Norton Foundries Co.

National Labor Relations Board - Board Decisions

Oct 24, 1972

199 N.L.R.B. 1003 (N.L.R.B. 1972)

NORTON PRECISION, INC.
Norton Precision , Inc., a Subsidiary of Norton Found-
ries Company and International Union , United Au-
tomobile, Aerospace and Agricultural Implement
Workers of America, UAW. Case 7-CA-8974
October 24, 1972
DECISION AND ORDER
BY CHAIRMAN MILLER AND MEMBERS FANNING AND
PENELLO
On June 16, 1972, Administrative Law Judge I
Gordon J. Myatt issued the attached Decision in this
proceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions and supporting briefs,
and the Employer filed briefs in answer to the excep-
tions of the General Counsel and the Charging Party.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings,2 and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the complaint herein be, and it hereby is,
dismissed in its entirety.
i The title of "Trial Examiner " was changed to "Administrative Law
Judge" effective August 19, 1972.
2 The General Counsel has excepted to certain credibility findings made
by the Administrative Law Judge. It is the Board 's established policy not to
overrule an Administrative Law Judge 's resolutions with respect to credibili-
ty unless the clear preponderance of all the relevant evidence convinces us
that the resolutions were incorrect . Standard Dry Wall Products, Inc, 91
NLRB 544, enfd . 188 F 2d 363 (C A. 3). We have carefully examined the
record and find no basis for reversing his findings
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
GORDON J. MYATT, Trial Examiner: Upon a charge
filed on September 20, 1971,1 by International Union,
United Automobile, Aerospace and Agricultural Imple-
ment Workers of America, UAW (hereinafter called the
Union) a complaint and notice of hearing was issued by the
i Unless otherwise indicated , all dates herein refer to the year 1971.
1003
Regional Director of Region 7 on November 5. The com-
plaint alleged that Norton Precision, Inc., a Subsidiary of
Norton Foundries Company (hereinafter called the Re-
spondent) violated Section 8(a)(5) and (1) of the Act. It is
alleged that Norton was the successor employer to Earl A.
Thompson Manufacturing Company (hereinafter called
Thompson) and, as such, failed and refused to recognize the
Union as the exclusive bargaining representative of its pro-
duction and maintenance employees and failed to honor the
terms of the collective-bargaining agreement negotiated be-
tween the Union and Thompson. The Respondent's Answer
admitted certain allegations, denied others, and specifically
denied the commission of any unfair labor practices. This
case was tried before me in Detroit, Michigan, on January
20 and 21, 1972. All parties were represented by counsel and
afforded an opportunity to be heard and present relevant
evidence on all of the issues in question. A brief was submit-
ted by the Respondent and Counsel for the General Coun-
sel gave oral argument, subsequently amended by a short
brief. All of the arguments and positions of the parties have
been duly considered by me in arriving at my decision in
this case.
Upon the entire record herein, including my evaluation
of the testimony of witnesses based upon my observation of
their demeanor and upon consideration of the relevant evi-
dence, I make the following:
FINDINGS OF FACT
1. JURISDICTIONAL FINDINGS
The Respondent is a Michigan corporation organized
in July 1971, and engaged in the manufacture , sale, and
distribution of hydraulic and solid valve lifters and other
products for use in the automotive field. The Respondent
maintains two facilities in the State of Michigan; one con-
sisting of a foundry located at Marine City, Michigan, and
a manufacturing facility located at Ferndale, Michigan. The
Ferndale facility is the only one involved in these proceed-
ings.
The Respondent is the wholly owned subsidiary of
Norton Foundries Company, an Ohio Corporation, which
maintains its principal office and place of business in Cleve-
land, Ohio. Norton Foundries Company is engaged in the
manufacture, sale, and distribution of metal castings for
plumbing parts, of water pumps, and of special castings for
the chemical, automotive, aircraft, and printing industries.
During year ending December 1970, Norton Foundries
Company manufactured, sold, and distributed from its
Ohio facilities products valued in excess of $50,000 which
were shipped directly to points located outside the State of
Ohio. The Respondent projects its monthly sales revenue
from its Michigan operations within the next 6 months to
exceed $100,000, of which in excess of $50,000 worth of
manufactured products and materials will be shipped di-
rectly to points outside the State of Michigan.
On the basis of the above, I find that the Respondent
is, and has been at all times material herein , an employer as
defined in Section 2(2) of the Act engaged in commerce
within the meaning of Section 2(6) and (7) of the Act.
199 NLRB No. 140
1004 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
II. THE LABOR ORGANIZATION INVOLVED
International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America, UAW, is
a labor organization within the meaning of Section 2(5) of
the Act.
III THE ALLEGED UNFAIR LABOR PRACTICES
A. Background Facts
Earl A. Thompson Manufacturing Company was a
manufacturer of engine parts , automatic machines , and spe-
cial equipment for use in the automotive industry.2 In 1956,
Thompson began to manufacture hydraulic valve lifters at
its Ferndale plant for sale to General Motors Corporation
for use in Chevrolet automobile engines. In the early 1960's,
this became Thompson's principal manufacturing activity.
The manufacturing process followed at that time in-
volved fusing a two-piece body of iron and steel together
and machining it. The plunger and the push rod seat were
screw-machined as well as most of the other components of
the lifter. All of these operations were performed at
Thompson's plant. The parts were handled manually and
moved and stored in material containers as the components
went from one operation to another through final assembly.
In 1964, Thompson developed a new type of hydraulic
valve lifter. which involved a metal casting process for the
body and utilized a cold-form plunger. The hydraulic lifter
produced by this process was called the Phase II lifter as
contrasted to the lifter produced by the machine process;
the latter was described as the Phase I lifter. This new meth-
od of manufacturing the valve lifter was a departure in the
known technology. Thompson spend a considerable num-
ber of years attempting to develop the manufacturing tech-
nique while continuing to produce lifters for Chevrolet by
means of the Phase I process.
In April 1969, the Union was certified as the bargaining
representative of Thompson's production and maintenance
employees at the Ferndale plant. The bargaining unit con-
sisted of:
All production and maintenance employees, including
truckdrivers and shipping and receiving employees em-
ployed by Thompson at its Ferndale, Michigan plant,
excluding office clerical employees, professional
employees, guards and supervisors as defined in the
Act.'
The Union and Thompson officials began collective-bar-
gaining negotiations which took place throughout the entire
summer of 1969.
In August 1969, F. Joseph Lamb Company, a manufac-
turing concern engaged in the design and fabrication of
specialized industrial machinery, purchased all of
Thompson's capital stock. Rye, president of Lamb, became
president of Thompson. Robert Wolforth, an employee of
2 The founder of Thompson was considered a "giant" in the automotive
engineering field . His patented inventions included such items as automotive
valve lifters, special gauging equipment , automatic machine equipment and
power controls, automatic casting equipment and special casting methods,
and the development and use of special metal alloys
3 The Union was certified in Case 7-RC-9325.
Lamb, became a vice president and general manager of the
Thompson operation. Hallock, the former president of
Thompson, and H. Thompson, another executive of
Thompson, became vice presidents in charge of sales and
manufacturing respectively after the purchase by Lamb.
On October 6, 1969, Wolforth signed the collective-
bargaining agreement negotiated between the parties during
the prior summer.4 This agreement set forth the various job
classifications, pay rates, and all of the terms and conditions
of employment. In addition, the parties executed a separate
pension agreement covering the unit employees.
In the 18-month period following the purchase of
Thompson, Lamb made a heavy capital investment in that
operation . When Wolforth took over as general manager it
was decided that the Thompson concern would perfect the
manufacturing process in order to put the Phase II lifter into
production. The company continued to produce the Phase
I lifter in an attempt to satisfy the G.M. contract demands
during the transition.
B. The Events Leading to the Sale of Thompson's Assets
The Phase II program caused Lamb to invest heavily
in equipment and facilities. A precision metal casting
foundry was opened in Marine City, Michigan, to cast the
body of the new style hydraulic lifter.5 Sand was purchased
from Wolverine Sand to form the shell of the body for the
lifter. The total output of the foundry was shipped to Fern-
dale for machining and assembly with other components,
either machined by Thompson or by outside contractors.
Braun Engineering supplied the cold-form plunger and the
push rod was supplied by Magnolia Screw Products. In
addition, sophisticated automated machinery was installed
at the Ferndale plant to eliminate the manual handling of
the components as they went from one machine oper tion
to another. New types of machines were designed aid in-
stalled and existing machines were modified to adapt to the
new manufacturing process. Thompson also installed an
automatic assembly machine to eliminate hand assembly of
the final product. All of these modifications and changes
required months and months of planning and tooling, and
in some instances retooling, to develop the Phase II opera-
tion.
According to Wolforth, the last Phase I lifter was built
in September 1970, although the installation and adaptation
of all of the machinery for the Phase II process was not
completed until approximately 4 months later. During the
transition period Thompson was working its employees on
a regular production schedule in an effort to keep the opera-
tion solvent, while minimizing the loss of efficiency between
the two models of lifters and the resulting loss of sales.
There were approximately 140 production and maintenance
employees at the Ferndale plant working three 8 hour shifts
a day, 5 days a week. The Marine City foundry employed
approximately 30 production employees. The job classifica-
tions and pay rates at Ferndale were defined by the terms
of the collective-bargaining agreement. There was no move-
The initial clause of the agreement stated it was with Thompson "and its
successors and assigns "
S The foundry production and maintenance employees were not consid-
ered part of the bargaining unit and were not covered under the terms of the
collective-bargaining agreement.
NORTON PRECISION, INC.
ment between job classifications , except through promo-
tion, bumping, or on an emergency basis which was always
cleared with the union shop committee. There was no inter-
change between the employees of the Marine City foundry
and the Ferndale plant. Thompson's day-to-day operation
and its labor policy were administered by Wolforth as gen-
eral manager of the plant.
In February 1971, Thompson moved its tool room op-
eration from Ferndale to a separate facility in Detroit,
Michigan. The collective-bargaining agreement was
amended by the parties at this time to cover the employees
working in the new facility. The separate tool room was
subsequently closed by Thompson on April 30, and the
Union and Thompson negotiated severance pay for the em-
ployees whose jobs were eliminated.
In spite of Thompson's lengthy and costly efforts to
perfect the Phase II lifter, the operation proved to be a
financial disaster. Thompson was under a contract to pro-
vide Chevrolet with 800,000 hydraulic valve lifters a month.
During the transition period the plant achieved a produc-
tion high of 600,000 units in March 1971, but found as
production levels were increased the number of production
problems also increased to an unacceptable level. Wattles,
Secretary of Thompson's Board of Directors, testified that
after the novel automated process was initiated at the plant,
management found that the tolerance and grinding prob-
lems multiplied greatly, causing Chevrolet to reject large
quantities of the lifters. Wattles explained that the automat-
ed operation was entirely unique in the valve lifter industry,
and the sophisticated machinery boarded on the outer edges
of the known technology. Consequently, when production
levels were raised the quality problems increased in geome-
tric proportion. In order to correct this situation Thompson
periodically had to cut back production in an attempt to
work out the defects in the system. In addition, much of the
expensive sophisticated machinery involved in the Phase II
process never performed as expected and the Respondent
was constantly faced with large amounts of "down time."
According to Wattles, Thompson was losing approximately
$150,000 a month during the transition from the Phase Ito
the Phase II lifter.
In April 1971, Chevrolet rejected $230,000 worth of the
lifters produced by Thompson. This major reversal, coupled
with the heavy expenditures and increased production prob-
lems, caused reassessment of the thinking of the executives
of both Thompson and Lamb. The rejects were disposed of
by selling them to Elray and Autocenter, suppliers of other
than original equipment to retailers of automotive parts .6
Wattles testified that the,Board of Directors were con-
fronted with three options regarding the Thompson opera-
tion: (1) sell all of the assets to a buyer;? (2) close the plants
and sell the assets piecemeal through a liquidation sale; or
(3) go into the after-market at a very low production level.
The Directors decided the first option was the most feasible.
6 Wolforth testified that although Thompson 's entire monthly output was
shipped to Chevrolet plants, all lifters rejected by Chevrolet were sold in the
so-called "after-market" to suppliers of retailers of automotive parts. The
principal customers were Elray and Autocenter. Wolforth estimated that
approximately 5 to 10 percent of Thompson 's monthly production was dis-
posed of in this manner.
7 According to Wattles , present manufacturers of valve lifters could not be
considered as possible purchasers because of the antitrust laws.
1005
They also considered it imperative to discontinue produc-
tion and in the middle of May laid off a majority of the
production and maintenance employees. Approximately 30
employees were retained to operate the equipment when
prospective purchasers were shown through the plant. In
addition to this purpose, the executives of Lamb intended
to demonstrate the use of the automated equipment to other
manufacturers in the automotive industry. Lamb was the
designer and installer of this special equipment and while it
did not prove successful in the Thompson operation, the
Lamb executives felt that similar equipment could be adapt-
ed for use by other manufacturing companies.
C. The Purchase of the Assets by the Respondent
For a 2-week period following the layoff of most of the
employees in mid-May, the remaining production employ-
ees worked a regular 8 hour shift during the day. During this
time both prospective purchasers of the assets and individ-
uals interested in the automated equipment were shown
through the Ferndale plant and the Marine City foundry.
Several employees testified that they were working.on reg-
ular production as well as performing interim cleanup du-
ties. Wolforth testified, however, that for all practical
purposes production had ceased except for the running of
a sufficient parts (described as "floats") to have material on
hand to operate the machinery for demonstration purposes.
He stated that the employees spent considerable time mov-
ing material and keeping the plant and machinery clean in
addition to running floats. Although the employees may
have been operating the machines during this time under
the honest belief that they were engaged in limited produc-
tion, I find that, under the circumstances , Wolforth's expla-
nation of the purpose of their activity is more plausible. The
huge capital investment made by Lamb in the Thompson
operation, and the staggering losses suffered by that firm,
compel acceptance of the explanation that production had
ceased at the plant. It is apparent that the only purpose for
operating the machinery was to demonstrate the efficacy of
the automated process and to interest potential buyers in
the purchase of Thompson's assets.
On June 4, all of the remaining production and mainte-
nance employees of Thompson were laid off. Wolforth and
the other managerial employees continued to report to the
plant each day, although there was no production in pro-
cess . In addition, two salaried office workers remained on
the payroll and also reported to work each day.
Robert W. Russell, sole shareholder and owner of Nor-
ton Foundries Company, learned of the availability of
Thompson's high precision foundry in Marine City some-
time during the first week of June." Russell was interested
in the acquisition of the foundry in order to have a facility
in which he could produce special metal castings . Russell
arranged to see the foundry in early June and subsequently
visited the Ferndale plant, which was closed at the time.
During the balance of the month of June , Russell and the
Thompson executives engaged in extensive negotiations
over the purchase of both the foundry and the plant.'
9 Russell learned of the availability of the foundry through a sales repre-
sentative who also serviced Thompson.
9 While the negotiations were taking place Wolforth and the other manage-
Continued
1006 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The negotiations resulted in an agreement on the part
of Thompson to sell and Norton Foundries to purchase the
real property, the plant, the foundry, and most of the phys-
ical assets of Thompson. Norton did not purchase the ac-
counts receivable, the finished inventory, the rights to the
General Motors contract to supply hydraulic lifters to
Chevrolet, the prepaid insurance , or certain types of equip-
ment developed and owned by Thompson. Nor did Norton
assume any liability for Thompson's accounts payable.
During the negotiations Russell was apprised of the exist-
ence of the contract between Thompson and the Union, and
was provided a copy of that agreement. When the purchase
contract was signed (July 20) title to the unfinished invento-
ry also passed to Norton Foundries. Titles to the real prop-
erty and the other assets, including patents developed by
Thompson,10 were not scheduled to pass to Norton Found-
ries until final payment of the full purchase price.
Wolforth, H. Thompson, Hallock, Trevarthen, Ameel,
Stone, and Cummins were named in the agreement as man-
agement officals whom Thompson agreed to "use its best
efforts to make available" to Norton, and to not interfere
with Norton's efforts to hire them. When the contract was
signed Wolforth and Hallock resigned from the board of
directors of Thompson and were no longer employed by
that company or by Lamb."
Under the terms of the agreement, Norton Foundries
Company formed the Respondent corporation (Norton Pre-
cision , Inc.) as a wholly owned subsidiary to operate the
plant and foundry. Respondent did not take physical pos-
session of the plant and foundry until July 26. Russell nego-
tiated with Wolforth, H. Thompson, Hallock, and others
formerly employed by Thompson in order to retain their
services. Because the Respondent was unable to make a
comparable economic offer to these individuals, some of
them left after the Respondent took over the operation.
However, on August 4, Wolforth agreed to remain as gener-
al manager in charge of both the Ferndale plant and the
Marine City foundry. H. Thompson remained in charge of
manufacturing with several lower level supervisors formerly
employed by Thompson remaining at the plant. Trevarthen
was the general manager and Ameel was the plant manager
at the foundry-positions which they occupied under
Thompson-and several lower level supervisors also re-
mained with the operation at the foundry.
Because the Respondent was aware of the unfortunate
experience of Thompson, modifications were made in the
method of manufacture, the level of production, and the
market to which the product was to be sold. In order to
operate profitably, the Respondent decided to sell its lifters
in the after-market rathern than supply original equipment
ment officials of Thompson continued to report to work, but were actively
seeking other employment On June 15, Wolforth notified the Union by letter
that production at Thompson had been suspended indefinitely for "compel-
ling economic reasons," and that the Company was seeking a qualified buyer
with the hope of reactivating the operations
10 Although Norton purchased the patents, Thompson was granted a roy-
alty free license for their use
1 Wattles testified that it was customary in contracts of this kind for the
seller to agree not to interfere with the right of the purchaser to attempt to
negotiate with and hire certain key individuals who were familiar with the
manufacturing process.
to the automotive manufacturers. In addition, the Respon-
dent decided to specialize in the high performance racing
market rather than the conventional passenger automobile
market. Instead of producing many of the components of
hydraulic lifters at the plant, the Respondent contracted out
much of this work. A powdered metal push-rod seat was
substituted for the screw-machined push-rod seat used by
Thompson. The cold-form plunger was changed to an all
cast plunger which was produced at the foundry. The hy-
draulic lifters manufactured by the Respondent were not
made exclusively for use in Chevrolets. In addition, the
Respondent began to develop prototypes for solid lifters for
use in Chrysler and Ford high-performance cars.
Sometime in early August, the Respondent started ad-
vertising for production employees. The advertisement stat-
ed that there were openings for "production workers" and
no job classifications were specified. Most of the job appli-
cants were former Thompson employees. During the hiring
interviews Wolforth made it clear to the applicants that the
plant would not be a union shop. The Respondent initially
hired 3 or 4 employees and gradually expanded the work-
force until it reached a peak of approximately 35 production
workers. Wolforth testified that in October 1971, 29 em-
ployees were working at the Ferndale plant and 20 of this
number were former Thompson employees.
Unlike under the operation of Thompson, the employ-
ees were required to work in several different job capacities
during a shift. Thus a boring machine operator might run
a grinder or a boring machine or some other equipment
during the course of a workday. Employees were moved
from one machine area to another to keep up with the float'
of parts and required to operate all of the different types of
machines when needed. The only machines which were run
consistently were the rough-grinding and boring machines.
The others were only operated when the inventory of stock
for that operation was low. The Respondent also changed
the manner in which the lifters were assembled. The sophis-
ticated automated machinery which Thompson installed
was never used by the Respondent. Instead, the lifters were
hand-assembled, and much of the machinery essential to
Thompson's operation was either scrapped or remained
idle.
The Respondent utilized the Marine City foundry to
cast water pumps, oil pumps, and thermocoupled tubes as
well as the lifter bodies. These items had never been manu-
factured by Thompson. The lifter bodies were the only
products sent to the Ferndale plant from the foundry. All
of the other items produced at the foundry were either sent
directly to customers or to the Respondent's Cleveland op-
eration to be further machined. In order to make the opera-
tion profitable the Respondent reduced the level of
production at Ferndale to 10,000 units per day for 16 work-
ing days per month. The employees worked one shift of 10
hours for 4 days a week. Because of the limited workforce
and because of the low level of production, supervisory titles
were somewhat meaningless. Wolforth and the other man-
agement officials worked in the plant on many occasions
alongside the production workers. They performed such
functions as shipping and receiving, loading and unloading
of materials, and driving the company truck. The bookkeep-
ing and the payroll records were kept at Ferndale, but the
NORTON PRECISION, INC.
two clerical employees worked in the plant when needed as
well as in the office.12
Although Wolforth was in charge of the operations at
Marine City and Ferndale, the overall labor policy was
determined by Russell in Cleveland. Russell also set the
salaries and wage scales of the employees, and these were
far lower than the wages paid production workers under the
terms of the contract with the Union.
The Respondent failed to meet the terms of the original
purchase agreement between Norton Foundries and
Thompson. The parties renogotiated the contract in order
to protect Thompson's interest and to save the
Respondent's initial investment. The new agreement spread
out the payment schedule and the patents which were orig-
inally sold to the Respondent were now retained by Thomp-
son. The Respondent in turn was granted a royalty free
license for their use. In addition, Respondent mortgaged the
Ferndale real estate to W. E. Plechaty Company, an Ohio
corporation, and executed a quit-claim deed conveying title
back to Thompson subject to the mortgage.13 Thompson
was also granted an option by Plechaty to purchase that
company's interest in the real property in the event of a
default by the Respondent.
D. The Union's Demand for Recognition
When the Respondent began hiring employees in Au-
gust the union officials became aware that the plant was
again in operation and they contacted Wolforth. Wolforth
referred the union officials to Wattles, secretary of the
board of directors of Thompson. The Thompson executives
and union officials met on August 19, but there was no
discussion concerning the Respondent's operation. Accord-
ing to Kujowski, the union representative, Thompson's ex-
ecutives were only interested in working something out
concerning the pension plan which had applied to the em-
ployees prior to the termination of production by Thomp-
son.
On August 20, the Union sent a letter to the Respon-
dent requesting recognition and stating that the Union con-
sidered the Respondent to be a successor to Thompson and
obligated to honor the terms of the collective-bargaining
agreement. Russell replied by a letter dated August 27. He
dewed any business affiliation with Thompson, and stated
that the Respondent had only purchased physical assets and
therefore was not a successor to the prior concern. He also
stated that the Respondent had an entirely different method
of operation and was a new business enterprise. Russell
rejected the Union's claim for recognition. The Union again
pressed its demand on September 1, and the claim was again
rejected by the Respondent.
Concluding Findings
The General Counsel contends that the Respondent is
the successor employed to Thompson. His contention is
based on the premise that the Respondent is engaged in the
same business operations, albeit on a greatly reduced scale,
12 Until January 1972, the payroll was issued from Ferndale After that
date the payroll was made up at Norton Foundries Company in Cleveland
13 The Plechaty Company was apparently an investor in Norton Foundries
and the Respondent utilized this means to raise additional capital
1007
at the same location, utilizing the same equipment, and
employing a reduced work force consisting mainly of em-
ployees of the predecessor company under the same super-
visory hierarchy. By virtue of this combination of factors,
it is argued that the employing enterprise is essentially the
same and the Respondent is under a statutory duty to bar-
gain with the Union which represented the employees under
Thompson. It is also argued that the Respondent inherited
Thompson's obligation to honor the terms of the collective-
bargaining agreement with the Union.
Were these the only factors present in this case I would
be inclined to agree with counsel for the General Counsel.
The Board's doctrine of successorship, however imprecise
its perameters may be, has become an accepted doctrine in
the law.14 It is well settled that a change in ownership of a
business enterprise does not, of itself, relieve the new owner
from an obligation to recognize and bargain with the Union
that represented the predecessor's employees. N.L.R.B. v.
Burns International Security Services, Inc., 406 U.S. 272
(1972); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543
(1964); N.L.R.B. v. Interstate 65 Corporation, 453 F.2d 269
(C.A. 6, 1971); Tom-A-Hawk Transit, Inc. v. N.L.R.B., 419
F.2d 1025 (C.A. 7, 1969). As the Supreme Court stated in
Wiley, "[t]he object of national labor policy, reflected in
established principles of federal law, require that the right-
ful prerogatives of owners independently to arrange their
business and even eliminate themselves as employers be
balanced by some protection to the employees from a sud-
den change in the employment relationship.... "15 The
crucial test developed by the Board and sanctioned by the
courts in determining whether the successor employer in-
herited the labor obligations of the predecessor is whether
the employing industry remained the same after the trans-
fer. N.L.R.B. v. Zayer Corp., 424 F.2d 1159, 1162 (C.A. 5,
1970); N.L.R.B. v. McFarland, 306 F.2d 219 (C.A. 10, 1962);
N.L.R.B. v. Alamo-White Truck Service, 273 F.2d 238 (C.A.
5, 1959). Application of this test involves consideration of
the totality of the circumstances surrounding the transfer as
well as the operations of the predecessor and successor en-
terprises. Lincoln Private Police, Inc., 189 NLRB No. 103.
In the instant case, the predecessor employer had com-
pletely ceased 'production and laid off its production work
force approximately a month and a half before the sale of
the Ferndale plant and Marine City foundry to the Respon-
dent. Since the Respondent did not start to hire production
employees until early August, this meant that the workers
had been terminated for approximately 2 months with little
or no expectation of reemployment at the Ferndale plant.
While it is true that a majority of the employees subsequent-
ly hired by the Respondent were former Thompson employ-
ees, it cannot be said in these circumstances that there was
a sudden change in their employment relationship brought
about by the sale of the business to the Respondent. This
hiatus in their employment is a significant, although not
controlling, factor in determining whether there was conti-
nuity in the employing industry.
Also to be considered is whether the changes in the
14 See comments of Judge Lowenthal in JAM, District Lodge 94 v
N L R B., 414 F.2d 1135 (C A D C, 1969). On this point Judge Lowenthal
stated "This subject of successorship is shrouded in somewhat impressionis-
tic approaches ." (Concurring opinion )
I5 John Wiley & Sons, Inc v. Livingston, supra, p. 549.
1008 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
methods of production, the type of market supplied, and the
kind of products produced substantially altered the nature
and character of the employing industry. Thompson's pnn-
cipal product was the hydraulic valve lifter, and its total
output was committed to the Chevrolet division of General
Motors as original equipment. The entire output of the Ma-
rine City foundry was shipped to the Ferndale plant for
machining and assembling in order to meet the contract
requirement with Chevrolet. The Respondent, on the other
hand, not only produced hydraulic valve lifters but also
solid valve lifters for the high performance racing market.
Moreover, the Respondent's hydraulic lifters were not con-
sidered original equipment and they were marketed in the
so-called "after-market" for sale to suppliers of automotive
equipment on a retail basis. Much of the automated ma-
chinery that made the Thompson operation unique was
never utilized by the Respondent. In addition, the employ-
ees were not assigned to specific types of machines on the
basis of job classifications, but were required to move from
machine area to machine area in order to sustain the flow
of production. It was Thompson's policy to machine and,
manufacture many of the components used in the hydraulic
lifter, but the Respondent contracted much of this work out
to other machine shops. A further difference in the method
of operations was the fact that the Respondent began cast-
ing new lines of products such as water pumps, oil pumps,
and thermocoupled tubes. None of these products had ever
been produced by the predecessor employer. Moreover,
while the entire output of the Marine City foundry was
shipped to the Ferndale Plant during the Thompson opera-
tion, the Respondent only shipped the cast bodies for lifters
from the foundry to Ferndale-all other metal castings pro-
duced at the foundry were shipped directly to customers or
to the Respondent's Cleveland operation for further ma-
chining.
It is true that the supervisors and the management
officials who remained with the Respondent occupied sim-
ilar positions with the predecessor employer. It is also true
that the machines used by the Respondent were those pur-
chased from the predecessor and modified for the
Respondent's purposes. But on balance these factors do not
outweigh the change in the production methods, the change
from a one product operation supplying a single customer
to the manufacturer of a variety of products supplied to
entirely different markets, and the impact of the 2-month
hiatus between the discontinuance of production by
Thompson and the commencement of production by the
Respondent. Accordingly, I find that there was no continui-
ty of the employing enterprise. I further find that the nature
and character of the employing industry at Ferndale was
sufficiently altered so that the Respondent could not be
considered a successor employer to Thompson. Gladding
Corporation; Gladding-Paris Corporation, 192 NLRB No. 40.
Cf. Gallis Equipment Company, Inc., 194 NLRB 124.
Having found that the Respondent is not the successor
employer to Thompson, it follows that Respondent did not
inherit any of Thompson's obligations under the collective-
bargaining agreement with the Union. But even if my con-
clusions concerning the successor relationship were other-
wise, under the very recent Supreme Court decision in the
Burns case the Respondent would have no duty to observe
the substantive terms of the collective-bargaining agree-
ment since the Respondent never assumed any obligation
relating to that contract.16 Nor under the terms of that deci-
sion can it be said that the Respondent unilaterally changed
any preexisting terms or conditions of employment without
bargaining with the Union.
On the basis of the above, I find and conclude that the
Respondent is not a legal successor to Thompson Manufac-
turing Company and that the Respondent has not violated
the Act by refusing to recognize and bargain with the Un-
ion. Accordingly, I shall recommend dismissal of the com-
plaint herein in its entirety.
CONCLUSIONS OF LAW
1. Norton Precision, Inc., a subsidiary of Norton
Foundries Company is an employer as defined in Section
2(2) of the Act engaged in commerce within the meaning of
Section 2(6) and (7) of the Act.
2. International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America, UAW, is
a labor organization within the meaning of Section 2(5) of
the Act.
3. The Respondent did not violate Section 8(a)(5) and
(1) of the Act by refusing to recognize and bargain with the
above-named Union whose claim for such recognition was
based on the fact that it was the exclusive bargaining repre-
sentative of the production and maintenance employees of
the Respondent's predecessor.
RECOMMENDED ORDER 17
On the basis of the foregoing findings of fact and con-
clusions of law and upon the entire record in this case, I
recommend that the allegations of the complaint herein be
dismissed in their entirety.
16 N L R B v. Burns International Security Services, Inc, supra
17 In the event no exceptions are filed as provided by Section 102 46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and recommended Order herein shall, as provided in Section
102 48 of the Rules and Regulations, be adopted by the Board and become
its findings, conclusions, and order, and all objections thereto shall be
deemed waived for all purposes