Lennox Industries

National Labor Relations Board - Board Decisions

Sep 30, 1992

308 N.L.R.B. 1237 (N.L.R.B. 1992)

1237
308 NLRB No. 180
LENNOX INDUSTRIES
1 The warehouses are located in St. Louis, Missouri; Bloomington,
Minnesota; Davenport, Iowa; Lenexa, Kansas; Denver, Colorado;
and Pewaukee, Wisconsin.
2 Member Devaney dissented as he would have denied the request
for review.
3 Although not noted in the Regional Director’s decision, at the
hearing the Employer-Petitioner indicated that it would ‘‘go along’’
with whatever unit the Board deemed appropriate, including the two
units set forth in the Notice to Show Cause.
4 There have been five or six transfers from the manufacturing fa-
cility to the warehouses pursuant to this provision.
Lennox Industries, Inc., Midwest Division, Peti-
tioner and International Union, United Auto-
mobile, Aerospace and Agricultural Implement
Workers of America (UAW), Amalgamated
Local 893, Unit 11, AFL–CIO. Case 18–UC–260
September 30, 1992
DECISION ON REVIEW AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND OVIATT
On April 2, 1992, the Regional Director for Region
18 issued the attached Decision and Order in which he
dismissed the instant unit clarification petition, which
sought to separate the existing combined single unit of
production and maintenance employees employed at
the Employer-Petitioner’s Marshalltown, Iowa manu-
facturing facility and at six sales and distribution fa-
cilities (warehouses)1 represented by the Union, into
seven separate units. Thereafter, in accordance with
Section 102.67 of the National Labor Relations
Board’s Rules and Regulations, the Employer-Peti-
tioner filed a timely request for review of the Regional
Director’s decision, asserting that the Regional Direc-
tor erred by failing to clarify the unit into seven sepa-
rate units, one at each geographic location, and by fail-
ing to apply the principles set forth in Rock-Tenn Co.,
274 NLRB 772, 773 (1985), and Ameron, Inc., 288
NLRB 747 (1988).
By Order dated June 19, 1992, the Board granted
the Employer-Petitioner’s request for review2 and
issued a Notice to Show Cause why the existing unit
should not be clarified into two separate units: (1) a
unit of all production and maintenance employees at
the Marshalltown manufacturing facility; and (2) a unit
of all employees at the six sales and distribution facili-
ties included in the existing unit.3
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the entire record in this
case, including the parties’ response to the Notice to
Show Cause, and has decided to reinstate the petition
and to clarify the existing unit into two separate units
as proposed in the Notice to Show Cause.
The facts are not in dispute. As the Regional Direc-
tor found, Lennox Industries manufactures heating and
air-conditioning products at various facilities, then
transfers these products to sales and distribution facili-
ties located throughout the country, from which inde-
pendent dealers are supplied inventory and sales are
serviced. Prior to a corporatewide reorganization in
1991, Lennox Industries was divided administratively
into five geographic divisions. The Midwest, South-
west, and Eastern divisions had both manufacturing
and sales and distribution components, while the
Southeast and Western divisions were composed solely
of sales and distribution facilities.
In December 1976, in Case 18–RC–11135, the
Union was certified to represent a single unit of Mid-
west division employees, consisting of approximately
400 employees at the Marshalltown manufacturing fa-
cility and approximately 16 employees at the six ware-
houses in the Midwest division. The Employer-Peti-
tioner and the Union have been parties to successive
collective-bargaining agreements covering this unit
since 1977, the most recent of which was effective
from October 2, 1989, until October 2, 1992. Local
management in Marshalltown negotiated and adminis-
tered these contracts, and all administrative, personnel,
and labor-relations functions were handled in
Marshalltown without assistance or input from Lennox
Industries’ corporate headquarters in Dallas, Texas.
The Regional Director found that the employees of
the Midwest division shared a community of interest
based on, inter alia, the Employer-Petitioner’s geo-
graphic organization; the integration of the manufactur-
ing, sales, and distribution operations in the Midwest
division; the interchange of employees among Midwest
division facilities, based in part on contractual unitwide
seniority-based bumping rights in the event of a lay-
off;4 and common skills and functions between the
warehouse employees and a small number of manufac-
turing employees who drive forklifts, load and unload
trucks, and move products.
In the spring of 1991, Lennox Industries began
phasing in Project 21, a reorganization plan which re-
sulted in the relocation to and centralization of all sales
and distribution functions at corporate headquarters. In
addition, the manufacturing facility in the Southwest
division was closed. All division management positions
relating to sales and distribution were eliminated, and
factory managers became ‘‘site managers,’’ with re-
sponsibility solely for manufacturing at the remaining
manufacturing facilities, including Marshalltown.
By November 1, 1991, the Midwest division had be-
come the ‘‘Marshalltown manufacturing facility.’’ On
November 7, the Marshalltown site manager notified
union officials of the changes in organizational struc-
ture, advising them that all problems and/or grievances
associated with the individual warehouse operations
1238 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 See Batesville Casket Co., 283 NLRB 795 (1987); Delta Mills,
287 NLRB 367 (1987); Ameron, supra. 6 253 NLRB 270 (1980).
should be addressed directly to the distribution man-
ager at each warehouse.
The Regional Director found that although the com-
munity of interest shared by unit employees was less-
ened by the Employer-Petitioner’s transfer of manage-
rial authority over the sales and distribution functions
from Marshalltown to Dallas, that community of inter-
est was not negated entirely. The Regional Director
further found that the shift of higher authority from
Marshalltown to Dallas was likely to have little impact
on unit employees, because of the significant day-to-
day autonomy possessed by the warehouse managers.
Accordingly, he concluded that the organizational
changes were not of a nature to override the parties’
long history of bargaining in the combined unit, and
dismissed the petition on the ground that the geo-
graphic relationship between these facilities continued
to support the combined unit, even though the Em-
ployer-Petitioner’s corporate organization was no
longer coextensive with the bargaining unit. The Re-
gional Director reasoned that the Marshalltown manu-
facturing facility and the six warehouses remain parts
of the same corporation, and are ultimately responsible
to the same corporate management, unlike the situation
in Rock-Tenn and Ameron, where reorganization di-
vided the bargaining units at the highest corporate
level.
We disagree with the Regional Director, and find
merit to the Employer-Petitioner’s argument that its re-
cent corporate reorganization has rendered the existing
single unit inappropriate. However, our review of the
record and the responses to our Notice to Show Cause
have convinced us that it would be appropriate to clar-
ify the existing unit into two separate units, rather than
the seven separate units originally sought in the peti-
tion.
As set forth in Rock-Tenn and its progeny,5 while
the Board places great weight on collective-bargaining
history, it will clarify an historical unit where recent,
significant changes have rendered that unit inappropri-
ate. Thus, in Rock-Tenn, the Board clarified the com-
bined single unit into a two-plant unit, where it found
that changes in the organizational structure and oper-
ations of the employer’s papermill and partition plant
had occurred when they were sold to separate operat-
ing divisions of the Rock-Tenn Company. At the time
of the sales, there were few remaining factors of com-
monality between the two plants, whose employees
had been represented in the single unit for approxi-
mately 14 years. Each plant was engaged in a totally
different operation, had separate and distinct corporate
management and supervisory staff, labor relations had
been completely decentralized, and grievances were
handled separately, negating any community of interest
that may have existed previously among employees of
the two plants.
Similarly, in Ameron, the Board clarified the exist-
ing combined single unit into two separate units, be-
cause it found that restructuring and recapitalization
had resulted in the creation of a separate company
(TAMCO) to operate the melt shop and rolling mill
whose employees historically had been represented in
a single unit combined with Ameron’s wire mill em-
ployees. The Board found that each of these corporate
entities had its own managers and employees, different
operations requiring different equipment and skills,
separate personnel departments, and separate handling
of labor relations, all of which rendered the combined
single unit inappropriate.
In the instant case, likewise, we find that the recent,
substantial changes that occurred as a result of the
corporatewide reorganization have divided the manu-
facturing operations from the sales and distribution op-
erations as effectively as the sale of the plants in Rock-
Tenn and the creation of TAMCO in Ameron created
essentially independent entities, functioning separately
and autonomously.
As the Regional Director found, in the instant case
the history of bargaining in a single unit began at a
time when the responsibility for both manufacturing
operations and sales and distribution operations rested
with the Midwest division vice president, who was
headquartered in Marshalltown and reported directly to
the corporate chief executive/chief operating officer in
Dallas. Reporting to the Midwest division vice presi-
dent were the Marshalltown factory manager and a va-
riety of managers for sales and marketing. Although
the warehouse managers at the six remote facilities
handled day-to-day affairs, sales and distribution man-
agement in Marshalltown were involved in personnel
and labor-relations decisions, and all steps in the for-
mal grievance procedure after preliminary discussions
between the affected employee and his immediate su-
pervisor. Thus, it is clear that while the employees in
the combined unit shared some community of interest
prior to the 1991 reorganization, it was not substantial;
and that, as a result of the reorganization, the adminis-
trative and managerial ties between the warehouses and
the Marshalltown manufacturing facility were elimi-
nated. Thus, the only remaining shared community of
interest between employees at the warehouses and at
Marshalltown are the common terms and conditions of
employment set forth in the collective-bargaining
agreement, and the common overall control at the
highest corporate level in Dallas.
Unlike the situation in Stafford-Lowdon Co.,6 relied
on by the Regional Director, in which the only change
that affected employees in the two-plant unit was the
appointment of a separate manager for each plant, in
1239LENNOX INDUSTRIES
1 The Employer, Lennox Industries, Inc., Midwest Division, is an
Iowa corporation with its headquarters in Dallas, Texas, and a manu-
facturing facility located in Marshalltown, Iowa, where it is engaged
in the manufacture and distribution of heating and air conditioning
products. During the past 12 months, a representative period, the
Employer purchased and received goods and products valued in ex-
cess of $50,000 directly from suppliers located outside the State of
Iowa. During the same period, the Employer sold and shipped goods
and products valued in excess of $50,000 directly to customers lo-
cated outside the State of Iowa.
the instant case one entire line of management and su-
pervision was removed and relocated. Personnel and
labor relations are no longer handled in common, pay-
roll is separate, and health and pension plan adminis-
tration has been separated. Moreover, while all em-
ployees in the contractual unit are performing the same
jobs in the same locations as they did prior to the reor-
ganization, and while the six warehouses formerly part
of the Midwest division continue to distribute products
manufactured at Marshalltown, as well as products
manufactured at other locations, a separate unit of em-
ployees at the Marshalltown manufacturing facility is
now appropriate based on its substantial day-to-day au-
tonomy of operations and supervision, and virtually
complete separation from the six warehouses. See
Fruehauf Trailer Co., 87 NLRB 589, 591 (1949).
We agree with Regional Director, however, that sep-
arate units at each of the six warehouses are not appro-
priate. As he found, at least three of the six have only
one or two employees and, while there no longer is
any administrative reason for grouping these geo-
graphically distant facilities together, the employees at
these locations have a long bargaining history of being
represented together as part of a larger unit. In these
circumstances, we find that it would best effectuate the
purposes of the Act to allow them to continue to be
represented by the Union in the same geographical
grouping in which they previously were represented,
retaining their group identity within the Employer-Peti-
tioner’s reorganized sales and distribution operations,
unless and until the parties themselves may negotiate
a different configuration.
ORDER
The Regional Director’s Decision and Order dis-
missing the instant unit clarification petition is re-
versed, the petition is reinstated, and the existing unit
is clarified into two separate units, one consisting of
employees at the Marshalltown manufacturing facility,
and one consisting of employees at the six sales and
distribution facilities.
MEMBER DEVANEY, dissenting.
I would have denied the Employer-Petitioner’s re-
quest for review, as I agree with the Regional Direc-
tor’s determination that the recent organizational
changes cited by the Employer-Petitioner do not war-
rant clarification of the historical unit. As more fully
discussed by the Regional Director, these changes were
not so substantial as to negate the existing community
of interest among the unit employees and render the
longstanding unit no longer appropriate.
APPENDIX
DECISION AND ORDER
Upon a petition duly filed under Section 9(b) of the Na-
tional Labor Relations Act, as amended, a hearing was held
before a hearing officer of the National Labor Relations
Board.
Pursuant to the provisions of Section 3(b) of the Act, the
Board has delegated its authority in this proceeding to the
undersigned.
Upon the entire record in this case, the undersigned finds:
1. The hearing officer’s rulings made at the hearing are
free from prejudicial error and are hereby affirmed.
2. The Employer is engaged in commerce within the
meaning of the Act, and it will effectuate the purposes of the
Act to assert jurisdiction herein.1
3. The Petitioner, contrary to the Union, seeks to clarify
an existing bargaining unit of production and maintenance
employees employed at a single manufacturing facility in
Marshalltown, Iowa, and at sales and distribution facilities
(warehouses) located in St. Louis, Missouri; Bloomington,
Minnesota; Davenport, Iowa; Lenexa, Kansas; Denver, Colo-
rado; and Pewaukee, Wisconsin, into seven separate units,
one at each of the geographic locations listed in the existing
unit description. The Employer contends that it undertook a
recent and substantial corporate reorganization that renders
the existing unit inappropriate. For the following reasons, I
conclude that the organizational changes are not of a nature
to override the parties’ long history of bargaining in the com-
bined unit.
Before the reorganization, the Employer organized itself
into five geographic divisions. The Midwest Division was
coextensive with the bargaining unit. The Union and a prede-
cessor have represented employees in the bargaining unit for
many years. There are about 400 employees at the
Marshalltown facility, and 16 employees at the six ware-
houses combined.
The Petitioner’s other divisions included the Southwest
and Eastern Divisions, which had both sales and distribution
facilities and a manufacturing facility like the Midwest Divi-
sion, and the Western and Southeast Divisions, which in-
cluded only sales and distribution facilities. In the Southwest
and Eastern Divisions, production and maintenance employ-
ees at the manufacturing facilities only were represented by
other unions. One sales and distribution facility in the South-
east Division was also represented by another union.
The Petitioner manufactures heating and air conditioning
equipment at its manufacturing facilities. This equipment is
then transferred to the sales and distribution facilities
1240 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 Manager of Human Resources Douglas Bruster testified that dis-
ciplinary decisions ‘‘[u]ltimately . . . rested in the hands of that
Warehouse lanager, but with strong direction from myself.’’ Upon
a leading question, he added, ‘‘[b]asically they followed our orders.’’
throughout the country. Each sales and distribution facility
supplies inventory and services sales to independent dealers
in the area surrounding the facility.
Employees at the sales and distribution facilities do typical
warehouse work, driving forklifts, loading and unloading
trucks, and moving products about the facility. The
Marshalltown manufacturing facility includes a small ware-
house where one employee does work identical to that per-
formed in the sales and distribution facilities. Twenty or so
other employees in Marshalltown possess similar skills and
perform similar tasks, such as driving forklifts and moving
products about.
For many years, all employees in the former Midwest Di-
vision have been covered by the same collective-bargaining
agreements and work rules. The current collective bargaining
agreement, which has a term of October 2, 1989 to October
2, 1992, provides ror unit-wide seniority-based bumping
rights in the event of a layoff. Several employees have
moved from Marshalltown to one of the sales and distribu-
tion facilities under that provision, including one just after
the effective date of the Petitioner’s reorganization. In addi-
tion, all employees in the unit share a credit union.
Before the reorganization, each division was headed by a
vice president who was just below the corporate chief
executive/chief operating officer level. The Midwest Division
vice president was headquartered in Marshalltown. The next
higher level of management was headquartered in Dallas, and
rarely visited the remote facilities. Marshalltown officials
were basically responsible for all production and supply deci-
sions, hiring, contract negotiations, payroll, bill paying, and
similar functions for the entire division, including the sales
and distribution facilities. Day-to-day affairs, such as dis-
cipline, at the sales and distribution facilities were up to the
warehouse manager, with input at the option of the ware-
house manager from officials in Marshalltown.2 In the event
of an employee grievance, after a preliminary discussion be-
tween the affected employee and his immediate supervisor,
all formal steps of the collective-bargaining agreement’s
grievance procedure were handled in Marshalltown, in early
stages by telephone, and, if necessary later on, by taking the
affected employee to Marshalltown.
After the reorganization, all of the Petitioner’s sales and
distribution facilities were separated from the manufacturing
side of the business. All sales and distribution facilities are
now supervised by sales managers headquartered in Dallas.
All sales management positions in Marshalltown were elimi-
nated. Management in Marshalltown lost its responsibility for
bargaining with the Union or handling grievances concerning
events or employees at the sales and distribution facilities.
After the reorganizatlon, the warehouse managers are con-
sidered responsible for hiring, after management in Dallas
authorizes filling a position. The warehouse managers are
also considered responsible for discipline, with participation
by Dallas officials in the early stages expected to be rare.
The Petitioner expects to handle formal grievances under the
collective-bargaining agreement after the contract’s first step
in Dallas. It appears, however, that few grievances ever
reached Marshalltown from the remote sales and distribution
facilities before the reorganization, and few are likely to
reach Dallas after the reorganization.
Unit clarification to divide an existing bargaining unit may
be appropriate when ‘‘significant changes in the organiza-
tional structure and operations of [the existing unit] have oc-
curred which negate any community of interests that may
have existed previously among the employees’’ of the pro-
posed separate units. Rock-Tenn Co., 274 NLRB 772, 773
(1985). Before the Petitioner’s reorganization, the employees
of the Midwest Division shared a community of interest
based on, among other things, Petitioner’s geographic organi-
zation, integration of operations between the manufacturing
facility and the sales and distribution facilities, interchange of
employees, common skills and functions between the sales
and distribution center employees and at least some of the
employees in Marshalltown, and shared terms and conditions
of employment. After the reorganization, this community of
interest was lessened by Petitioner’s transfer of supervisory
authority over the sales and distribution facility from
Marshalltown to Dallas. I find that insufficient to negate the
community of interest that existed previously. Due to the sig-
nificant autonomy possessed by the sales and distribution fa-
cility managers to deal with the day-to-day employment con-
cerns of the warehouse employees, the shift of higher author-
ity from Marshalltown to Dallas is likely to have little impact
on the unit employees. The employees throughout the unit
retained common terms and conditions of employment and
interchange continues.
The Employer seeks to minimize the effects of integration
and interchange. Although the unit sales and distribution fa-
cilities distribute products manufactured at locations other
than Marshalltown, that was true to the same extent before
the reorganization, and the transportation of products be-
tween Marshallton and the unit sales and distribution facili-
ties still takes place, and does so to no less extent. While the
number of transferring employees is a small percentage of
the number of manufacturing employees, it makes up a sig-
nificant percentage of sales and distribution facility employ-
ees.
In addition, the Davenport sales and distribution center has
only one unit employee, and the Denver and Pewaukee cen-
ters currently have only two. Thus, six separate units of the
sales and distribution centers would be clearly inappropriate.
The geographic relationship between the manufacturing facil-
ity and the sales and distribution facilities, essentially form-
ing a wheel hubbed in Marshalltown, continues to support
the combined unit, even though Petitioner’s corporate organi-
zation is no longer coextensive.
The Employer cites a number of cases in support of its po-
sition, including Roc-Tenn and Ameron, Inc., 288 NLRB 747
(1988), but I consider them distinguishable. In both Rock-
Tenn and Ameron, the reorganization divided the bargaining
units at the highest corporate level. In this case, on the other
hand, the manufacturing facility in Marshalltown and the unit
sales and distribution facilities are still parts of the same cor-
poration, and ultimately responsible to the same management
in Dallas. See Stafford-Lowdon Co., 253 NLRB 270 (1980)
(two-plant unit not inappropriate because employer recently
assigned plants separate managers). In addition, none of the
cited cases exhibited the extent of integration and interchange
1241LENNOX INDUSTRIES
present on this record. I, accordingly, will dismiss the Peti-
tioner’s petition for unit clarification.
ORDER
IT IS HEREBY ORDERED that the petition in this case be,
and it hereby is, dismissed.