that he "had the Union where he
wanted it," and that he had "finally" succeeded in firing Thuma by "putting him
on sweeping." In August 1955 Bunker informally brought up Thuma's name in
the course of discussion of another subject. Smith replied that Mackniesh was,
adamant on Thuma. Bunker then stated that he long knew management "wanted
to get rid of our local." To this Smith retorted that "he wasn't particular whether
it was Arlo or you but we felt we could deal with one of you but not two of-
you ." 25
Thuma, it can be said here, as the Trial Examiner observed him, is not a "sym-
pathetic" personality. And if there were a sharp conflict in the versions of Smith
and Thuma, making the issue hinge on who as between them is to be believed, it.
may well be doubted that testimony of Thuma, uncorroborated, would stand up
under such controversion. (See Trial Examiner's comment on Thuma at footnote
19, supra.) But such is not the case here. There is substantial agreement between
Thuma and Smith concerning what happened. There is no dispute concerning the-
context in which it occurred. And the statements of Smith to other witnesses, which
illuminate his motivation, are substantially undenied, and, additionally, are in-
herently worthy of credit in the light of all of the circumstances. The Trial Ex-
aminer is constrained to conclude that Smith had no reasonable expectation that
Thuma would accept the cleaning assignment without some reaction from Thuma.
calling for clarification as to Smith's purpose and intent, and that Smith, pursuant to.
plan, seized up the reaction to discharge Thuma under the pretext of insubordina-
tion. Had Smith's discharge really been the result of resentment over Thuma's.
refusal to carry out his orders, it is not unreasonable to expect, the circumstances
being what they were, that Smith, after cooling off, would have been receptive to
to considerations sympathetic to Thuma's position. Smith's enduring adamancy-
thereafter would seem rather related to his earlier expressions of animus against the
3 committeemen, his gloating statement to Mitchell concerning his triumph over the
zs Smith, who preceded Bunker as a witness, testified, in response to a general question,
by the Trial Examiner, that after the June 1955 strike settlement, the Union did not bring
up the Thuma case again. In the light of Bunker's later testimony that this specific
reference to Thuma came up in the course of an informal talk between them, it is un-
certain whether Smith's general statement can be regarded as a denial of Bunker's,
testimony for the sense of Smith's statement, taken in context, would seem to be merely
that Thuma's case was no longer pressed as a union grievance. The Trial Examiner,
although ever wary of uncorroborated testimony by Bunker (footnote 19, supra), finds.
this testimony of Bunker, apart from its not being specifically controverted, supported by
other facts of record : The statement attributed to Smith is in line with the animus toward
the three committeemen expressed by Smith and Pierson, and with the triumphant tenor
of his comment to Tom Mitchell immediately after the discharge. Bunker's testimony that-
Smith made it is accordingly credited.
476321-58-vol. 119-14
194. DECISIONS .OF` NATIONAL. LABOR; RELATIONS BOARD
Union and Thuma'by assigning the latter : tosweeping, 'and his statement to Com-
mitteeman Bunker that he could deal with either, him or Thuma alone but not
the. 2 together. Nor - can it be altogether divorced from 'the provocative back-
ground 'to this occurrence' furnished by Smith's futile summons of Thuma to the
plant in May, likewise with no mitigating explanation 26 The circumstances taken
in combination rather persuasively indicate that Smith was carrying out a plan
designed to provoke Thuma into a reaction which would furnish the occasion for
being rid of him as one of the Union's two most aggressive committeemen. A plan
thus conceived and consummated undermines the employer's claim of insubordina-
tion as a defense , since it exposes the insubordination as not a reason but a pretext,
and of the employer's own devising . See L. & H. Shirt Co., Inc., 84 NLRB 248,
249. And this the Trial Examiner finds, was the case here . The real reason for
Thuma's discharge, this Trial Examiner finds, was his militance and aggressiveness
as a union committeeman . The discharge accordingly offended the provisions of
Section 8 (a) (3) and (1) of the Act.
3. Additional violations
a. Coercive statements
The resumption of operations saw management in a considerably strengthened
position , vis-a-vis the Union . When Leo Bunker, about a month after the reopen-
ing, submitted the grievance concerning Thuma's discharge , Smith stated that "we've
been having a lot of petty grievances which must be stopped ," that he was "not
recognizing any more grievances ," and that while he would discuss any matter
informally with Bunker, he would decide "whether or not you have a grievance." 27
Bunker presented no written grievance thereafter until December 17, 1954, which
like the one which exasperated Mackniesh early that year, concerned a claimed
violation of his superseniority . Smith forced Bunker to sign a withdrawal of that
grievance under threat of a layoff and reduction in pay.28 The intimidatory action
in both cases was . a repudiation of the employer 's obligation to bargain and an
interference with the employees ' guaranteed rights, in violation of Section 8 (a) (5)
and (1), respectively.
b. Unilateral discontinuance of bonus
During the period from the resumption of operations at Industrial in July 1954
to the strike of May 9, 1955, the men were not receiving their accustomed bonus,
or if they were getting some, as Industrial contends , it would seem to have been
negligible . So one would have to infer from the fact that one of the terms of the
settlement of the strike on June 20 , 1955, was a lump sum paid to every employee
then on the payroll, which represents the accustomed bonus of which they had been
deprived from the date they returned to work following the 1954 shutdown to
May 9, 1955, the date the strike began. It is true that for this situation, the
committee filed no grievance prior to the strike . But this does not erase the
fact that the bonus was eliminated with no notification to the Union or discussion
with it concerning the matter . Nor have Respondents advanced any explanation
of why this was done. Insofar as full reimbursement was given to those men who
were on the payroll at the time of the strike settlement , the matter would seem to
be academic for purposes of remedy . But the General Counsel contends that it
is not academic in respect to those persons who were recalled to work in the
summer of 1954 , but whose employment terminated before the strike. The conten-
tion would seem to have merit . The unilateral elimination of part of the employees'
compensation without prior notice to the Union was in contravention of the em-
ployer's bargaining obligation with the Union under principles too well established
to require elaboration. May Department Stores v. N. L. R . B., 326 U . S. 376;
N. L. R. B. v. Niles-Bement-Pond, 199 F. 2d 713 (C. A. 2). The elimination of the
26 As previously noted ( footnote 22), although Thuma called a bit later than the 1 day
specified in the notice , Smith neither at the time nor at the hearing attributed his abrupt
change of mind to that circumstance.
V This testimony is undenied, and being consistent with the tenor of events , is credited.
Bunker also testified that Smith in this talk offered him a bribe to lead the men away from
the Union . He testified concerning a similar offer made to him by Smith about a month
earlier. The testimony, while not specifically . denied, is neither corroborated by other
testimony nor reinforced by surrounding circumstances . It is rejected.
28 Bunker's testimony concerning this event is undenied by Smith and is corroborated by
Committeeman Harold Lord , a credible witness ( footnote 19, supra).
:IND.USTRIAL.:FABRICATING.INC. 195
bonus must ,also be.-considered in connection with Smith's declaration to Foreman
Morgan and to. Tom Mitchell, showing an intention to reduce their income as a means
of alienating the men from the Union and the committee. So considered, the action,
unexplained, is open to the inference that its purpose. was to discourage membership
in the Union. Not having explained it, Industrial has let the inference stand. It
follows that the summary discontinuance of the bonus was also discriminatory in
violation of Section 8 (a) (3) and an interference, restraint, and coercion of the
employees in violation of Section 8 (a) (1). Intermountain Equipment Company,
114 NLRB 1371; Young Engineering Company, 57 NLRB 1221, enforced 16 LRR
Man. 921 (C. A. 7).
We come to the events culminating in the shutdown of Industrial and the emergence
of Paragon.
E. The events in 1955 culminating in the permanent shutdown of Industrial and its
replacement by Paragon as the producer of heavy flasks
1. The negotiation for the new contract and the ensuing shutdown of Industrial
The strike settlement of June 20, 1955, which as noted, entailed substantial mone-
tary concessions by management, occurred during the life of the current 3-year
contract, which was expiring September 30. Pursuant to the standard 60-day
cancellation provision, the Union on July 25, 1955, sent Industrial a notice of a
desire to terminate the contract and to negotiate a new contract, with still more
favorable terms, but not specifically spelling out the particulars.
A conference was held August 10 with Smith representing management and
International Representative Marsh and the committee representing the Union.
There the Union clarified the items in the July 25 notice. Apart from certain items
which Smith deemed of minor import and on which he was ready to yield, the
Union demanded a guaranteed annual wage, after the pattern recently pioneered
with Ford Motors, a 6-cent an hour wage increase for each year of the contract,
after the pattern of General Motors, and a highly enlarged insurance plan. In the
aggregate, according to International Representative Marsh's testimony, this entailed
a "package" increase of 35 cents an hour. Smith indicated a willingness to double
Industrial's current monthly contribution toward insurance, but stated the Company
could not assume the expense entailed in the package deal demand and stay in business.
Marsh, according to his own testimony, stated the Union was "not trading horses
for rabbits" and that "we had no control over whether they closed up or whether
they kept the plant opened." Smith, while none too sanguine about the Union's
receding from its demands, arranged with it for another meeting, first to get his
instructions from Mackniesh, and secondly, because of his general belief that
"negotiations are a poker game" where the parties "take a final stand" as "bargaining
strategy," from which they might well recede as negotiations progress.
The meeting, set for August 25, was postponed to September 16, at Smith's re-
quest. On that day, Committeemen Bunker and Lord, who also were the only
employees left in consequence of a sharp curtailment in operations following
the August 10 meeting, waited in vain for Smith at his office, and then left for home.
Smith then caught up with Bunker as the latter was driving away and read a letter
to him from Attorney Colman, as follows:
The stockholders of Industrial Fabricating Inc., have decided that the company
shall discontinue business operations. I have been instructed as its attorney
to take the necessary steps to dissolve the corporation.
Industrial's doors have been closed ever since.
Smith testified there was a meeting held with the Union before he exhibited the
letter, in which the Union stated it would not tone down its demands. But, on fur-
ther questioning, his testimony disintegrated on every aspect of the alleged meeting-
concerning who was there, how it was called, what was said, just when it was held,
and finally concerning whether it was held at all. Such testimony was hardly the
kind to stand up against the positive and precise testimony of Bunker and Lord
concerning what happened on September 16, which indicated rather clearly there
was no bargaining conference after the one of August 10. It is found there was none.
Mackniesh, very early in the hearing, before the controversy over the later meeting,
testified that the decision to close down the plant at Industrial occurred in August,
and that afterwards, until the actual shutdown on September 16, Industrial took no
new orders but merely finished the old ones-a fact confirmed by the sharp reduction
in the working force of Industrial from early August to the date of the shutdown 29
29 There were 9 employees the week ending August 12, and 2 the week ending Sep-
tember 16.
196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
It is accordingly found that the decision to close Industrial was made immediately-
after the August 10 conference . The inference drawn is that the decision was made
on the basis of Smith's report to Mackniesh concerning the tenor of the August 10
meeting. Mackniesh earlier testified that the concessions made at the June 20
strike settlement represented the maximum in labor overhead which he deemed
to be economically feasible for the operations of Industrial . While he, like Smith,
testified that the decision to close was made after Smith reported that the Union
would not recede from its demands , the more reasonable inference , taken in con-
nection with the fact that he deemed the existing labor budget the maximum one
feasible, is that , on the basis of what occurred at the August 10 meeting , he concluded
that whether or not the Union pared down its demands , there was no hope of its.
doing so to the point of its nearly completely withdrawing them, and accordingly,
that another meeting from management 's view would be futile. Hence the decision
to close. The explanation of why this was concealed from the Union and why it was
led to believe another meeting would be held would seem to lie in the contempo-
raneous activity of Mackniesh in launching Paragon and setting it up to replace
Industrial as the producer of the foundry flasks for Sales.
2. Industrial 's replacement by Paragon as the producer of the Industrial type of flask
Mackniesh initiated the plan to form a new flask-producing corporation in
May 1955, when the strike was in progress . The actual incorporation of Paragon
occurred June 27, 1955 , but it was already launched as a going concern before
then . A building was rented late in May , some machinery was moved from
Industrial to Paragon in June, and in the same month Paragon , through Sales,
procured its first order . There was another shipment of Paragon machinery in
July. While Industrial 's business was tapering off, Paragon 's was correspondingly
on the upgrade . But it was after the shutdown of Industrial that Paragon 's business
showed a rise to dimensions equaling Industrial 's at its zenith , and it was after the
shutdown that nearly all of Industrial 's machinery was moved to Paragon.
After the shutdown of Industrial , Sales , which had occupied Industrial 's building
in Eaton Rapids , transferred its quarters to the office of Paragon , and the relationship
functionally between Sales and Paragon duplicates substantially that which prevailed
between Sales and Industrial , as described in part III of this Report. In addition,
from the outset , Sales has financed Paragon's operations , for which it is reimbursed
out of the proceeds of the product . The office of Paragon is occupied by the same
two persons who functioned managerially at Industrial-Smith and Every. At
Industrial , Smith was general manager of Industrial and sales engineer of Sales,
with his salary charged to Industrial ; Every was general foreman of Industrial under
Smith. Now their titular designations have altered . Every is general manager of
Paragon. Smith's present designation is merely sales engineer for Sales, with his
salary charged to Sales; and the plant is also visited by Mackniesh with approximately
the same regularity as he visited Industrial.
The General Counsel contends that Paragon is merely a front for Industrial and
hence jointly responsible with Industrial for what he conceives to be a lockout of
Industrial which is twice illegal-first as an evasion of Industrial's bargaining
obligation with the Union , and secondly as a discrimination against Industrial's
employees.
Were the Trial Examiner persuaded that Industrial 's conduct had the legal signifi-
cance claimed for it by the General Counsel, he would likewise be persuaded that
for purpose of remedy , there is no distinction in law between Industrial and Paragon;
and this would be so despite the fact that recordwise there is not a familiar name
in the roster of Paragon 's titular principals . Its stockholders of record are Herbert
A. Cross and Jerome A. Vanek, holders of one-third and two-thirds of the stock,
respectively . They are also its principal officers and directors , Cross, the president,
and Vanek , the vice president . Even the incorporating attorney is a new figure;
not David Colman, who incorporated the other corporate Respondents herein
involved, but one Magnotta of Albion. And the third officer and director of
Paragon , Joseph V. Wilcox, its secretary ( who is counsel for Paragon in this
proceeding ) derives his status from his being an associate of Magnotta.
These new names , however, are linked by an old one, Frank Mackniesh. He
procured them all. Cross and Vanek never conferred with each other before
becoming the purported principals of Paragon and have never done so since. And
they still know each other only by reputation. Vanek to this day has never seen
the plant of Paragon , in which he is the purported majority stockholder . Indeed,
we have it from Cross , who presumably was so informed by Mackniesh , that Vanek
conditioned his lending his name to the venture on his having no participation in
it whatever . (That , Cross testified , is why Vanek was made vice president.) And
INDUSTRIAL FABRICATING INC. 197
-Cross, 77 years old, an engineer by profession, now semiretired, had never before
been in the foundry flask business, nor in business for himself. He, too, stipulated
to Mackniesh that his presidency would not take up "much" of his time. Indeed,
it has not. On his own testimony, he was at the plant 4 times, the first 2 when
Mackniesh brought him to Milan in May to sign the lease for the plant building,
which Mackniesh sought out, and the second, the beginning of June, when he
"hired" Every, erstwhile general foreman of Industrial to be general manager of
Paragon. The third was in July, and the last was in September-5 months before
the hearing and when Paragon had not yet realized its business potential. For all
.the familiarity the above gave Cross with the operation and for all the supervision
he exerted, he might as well have joined the absent Vanek. With the amiable
unconcern of a person utterly dissociated from what he was describing, he testified
to a pervasive ignorance of the venture somewhat alien to even a most tolerant
chief executive. He did not know the amount of orders or business being done
by Paragon, did not know the amount of its inventory or where it is obtained from,
did not know the amount of the labor costs or anything about the wage scale, and
he never asked. Cross' explanation for his passivity was that from the moment
he hired Every, he left everything completely to him. One would have expected,
then, that he know something about Every's background before staking, as he
purports to have done, the success of the entire venture on Every. Yet all he
knew about Every was that he had been a "foreman of some kind" at Industrial;
and Mackniesh testified that in that capacity Every had had no experience in overall
management problems, fiscal, labor or otherwise, not even when Smith would be
away on vacation. One would have expected Cross to know what he was paying
for that kind of critical responsibility. He did not. And Every being purportedly
the man to whom the plenary delegation was being made, one would have expected
that by the time Cross testified, 8 months after Every was hired, he would have
.had more familiarity with Every than this:
Q. Now do you have anything to do with the manufacturing at Paragon?-
A. Well, not physically. We have a man who runs it, though.
Q. Who runs it?-A. Mister-oh, tripes. The fellow here yesterday, I keep
forgetting his name.
Q. Is that Mr. Every?-A. Every, yes.
In contrast with the virtually total passivity of Paragon's purported principals,
the representatives of Sales are very much in evidence. As has been noted, Smith
-occupies the office of Paragon with Every. He is there, on the average, three
times a week, spending the remainder of the time in contact with customers. And
Mackniesh, as stated, visits the plant with about the same frequency as he did
Industrial. The explanation given for their presence is that they are there to
protect the interests of Sales, that Smith gives Every engineering advice, and
Mackniesh comes there to settle accounts with Paragon. But the record makes it
amply plain that the interest of Sales extends deeply into Paragon, as shown below.
Paragon's only machinery is that which was obtained from Sales' affiliate, Indus-
trial-valued at over $17,000. According to Cross, this is to be paid for out of the
profits of Paragon. Paragon's operations are financed by Sales and here, as previ-
ously stated, Sales reimburses itself out of the proceeds of the product made by
Paragon, Additionally, as in the case of Industrial, Paragon has no contact with
the trade. Only Sales has, and counsel have agreed that like Industrial, Paragon
has no good will save that which it might enjoy with Sales. Correspondingly, the
.good name in the trade of Sales, and by that token, of Mackniesh, is staked on the
quality of the product that Paragon produces.
The only interest which the purported stockholders pit against the heavily pre-
ponderant interest of Mackniesh and his Sales company is the value of their stock
in Paragon. The total stock is valued at $2,100, Vanek's at $1,400, Cross' at $700,
and the only cash payment for it, so far as the record shows, is that made by Cross-
$300. It would hardly be likely, therefore, assuming any nonconcurrence between
Cross and Mackniesh concerning who is to run Paragon, that Mackniesh would be
willing to risk the $17,000 of Industrial, the money which Sales advances to finance
Paragon, and the good name of Sales and himself, on the untried capacities of Every,
where Smith, with all his prior experience, is available on the premises to supervise
Every's performance. Nor would Mackniesh understandably feel secure if he did
not himself exert the same degree of supervision over both of them as he did at
Industrial.
Also Cross and Vanek, assuming the reality of their investment, would hardly
deem it secure without Mackniesh's guiding hand in the business. It was Mackniesh
198 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
at whose urging they gave their names to the Paragon venture, and it is he whom they
knew and trusted. Hence, their total passivity is rationally comprehensible only if
they had the assurance, implicit in the situation itself, that Mackniesh would try to
make their investment secure by overseeing the operation of the venture, and that
those put in immediate responsibility, whether it be Every or Smith, or both, would
be answerable to Mackniesh.
Thus, a due regard for the preponderant interest of Mackniesh and the minor
interest of the purported stockholders of Paragon in the success if the operation
would compel making use of the available talents of Mackniesh to oversee it on a
general basis and of Smith to do so on a day-to-day basis.
Compelling as the inference above would seem to be from the relationship itself,
there is also independent evidence confirming it. Thus Every, after some reluctance,
admitted that Smith "advised" him on matters of policy, both labor and production-
wise. But it manifestly is "advice" which he is not expected to ignore, and in the
circumstances here presented, the term would seem to be a euphemism for either
actual supervision by Smith or, at the least, joint responsibility with Every for the
management of Paragon . That this is so would appear from an item of testimony
given early in the case by Mackniesh concerning an advance made to him by Cross
in November 1955. He testified that Cross advanced him $10,000 as a personal loan,
and that he, in turn, deposited the money to the account of Sales, for use by Sales
in financing Paragon 's operations on the reimbursement basis previously mentioned.
Since it was described as a personal loan, the Trial Examiner was inclined at first
to discount the advance as lacking in significance. However, in the light of Attorney
Colman's characterization of this advance, on oral argument, as an actual invest-
ment in the venture by Cross, the Trial Examiner has reread the testimony concern-
ing it. While it still shows it to be a personal loan to Mackniesh and, by that token,
not an investment in Paragon as such, Mackniesh 's explanation of why Cross ad-
vanced the money to him , is rather illuminating on who controls the venture, in
fact. Mackniesh testified that he told Cross that more money was needed "to finance
the working process and . . . shipments" of increasing orders being received for
Paragon. Cross then advanced the money to Mackniesh, because, as he put it, Cross
"said he didn't want to put that much into Paragon and let the group that was running
Paragon, we will say, Mr. Every, have free access to $10,000, because he said under
his impression any time a man, a company, had sulplus funds in the bank, they
always find some way of spending it, so he said when they needed the money to
finish an order , he said, `You give it to them.' "
Mackniesh's testimony would appear to have a two-fold significance: First, the
plural reference to "that group that was running Paragon" and to "them" and "they,"
would indicate that the immediate day-to-day responsibility for "running Paragon"
was not a solo venture. But the only person, in addition to Every, that would account
for this plural reference would be the co-occupant with him of Paragon's office-
Smith. And the purpose of the advance to Mackniesh, according to his own descrip-
tion, was to assure that Mackniesh would supervise the fiscal side of the operation
at least.
Cross also gave testimony which would seem to be rather revealing concerning
whom he truly regarded as running Paragon. At one stage , be explained his inaction
by stating that he had an "organization" he could rely on, which would seem to sug-
gest one or two more than just Every. Cross also testified that in November 1955,
the very month that he advanced the $10,000 to Mackniesh, in an interview with a
representative of the General Counsel, he referred the latter to Mackniesh as the
"secretary" of Paragon and the custodian of its records. Cross explained that he
then "assumed" this to be Mackniesh 's function . This assumption , however at odds
with the titular designations in Paragon , would indicate that Cross regarded Mac-
kniesh as exercising in fact that kind of function which would put him in charge of
Paragon 's books and records and the informative data concerning it. Such an arrange-
ment would more likely conform to the views one would expect from all the inter-
ested parties, from Mackniesh, from Cross, and from Vanek, concerning how to
secure a venture , than one which stakes the whole works on the capacities of him
whom Cross identified as "Mister-oh, tripes. The fellow here yesterday. I keep
forgetting his name."
What the above would seem fairly well to connote is that Paragon and Sales per-
form coordinated functions in the operation of a unitary venture. Thus viewed, it is
the logical role of the individuals in the advancement of that venture rather than
their titular - designations which are the key to the true relationship . In that con-
- text , the utter dependency of every economic interest at stake on the efficiency of the
manufacturing function would compel the exertion of supervision over it by the
INDUSTRIAL.: FABRICATING INC. '199
persons whose knowledge is most calculated to insure it. The placement of plenary
power in a prior underling, completely unversed in overall management, in disre-
gard of the availability of his erstwhile supervisors to at least oversee his perform-
ance, would mean the arbitrary creation of a managing vacuum, to the jeopardy of
every interest at stake. This, it must be inferred, would not be tolerated by any
of the interests involved, and the evidence already summarized would confirm that
the owners of this interest, whether real or nominal, have placed control in the sources
most likely to insure the advancement of the whole. In that regard, the venture
composed of Paragon and Sales duplicates functionally that of Industrial and Sales.
In the latter, control lay in Mackniesh, with delegation to Smith and Every in that
order. The variance. is in the difference in the stock ownership and the roster of offi-
cers in Paragon and Industrial. In practical terms, the result of this is that Vanek
and Cross have a participating interest in the overall proceeds of the venture com-
posed of Paragon and Sales, which they did not have in the predecessor combination
of Industrial and Sales. However, their common interest with Mackniesh in the
success of the venture as a whole, taken in connection with their own desire not to
be actively involved in it, has operated to make their titular designations nominal
and to repose actual control in Mackniesh.
Where the relationship of one company or individual to another presents such
features as financial control over the latter through advance of operating capital and
inventory,30 supervision and direction by the former over the latter's production
operations,31 and control by the former over the latter's labor relations policies,32
there is a "measure of domination . . . [which is] inconsistent with the notion
that [the latter is] . a free agent either in handling the enterprise or in dealing
with the men employed." 33 See also California Footwear, 114 NLRB 765.
The situation here is to be distinguished from cases such as N. L. R. B. v. New
Madrid Mfg. Company, etc., 215 F. 2d 908 (C. A. 8) and N. L. R. B. v. Norma
Mining Corporation, et al., 206 F. 2d 38 (C. A. 4). Critical elements which are
present here were lacking there. The court in Norma noted, for example, that the
company which was there sought to be held with the conceded employer (a coal
distributing company which leased its mines to operators, from whom it, in turn,
bought their total output) "made no loans to any of [the lessees] . did not ad-
vance credit . . . . [and] There was no joint occupancy of premises.. . In
New Madrid, there was "not an iota of evidence, either direct or circumstantial,
that New Madrid ever in fact had exercised any hand, either in management prerog-
ative generally or in labor-relations control in particular, in Jones' operation of the
Portageville plant, " The evidence of control over Paragon by those in charge
of Sales has been recited in detail, and it would be rather redundant to repeat it.
But Mackniesh's virtually exclusive role in setting up Paragon, the common occu-
pancy of Paragon's office by Paragon and Sales, the concession by Every, the general
manager of Paragon, that he receives the "advice" of Smith in his operation of the
plant under circumstances indicating either subordination by Every or joint partici-
pation with Smith in the running of Paragon, and the control placed in Mackniesh
over the expenditure of funds by "that group that is running Paragon," apart from
the inherent economic necessities already discussed which make such control im-
perative, afford sufficient indication of the "hand [of Mackniesh and Smith of Sales]
in management prerogatives generally [and] in labor relations control in particular
in [Paragon's] operation of the [Milan] plant."
It is accordingly found that Paragon, like Industrial, is controlled by Mackniesh,
either personally or through his Sales company. Since he initiated Paragon for
the purpose of having it replace Industrial as the producing arm of his integrated
flask venture, Paragon would be jointly answerable with Industrial for such legal
consequences as attach to the closing down of Industrial; whether as the "disguised
continuance" of Industrial or as a party acting "in concert" with Industrial in the
wrong done,34 if it be a wrong. The "if" is a big one, as the succeeding discussion
shows.
n N. L. R. B. v. Long Lake Lumber Company, etc., 138 F . 2d 363, 364 (C. A. 9) ;
N. L. It. B. v. McCatron , 216 F. 2d 212, 214 (C. A . 9), cert . denied 348 U. S. 943.
81 Dickey v. N. L. It. B., 217 F. 2d 652 , 655 (C . A. 6) ; Butler Brothers v. N. L. It. B.,
134 F. 2d 981 , 984 (C. A. 7).
12 N. L. R. B. v. New Madrid Manufacturing Company, d/b/a Jones Manufacturing Com-
pany, 215 F . 2d 908 (C. A. 8) ; N. L. It. B. v. Condenser Corporation of America, 128 F. 2d
67, 72 (C. A. 3).
as N. L. It. B. v. Long Lake Lumber Company, etc., 138 F . 2d 363, 364 (C. A. 9).
a4 Regal Knitwear Company v. N. L. it. B., 324 U. S. 9; Walling v. Reuter Co., 321
U. S. 671, 674-75.
200 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
3. Legal conclusions concerning the shutdown of Industrial and the transfer
to Paragon
In the light of the above, the shutdown of Industrial is not an event to be
viewed apart from the concurrent steps taken by Mackniesh to continue Industrial's
.function elsewhere. Thus viewed, the legal effects of the shutdown are not neces-
sarily those applicable to the permanent cessation of a business without more.
Were it merely that there would be no need to seek to justify the shutdown, as
.counsel for Industrial has rather affectively done in his brief. This is because
an employer . [has] the absolute right, at all times, to permanently
close and go out of business, or to actually dispose of his business to another,
for whatever reason he may choose. . . . No one can be required to stay
in private business, and no one can be prevented from permanently closing
or abdicatingly selling such a business.35
However, when the shutdown is viewed, as it must be, as part of a geographic
:shift of the enterprise as a whole, other facts become relevant in the legal appraisal
of the step taken. First is the fact that without disclosure to the Union, the step
had already been in process for several months before August 10, when the bargain-
ing conference took place. Second is the fact that again without disclosure, the
step was thereafter consummated at the same time that the Union was being led
to believe that another bargaining conference was going to take place. Based
on the above, the General Counsel claims that Mackniesh's motives were suspect
from the beginning, that the August 10 conference was sham and a maneuver
to gain time to complete the transfer. Indeed, he sees the same motivation even
earlier in the singularly generous strike settlement of June 20, which occurred in
,the midst of Mackniesh's initiating steps in launching Paragon.
While there is much to lend color to the General Counsel's view, the Trial
Examiner, after careful consideration, is of the opinion that the maneuver was
.a tentative one pending further developments, and that much like the Howell plant
before, the Milan plant was performing a "standby" function until Mackniesh
.made up his mind about shutting down Industrial and having Paragon take over.
This he did when Smith reported to him on the Union's proposal for a 35-cent
.an hour package increase. Coming on the heels of a strike settlement which raised
the labor overhead to about the maximum on which, in Mackniesh's view, Indus-
trial could be operated, the August 10 conference undoubtedly cast the die for
him: Mackniesh, at that point, despaired of the Union's paring down its demands
to an economically feasible level, even if another meeting were held.
The Trial Examiner followed with particular care the testimony concerning the
August 10 meeting. Based on his observation, he is rather inclined to agree with
Mackniesh's appraisal, for it had all the earmarks of a union overplaying its hand.
International Representative Marsh's grim reply to Smith at the August 10 con-
ference that he had no "control" over whether Industrial stood or fell under the
weight of the new burden it was being asked to assume, rather connoted that he
was willing to take the chance of Industrial's closing down in preference to fore-
going the demands for an arrangement corresponding to what was recently
.pioneered with the "Big Three" in the automotive industry. Marsh in attributing
this statement to himself, did so in response to Respondent counsel's question of
whether he had not stated to Smith that "if the company can't meet these kinds of
demands they don't belong in business." But the statement which Marsh acknowl-
edged he made, considered with his failure to express an interest in verifying
the claim of financial inability against the Company's books, would to the opposite
party at least, reasonably convey a suggestion hardly less ominous than that
ascribed to him in counsel's question. In this connection the Trial Examiner is
not unmindful of the mollifying explanation, given by Marsh in answer to a query
by the Trial Examiner, that "there was always room for collective bargaining on
the matter of giving and taking," and, in substance, that if Industrial had come
forward with a definitive statement of what it could or could not do, the Union
would have taken this into consideration, and would also have taken into account
the substantial concessions it recently obtained in the strike. Whether he actually
had such a residual thought at the time of the conference need not be decided. What
he said was sufficient reasonably to imbue the Company with the opposite feel-
ing and to impress upon it that it was beyond hope that the demands, even if not
altogether implacable, would be pared down to the level reached by manage-
ment's concession of June 20. Mackniesh genuinely believed that this last was
=N. L. R. B. v. New Madrid Manufacturing Company , d/b/a Jones Manufacturing Com-
pany, 215 F . 2d 908 , 914 (C. A. 8).
INDUSTRIAL FABRICATING INC. 201
the maximum at which Industrial could feasibly operate. At any rate, his testi-
mony to that effect is entitled to be credited in the light of Industrial's financial
statement for that year, which has not been effectively impeached, showing that
it was operating at a loss.
Industrial's shutdown and the transfer to Paragon was thus prompted not by
discriminatory motives but by the desire to put a stop to a losing operation and to
transfer it to where management thought it could operate at a profit. That being
so, the step taken was not in violation of Section 8 (a) (3) of the Act. See
Brown' Truck and Trailer Manufacturing Company, Inc., etc., 106 NLRB 999;
N. L. R. B. v. Adkins Transfer Company, Inc., 226 F. 2d 324, 328 (C. A. 6).
By the same token, the conduct in question was not an evasion of a bargaining obli-
gation under Section 8 (a) (5), for in the Trial Examiner's view, despite the arrange-
ment for another meeting, the situation, in terms of whether the Union would pare
its demands down to an economically feasible level, had reached the point of a
genuine impasse. Ibid. See also, Brown-McLaren Manufacturing Company, et al.,
34 NLRB 984.36
One aspect of the negotiations requires further consideration. The transfer to
Milan was executed in secret without disclosure to the Union. This poses the
question whether Industrial thereby violated its bargaining obligation, as it had
done the year before, when with like covertness, it transferred its operations to
Howell. The later situation strikes this Trial Examiner as different from the old.
First, it would seem rather certain that disclosure would not have altered the Union's
position, if Marsh's reaction to the prospects of Industrial's demise is a criterion,
and it is. Secondly, there is evidence to indicate that knowledge of the Company's
plan would not have led the Union to seek to negotiate for jobs for the men at the
new location. On the weekend before September 16, Chief Committeeman Bunker
followed Every in the act of removing machinery from Industrial to Paragon and
traced him down to the new plant. Bunker spoke about it to Smith the following
Monday morning, and admittedly he made no suggestion that he or any other em-
ployee be given a job at Milan. Bunker testified he thought it would be "useless"
to do so. But after the shutdown, the Union still made no overtures to have any
Industrial employee placed on the payroll of Paragon. Thus, the presumption
which was applicable in the case of the 1954 diversion to Howell, that the Union
would have been interested in having the men taken on at the new location, is over-
come by affirmative indications to the contrary in the case of Milan. Cases such
as Brown-McLaren Manufacturing Company, et al., 34 NLRB 984, Brown Truck
and Trailer Manufacturing Company, Inc., 106 NLRB 999, and California Footwear,
114 NLRB 765, are inapplicable here, since there the presumption, far from being
overcome, was reinforced by actual demands on the part of the Union for bargaining
in respect to relocating the employees to the new situs of operations. Accordingly,
the Trial Examiner finds that the failure to make disclosure of the transfer of
operations to Milan, in the circumstances of this case, was not a violation of
Section 8 (a) (5) of the Act.
V. JURISDICTION: CONCLUDING FINDINGS
The finding made in the earlier jurisdictional part of this report, that Industrial
is engaged in commerce within the meaning of the Act, rather dispenses with the
need for reciting the rubic that the unfair labor practices found have "a close,
intimate, and substantial relation to trade, commerce, etc."
But in that same discussion, the issue of whether Industrial's operations fall within
the Board's voluntary standards was left open pending determination of whether
Industrial and Sales are an integrated enterprise. The Trial Examiner has already
indicated his view that they are such. Counsel for these Respondents conceded
on oral argument there would be no question that they were integrated, but for
the fact that Sales also sold for "other" companies, such as the Howell group. From
the recital of the details previously given, the Trial Examiner is of the view that
these "other" companies do not bear a stranger relationship to either Industrial
or Sales of a kind which would deprive Industrial and Sales of their character as a
single enterprise. In fact, for jurisdictional purposes, the Howell group, quite
apart from whether any one of them is answerable for the unfair labor practices of
36The Trial Examiner has carefully considered the Board's recent decision in American
Brake Shoe Company, Ramapo Ajax Division, 116 NLRB 820. It would seem to be in-
applicable here. The case concerned not a permanent shutdown or a transfer to avoid a
losing operation, but a "lockout" as a weapon to obtain an economic concession in negotia-
tions or as a counterweapon to an apprehended strike not yet imminent, a matter outside
the issue here.
202 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Industrial , which is another matter, are integrated with Industrial and Sales. They
are under the common control of Mackniesh , as shown, and their products or
operations apparently bear a sufficient relation to that of Industrial , so that either is
adapted to do or supplement the work of the other , as the 1954 transfer demonstrated.
The relationship as a whole bears out the observation of James W. Harp, who
sat in their councils , that this was one company split into a lot of little companies,
with Mackniesh as the boss. Without carrying the legal implication of such an
observation to their logical ultimate , it is enough to say that the fact the Sales sells
or once sold ( depending on whether we believe Mitchell and Bucher on the one
hand, or Mackniesh on the other ) the products of the Howell group, does not
break the unitary relationship of Sales with Industrial . Since it has been found
that Sales and Industrial are an integrated enterprise , Sales' role as the selling inter-
mediary between Industrial and the interstate consumers of its products does not
have the effect of making it "twice removed" from interstate commerce within the
Brooks Wood doctrine ( 107 NLRB 237). To the contrary , Industrial shares with
Sales the status of being but "once" removed therefrom, and in view of the amount
supplied to interstate companies , over $100,000 annually, it satisfies the Board's
jurisdictional standards within the meaning of Whippany Motors, Inc., 115 NLRB 52,
and Herman M. Brown Service Company, 115 NLRB 1371.37
VI. THE REMEDY
It has been found that Industrial engaged in certain unfair labor practices, in-
cluding coercive statements, the failure to disclose a contemplated transfer of op-
erations to Howell, the discriminatory discharge of Arlo Thuma, and the unilateral
withholding of a customary bonus for discriminatory reasons.
The only offenses requiring affirmative remedial action are the discharge of
Thuma and the withholding of the bonus . The standard remedial action will be rec-
ommended for both. Thuma is to be made whole for any loss in pay resulting from
the discrimination against him by paying him a sum equal to what , but for the
discrimination , he normally would have earned from the date of his discharge in
1954 to September 16, 1955, the date Industrial shutdown , less his net earnings
during that period, as the latter term is defined in Crossett Lumber Co., 8 NLRB
440. The computation will be made separately for each quarter of the calendar
year, in accordance with the formula in F. W. Woolworth Co., 90 NLRB 289,
291-294, as upheld in N . L. R. B. v. Seven - Up Bottling Company of Miami, Inc.,
344 U. S. 344.
The employees to be compensated for the withheld bonus are those who returned
to work at Industrial after the 1954 shutdown , but who , by reason of prior termina-
tion , were not on the payroll of May 9, 1955, the date of the strike , and hence, not
included in the reimbursement provided in the settlement . They are to be paid a
sum equivalent to the amount of bonus which but for such discontinuance, they
would normally have received from the date of their return to work following the
shutdown in 1954, to the date of the respective terminations of their employment
prior to May 9, 1954. Since Thuma's legal status as an employee under Section
2 (3) was not impaired by the discriminatory discharge , he is among the employees
to be compensated for withheld bonus, except that his bonus , if any, runs for the
entire length of the period for which he is entitled to back pay.
The Trial Examiner has also given thought to the appropriateness of an affirmative
remedy for the failure to disclose the diversion of Industrial 's operations to Howell
in 1954. Since it cannot be known who, if at all, would have been interested in
going to Howell , and under what terms , the Trial Examiner is frankly unable to
formulate a monetary remedy which would be free of the taint of a penalty.
Republic Steel Corp. v. N. L. R. B., 311 U: S. 7. Hence, no affirmative remedy
therefor will be recommended.
A finding that unfair labor practices have been committed normally calls also
for a negative injunction requiring the offender to halt them . Since Industrial is
shut down , permanently so far as appears , a cease and desist order may well
appear academic . But the record does not compel us to regard Industrial's reopening
as beyond the pale of possibility . The plant of Industrial at Eaton Rapids has
37 Should the Trial Examiner ' s finding concerning the legal consequences of the transfer
of operations from Industrial to Paragon be reversed by higher authority , and in con-
sequence , possibly necessitate a jurisdictional finding concerning Paragon as a basis for
requiring it to participate in any remedial . action . It is found that Paragon , too, is engaged
in commerce within the meaning of the Act, and for the identical reason as Industrial,
likewise falls within the Board 's jurisdictional- standards : In the 6 months from its
Inception , it has done business at a rate substantially in excess of the $1 . 00,000 minimum
per year prescribed in the Whippany Motors case.
INDUSTRIAL FABRICATING INC. 203
iiot yet been sold, and some machinery is still left there. Mackniesh, a man of
mobile tendencies in respect to location of his operations , may well consider resuming
at Eaton Rapids. That being so, it cannot be said that the normal cease and desist
order should here be dispensed with as an altogether futile gesture . At any rate,
any doubt on that point should be resolved in favor of preserving the normal order.
The Trial Examiner has also considered the question of appropriately assuring
that Industrial will comply with the recommendations for the reimbursement of
employees. On oral argument, the attorney for Industrial, who represents Sales
and Mackniesh as well, stated in effect, that Industrial is capable of making good
such monetary obligations as may be involved in this proceeding. That being so,
there would appear to be no need to enter a specific order against anyone other
than Industrial. Hence, dismissal of the complaint against Sales and Mackniesh
does not necessarily foreclose future consideration of their role in securing Industrial's
payment of the monetary award. The normal requirement embraces the "agents"
of the offending employer as well. If and when the situation apprehended by the
General Counsel arises, it will be time enough to consider whether the cooperation
of Sales or Mackniesh or both should not be invoked as "agents" of Industrial to
make good the obligation. Cf. N. L. R. B. v. Hopwood Retinning Co., Inc., 98
F. 2d 97, 102; 104 F. 2d 302, 304 (C. A. 2). These are among the unforeseeables
against which the agency provides under its standard clause reserving jurisdiction
for the purpose of making its order effective against future contingencies. See
Fairmont Creamery Company, 64 NLRB 824, 830. Such jurisdiction inheres in
the agency even in the absence of an express reservation. See The Wallace Corpo-
ration v. N. L. R. B., 159 F. 2d 952, 954-955 (C. A. 4); Home Beneficial Insurance
Company, Inc., v. N. L. R. B., 172 F. 2d 62 (C. A. 4). However, such jurisdiction
is here expressly reserved so as to leave no question concerning the Board's power
later to provide for "modification should conditions change." International Union
v. Eagle-Picher Mining Co., 325 U. S. 353, 341.
Upon the findings above and the whole record, the Trial Examiner makes the
following:
CONCLUSIONS OF LAW
1. By virtue of a certification duly issued by the Board to International Union
Local 909, International Union, United Automobile, Aircraft and Agricultural
Implement Workers of America, UAW-CIO, affiliated with AFL-CIO, a labor
organization said Union, at all times since May 17, 1951, has been the exclusive
collective-bargaining representative for the following unit for employees of Indus-
trial Fabricating Inc.:
All production and maintenance employees, excluding office and clerical employees,
professional employees, guards, watchmen, and supervisors as defined in the Act.
2. By failing to notify the Union in the spring of 1954 of the contemplated transfer
of operations from the plant of Industrial Fabricating Inc. at Eaton Rapids, Michi-
gan, to. the plant of Unified Industries, Inc. and Pressed Steel Flasks, Inc., at Howell,
Michigan, thereby depriving the Union of an opportunity to bargain with it in
respect to its causes and also in respect to the tenure of employees involved,
Industrial failed and refused to bargain with the Union, thereby engaging in unfair
labor. practices within the meaning of Section 8 (a) (5) and (1) of the Act.
3. By unilaterally discontinuing the bonus of its employees in 1954, Industrial
failed and refused to bargain collectively with the Union, thereby engaging in an
unfair labor practice within the meaning of Section 8 (a) (5) of the Act; and by
doing so to discourage membership in the Union, it engaged in an unfair labor'
practice within the meaning of Section 8 (a) (3) of the Act.
..4. By refusing to entertain grievances, by threatening to shut down or transfer
operations if grievances are presented, and by compelling withdrawal of grievances
under threat of economic reprisal Industrial Fabricating Inc. failed and refused to
bargain with the Union thereby engaging in unfair labor practices within the
meaning of Section 8 (a) (5) of the Act.
5. By discriminating in respect to the hire and tenure of Arlo Thuma for the
purpose of discouraging membership in the Union, Industrial engaged in an unfair
labor practice within the meaning of Section 8 (a) (3) of the Act.
6. By interfering with, restraining, and coercing employees in the exercise of
their rights under Section 7, by the conduct above described and by other acts,
Industrial Fabricating Inc. engaged in unfair labor practices within the meaning of
Section 8 (a) (1) of the Act.
7. The above unfair labor practices affect commerce within the meaning of
Section 2 (6) and (7) of the Act.
[Recommendations omitted from publication.]