Owens-Brockway Plastic Products

National Labor Relations Board - Board Decisions

May 28, 1993

311 N.L.R.B. 519 (N.L.R.B. 1993)

519
311 NLRB No. 57
OWENS-BROCKWAY PLASTIC PRODUCTS
1 303 NLRB 386. 2 All dates are in 1989, unless otherwise noted.
Owens-Brockway Plastic Products, Inc. and Inter-
national Chemical Workers Union, AFL–CIO,
Local No. 728. Case 9–CA–26872
May 28, 1993
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND OVIATT
On June 15, 1990, Administrative Law Judge David
L. Evans issued the attached decision. The Respondent
filed exceptions and a supporting brief.
On June 14, 1991, the National Labor Relations
Board issued Dubuque Packing Co.,1 in which it an-
nounced a new test for analyzing the issue presented
in this case: whether an employer’s decision to relocate
unit work is a mandatory subject of bargaining. On
September 30, 1991, the Board afforded the parties in
this case an opportunity to submit statements of posi-
tion in light of the Board’s decision in Dubuque Pack-
ing. The Respondent, the General Counsel, and the
Charging Party filed position statements.
Thereafter, on December 31, 1991, the Board re-
manded this proceeding to Judge Evans to reopen the
record for the limited purpose of receiving evidence, in
light of the test articulated in Dubuque Packing and
discussed infra, concerning whether the Union could
have offered concessions that could have changed the
Respondent’s decision to relocate unit work.
On April 21, 1992, Judge Evans issued the attached
supplemental decision. The Respondent filed excep-
tions and a supporting brief.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision, supplemental
decision, and the record in light of the exceptions and
briefs and has decided to affirm the judge’s rulings,
findings, and conclusions as set forth below and to
adopt the recommended Order.
I. INTRODUCTION
The single issue presented in this case is whether the
Respondent violated Section 8(a)(5) and (1) of the Act
by refusing to bargain with the Union concerning the
decision to close its Jeffersonville, Indiana manufac-
turing plant and permanently relocate to its other plants
work previously performed at Jeffersonville. We find,
under the test set forth in Dubuque Packing, that the
Respondent did so violate the Act.
II. FACTUAL BACKGROUND
The Respondent owns 26 manufacturing plants en-
gaged in the production of plastic containers and bot-
tles. The Respondent was formed as the result of a
merger in April 1988 of Brockway Plastics, Inc.,
which owned 9 plastic bottle plants including the Jef-
fersonville plant, and Owens-Illinois Corporation,
which owned 17 plastic bottle plants. The Respondent
is an incorporated division of Owens-Illinois Corpora-
tion (Owens-Illinois).
The Union has been the collective-bargaining rep-
resentative of the production and maintenance employ-
ees at the Jeffersonville plant since it opened in 1962.
When the April 1988 merger occurred, the Respondent
assumed the collective-bargaining agreement effective
from July 19, 1985, to July 18, 1988. On July 19,
1988, the parties signed a 1-year extension of that con-
tract.
The Jeffersonville plant operates principally as an
‘‘overflow’’ facility for the Respondent’s other manu-
facturing plants. Thus, Jeffersonville fills manufac-
turing orders that exceed the capacity of the Respond-
ent’s other plants. Despite its status as principally an
overflow plant, in early January 1989,2 the Respondent
was preparing to bid on an account that could be per-
formed by the Jeffersonville plant. The Jeffersonville
plant had recently lost a bid on another account. The
failure to secure the latter account and the desire to bid
successfully on the former account spurred Dale Leidy,
vice president in charge of manufacturing and engi-
neering for the plastic products division of Owens-Illi-
nois, to meet with the Jeffersonville employees and the
Union’s business committee concerning Jeffersonville’s
competitive position. Leidy explained that competition
was fierce, production costs were high at Jefferson-
ville, and that corporatewide cost-cutting measures
were being taken. Leidy further explained that the Re-
spondent could be more aggressive in the bid for the
upcoming contract if ‘‘there’s reason to believe that we
can lower our costs.’’
A. The Respondent Informs the Union of the Need
for Concessions at Jeffersonville
On January 5, the Respondent requested to meet
with the Union concerning contract language, wages,
and benefits. The Union agreed, although the parties’
contract did not expire until July 19. Accordingly, the
parties met on January 10, February 28, and March 9,
in what were deemed ‘‘informational meetings.’’
At the January 10 meeting, the Respondent pre-
sented the Union with a document outlining the steps
needed ‘‘to improve the competitive situation of the
Jeffersonville business.’’ The document in part pro-
vided: ‘‘Revision in the wage rate schedule that will
provide for labor costs that are more in line with the
marketplace competition.’’ The Respondent addition-
ally presented various proposed contract modifications,
520 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
3 There is no complaint allegation that the Respondent unlawfully
refused to engage in effects bargaining.
4 The judge inadvertently stated at sec. II,A,3, par. 10 of his deci-
sion that Leidy testified that the decision to close Jeffersonville was
made on July 28.
including a wage reduction proposal and restrictions on
the use of seniority rules. The Respondent also pre-
sented the Union with a chart showing that the wage
rates at Jeffersonville were much higher than that of
the Respondent’s other plants. Indeed, the Jefferson-
ville plant had the highest average hourly wage rate of
all the Respondent’s manufacturing facilities.
The Respondent repeated its need for concessions at
the February 28 informational session. At the March 9
informational meeting, the Respondent presented the
Union with a document showing that the production
costs at Jeffersonville were higher than that of its com-
petitors in the industry. The document concludes:
8% GROSS PROFIT, 1% NET PROFIT BASED ON CUR-
RENT JEFFERSONVILLE COSTS CONCLUSION—WE
CANNOT COMPETE ON THIS BUSINESS
The judge found that the Respondent emphasized to
the Union at the informational meetings that conces-
sions were necessary for the Jeffersonville plant to re-
main viable. The judge found further that the Respond-
ent informed the Union that it could not guarantee that
Jeffersonville would remain open even if concessions
were granted, although it had no intention of closing
the plant.
B. The Formal Contract Negotiations
On June 21, the parties met for formal negotiations
of a contract to succeed the contract due to expire July
19. The Union proposed a substantial wage increase. It
is uncontested that the Respondent’s negotiators were
very upset at the Union’s failure to respond to the re-
quest for concessions emphasized by the Respondent
throughout the informal negotiation period.
The parties met again on July 10, 11, and 17. At
these sessions, the Respondent continued to demand
concessions regarding wages and the seniority provi-
sions of the collective-bargaining agreement. The
Union refused to agree to concessions and continued
its demand for a wage increase.
On July 18, the Respondent presented its final pro-
posal, which called for dropping of the demands of
both the Union and the Respondent, a 2-percent (40
hours’ pay) lump-sum payment to all unit employees,
and a 1-year extension of the expiring contract. The
Union accepted the proposal, and the contract imme-
diately went into effect.
C. The Respondent Closes the Jeffersonville Plant
and Relocates Its Operations
On August 29, Leidy announced to the Jeffersonville
in-plant union committee that the plant would close ef-
fective October 28. Leidy, reading from a prepared
statement, announced that ‘‘[t]he decision to perma-
nently close this plant was based on a general weak-
ening of customer orders in the Midwest coupled with
the anticipation of major customer conversions to ma-
terials that will transfer significant orders to our com-
petitors in other geographic markets.’’
On August 30, the Union requested bargaining with
the Respondent over the decision to close and its ef-
fects. The Respondent declined to bargain concerning
the decision to close, but agreed to effects bargaining.3
The Respondent also notified the Union that the deci-
sion to close Jeffersonville did not turn on labor costs,
and that the decision to close the plant was made on
August 27.4
The Jeffersonville plant ceased production in early
September. The plant closed in late October. The Jef-
fersonville plant had 10 manufacturing machines; fol-
lowing closure, 4 machines were transferred to the Re-
spondent’s Louisville, Kentucky plant; 2 to its Flor-
ence, Kentucky plant; 2 to its Harrisonburg, Virginia
plant; and 2 to the Respondent’s research facility in
Toledo, Ohio. Production orders that formerly were
filled at Jeffersonville were after its closure filled at
the Respondent’s plants in Louisville and Florence,
Kentucky, and Chicago and Vandalia, Illinois.
III. DISCUSSION
At the outset, we reject the Respondent’s contention
that its decision with respect to the Jeffersonville plant
was exempt from mandatory bargaining under First
National Maintenance Corp. v. NLRB, 452 U.S. 666
(1981). It is undisputed that the Respondent did not
decide to terminate all the production that occurred at
the Jeffersonville plant, but rather decided to transfer
work to different locations where it would be per-
formed by other employees. Accordingly, we find that
the Respondent’s decision is properly classified as a
relocation decision governed by our Dubuque Packing
decision, rather than a partial closing decision gov-
erned by the Supreme Court’s First National Mainte-
nance decision.
In Dubuque Packing, we announced the following
test for determining whether an employer’s relocation
decision is a mandatory subject of bargaining:
Initially, the burden is on the General Counsel to
establish that the employer’s decision involved a
relocation of unit work unaccompanied by a basic
change in the nature of the employer’s operation.
If the General Counsel successfully carries his
burden in this regard, he will have established
prima facie that the employer’s relocation deci-
sion is a mandatory subject of bargaining. At this
juncture, the employer may produce evidence re-
butting the prima facie case by establishing that
521OWENS-BROCKWAY PLASTIC PRODUCTS
5 Thus, we do not decide today that a plant relocation coming
some 18 months after a significant merger or consolidation can
never be viewed as part of that merger or consolidation.
6 We note that the Respondent also evaluated three of its other
production facilities—Louisville, Florence, and Vandalia—at the
time it evaluated the Jeffersonville facility in June. None of these
Continued
the work performed at the new location varies sig-
nificantly from the work performed at the former
plant, establishing that the work performed at the
former plant is to be discontinued entirely and not
moved to the new location, or establishing that
the employer’s decision involves a change in the
scope and direction of the enterprise. Alter-
natively, the employer may proffer a defense to
show by a preponderance of the evidence: (1) that
labor costs (direct and/or indirect) were not a fac-
tor in the decision or (2) that even if labor costs
were a factor in the decision, the union could not
have offered labor cost concessions that could
have changed the employer’s decision to relocate.
Id. at 391.
Citing, inter alia, the 1988 merger between
Brockway Plastics, Inc. and Owens-Illinois, the Re-
spondent argues that the General Counsel did not sat-
isfy his initial burden under Dubuque Packing of es-
tablishing that the Respondent’s relocation decision
was ‘‘unaccompanied by a basic change in the nature
of the employer’s operation.’’ We disagree. The Gen-
eral Counsel has shown that the Respondent’s decision
to close the Jeffersonville plant and relocate the work
performed there was a separate and distinct company
decision that did not alter the basic nature of the Re-
spondent’s operation as a manufacturer of plastic bot-
tles and containers. The General Counsel has therefore
established a prima facie case that the decision in-
volved here is a mandatory subject of bargaining giv-
ing rise to an obligation to bargain.
Under Dubuque Packing, the burden now shifts to
the Respondent to produce evidence rebutting the Gen-
eral Counsel’s prima facie case by establishing, inter
alia, that its decision to relocate unit work involved a
change in the scope and direction of the Respondent’s
enterprise. Alternatively, the Respondent may proffer a
defense to show by a preponderance of the evidence
that (1) labor costs were not a factor in the decision
to relocate or (2) that even if labor costs were a factor,
the Union could not have offered labor cost conces-
sions that could have changed the decision to relocate.
The Respondent alleges a change in scope and direc-
tion of its enterprise, as well as a defense based on
labor costs. We shall consider each of these conten-
tions in turn.
A. Did the Decision to Relocate Unit Work
Involve a Change in the Scope and Direction of
the Respondent’s Enterprise?
The Respondent first argues that its decision to relo-
cate unit work away from the Jeffersonville plant was
part of a corporatewide consolidation or reorganization
plan resulting from the Brockway-Owens-Illinois
merger in April 1988. The Respondent accordingly
contends that its consolidation or reorganization plan—
assertedly encompassing the relocation of unit work
away from the Jeffersonville plant and the resulting
closure of that plant—establishes a change in the scope
and direction of its enterprise sufficient to rebut the
General Counsel’s prima facie case under Dubuque
Packing. We disagree. We have carefully reviewed the
evidence presented by the Respondent and find that the
Respondent has not shown that it formulated a consoli-
dation plan that called for the relocation of unit work
away from the Jeffersonville plant.5
The Respondent did not introduce any evidence to
show that prior to, or at the time of, the April 1988
merger its directors or managers contemplated a con-
solidation of production facilities of the type the Re-
spondent now alleges is exemplified by the transfer of
unit work away from Jeffersonville and the resulting
closure of that plant. Indeed, the record reveals that
Dale Leidy, vice president in charge of manufacturing
and engineering for the Owens-Illinois plastic products
division, turned his attention to an evaluation of the
productivity of the various plants for the first time in
late 1988 or early 1989—many months after the merg-
er occurred. Although Leidy described this evaluation
as the second part of his ‘‘strategy’’ to accommodate
the new facilities obtained in the merger, the Respond-
ent never established even that this ‘‘strategy’’ was
part of a corporatewide plan to consolidate operations
arising from the merger.
The evidence presented by the Respondent does not
establish that, as a result of his evaluation, Leidy made
a determination—contingent, tentative, or otherwise—
to relocate work away from the Jeffersonville plant and
to close it, or to take similar relocation action resulting
in closure at any other plant, as part of a
corporatewide reorganization plan. On the contrary, in
June 1989, Leidy led a working group which evaluated
the performance of the Jeffersonville facility and rec-
ommended to ‘‘CONTINUE TO OPERATE JEFFERSON-
VILLE AT LEAST THROUGH 1989.’’ That recommenda-
tion recognized that labor costs at Jeffersonville were
high and proposed seeking a reduction in them, but the
recommendation did not make the continued operation
of the plant ‘‘AT LEAST THROUGH 1989’’ contingent on
any later event, much less on a reorganization plan. In-
deed, the June recommendation does not even mention
the existence of any consolidation or reorganization
plan nor that such a plan might result in a subsequent
decision to relocate unit work away from Jeffersonville
and to close that plant.6
522 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
three evaluations mentions the existence of a corporatewide reorga-
nization plan.
7 The Respondent identified these fixed costs as the building lease,
insurance, taxes, and depreciation.
Nor has the Respondent shown that the decision at
issue otherwise involved a change in the scope and di-
rection of the enterprise. No doubt a work relocation
decision may be so substantial that it can be termed a
change in the scope and direction of the business. But
there also may be work reassignment decisions that re-
sult in relatively insignificant changes in a company’s
operations. See, e.g., Holmes & Narver, 309 NLRB
146 (1992). The Respondent here has presented evi-
dence which at best establishes a decision of the latter
variety. The Jeffersonville plant was the only plant of
26 that was closed during the first 2 years after the
merger. The machines at Jeffersonville were not sold,
but were transferred to other plants in September-Octo-
ber 1989. The Respondent did not introduce evidence
to show that it intended those machines to remain idle
but rather the record suggests that the Respondent in-
tended to utilize those machines for production at its
other plants. The Respondent did not change its meth-
od of production; the type of extrusion blow molding
machine used at Jeffersonville continued to be used at
its production facilities elsewhere. It continued to man-
ufacture at other plants the same type of products it
had produced at Jeffersonville.
We thus find that the Respondent has failed to
present evidence establishing that its decision to relo-
cate work away from Jeffersonville in August 1989
was a planned result of the merger, or that the reloca-
tion decision otherwise involved a change in the scope
and direction of its enterprise.
B. The Respondent’s Labor Cost Defense
We reject, as did the judge, the Respondent’s con-
tention that labor costs were not a factor in its decision
to relocate the bargaining unit work performed at the
Jeffersonville plant. Commencing with the informal ne-
gotiating session in January and continuing through the
formal contract negotiations in mid-July—approxi-
mately 1 month prior to the decision to close Jef-
fersonville—the Respondent underscored the need for
wage concessions in order for the Jeffersonville plant
to remain viable. The Respondent’s emphasis on wage
concessions is well documented in the judge’s decision
and highlighted in the factual background section of
this decision. Indeed, the Respondent described the
Jeffersonville plant, in an internal memorandum dated
June 23 entitled, ‘‘Jeffersonville Negotiations Update,’’
as ‘‘an operation whose future is extremely uncertain
without concessionary demands made by the company
being met.’’ The Respondent’s persistent course of
conduct prior to closure stressing the need for wage
concessions at Jeffersonville compels the conclusion
that labor costs were a factor in its decision to relocate
the Jeffersonville operations.
The Respondent further contends that even assuming
that labor costs were a factor in its decision, the Union
could not have offered labor cost concessions that
could have changed the Respondent’s decision to relo-
cate, because there was insufficient business at the Jef-
fersonville plant to cover that plant’s operating costs.
As the Respondent argues in its brief, ‘‘even if the
Union had agreed to work for minimum wage, [the]
Respondent still would have been forced to close the
plant because it did not have sufficient business to
cover its fixed costs.’’7
In support of this argument, the Respondent pre-
sented monthly production charts for its manufacturing
plants assertedly showing that only 2 of the 10 ma-
chines at Jeffersonville were in operation at the time
the decision to relocate was made in late August. Vice
President Leidy testified that six machines need to be
in operation at Jeffersonville for that plant to operate
at a profit. The Respondent accordingly argues that
due to the decline in its business at Jeffersonville—to
well below the level necessary even to meet its fixed
costs—the Union could not have offered any labor cost
concessions that could have changed the decision to re-
locate.
The Respondent further submits that its merger in
1988 and concomitant expansion to 26 plants caused a
significant decrease in production at the Jeffersonville
plant. Following the merger, many accounts formerly
manufactured at Jeffersonville were transferred to
newly acquired plants located closer to the Respond-
ent’s customers. This permitted the Respondent to pro-
vide better customer service, and to decrease freight
and delivery costs which are customarily paid by the
customer in the Respondent’s industry. For example,
the Respondent transferred its substantial Jergens ac-
count from Jeffersonville to its Cincinnati plant begin-
ning in January 1989, because Jergens is located in
Cincinnati. The Respondent submitted documentary
evidence demonstrating such interplant transfers which
occurred following the April 1988 merger, much of it
transferring work away from Jeffersonville.
We have carefully reviewed the documentary evi-
dence submitted by the Respondent to support its con-
tention that any amount of labor cost concessions of-
fered by the Union could not have changed its decision
to relocate work away from Jeffersonville. As set forth
below, we find that a preponderance of the evidence
does not support the Respondent’s principal contention
that, at the time the relocation decision was made, its
business at the Jeffersonville plant was substantially
less than that necessary to cover the fixed costs of op-
erating the plant, and far less than that necessary to
operate at a profit. We accordingly conclude below
that the Respondent has not satisfied its burden under
523OWENS-BROCKWAY PLASTIC PRODUCTS
8 We agree with the judge that Leidy’s testimony that there was
insufficient business at Jeffersonville to operate the plant profitably
does not, standing alone, suffice to meet the Respondent’s burden
under Dubuque Packing concerning the issue of labor cost conces-
sions. See 303 NLRB at 393. Our inquiry here focuses on whether
the documentary evidence submitted by the Respondent in fact sup-
ports Leidy’s testimony. We accordingly need not adopt the judge’s
characterization of Leidy’s testimony as false and misleading, but
rather determine whether it is supported by the record evidence as
a whole.
9 The 12 charts are dated January 25, February 13, March 10,
April 18, May 11, June 16, July 14, August 28, September 15, Octo-
ber 16, November 10, and December 11.
10 Leidy’s testimony also indicates that he remained in contact
with the Respondent’s negotiating team during the contract negotia-
tions.
11 As previously noted, the Respondent informed the Union that
the decision to close was made on August 27. Leidy testified that
the decision was made on August 28. This discrepancy does not af-
fect the result.
Dubuque Packing of showing that the Union here
could not have offered labor cost concessions that
could have changed the Employer’s decision to relo-
cate the bargaining unit work performed at Jefferson-
ville.8
We focus initially on the Respondent’s monthly pro-
duction charts for its manufacturing plants, along with
the Respondent’s other internal memoranda docu-
menting its own evaluation of the forecast for the Jef-
fersonville plant during 1989. The Respondent sub-
mitted 12 production charts, one dated for each month
of calendar year 1989.9 Each chart shows the number
of manufacturing machines in place at each of the Re-
spondent’s plants, the number of machines in use at
each plant that month, and the number of machines
projected to be in use the following month.
The charts dated January through June show all 10
of the Jeffersonville manufacturing machines in oper-
ation during that time period. The chart dated June 16
projects seven machines to be in operation the fol-
lowing month.
By memorandum dated May 16 and entitled, ‘‘Jef-
fersonville Review,’’ Leidy notified his colleagues that
a meeting would be held on June 14
to review where we are in plant performance,
present plant loading, potential plant loading, etc.
We need to understand, from a business point of
view, where we are before union negotiations start
. . . . The agenda [on June 14] will include: 1.
Plant performance year to date . . . . 3. Business
outlook for second half . . . . 5. Recommenda-
tion-shutdown or extend [contract at Jefferson-
ville].
At the June 14 meeting, Leidy’s working group re-
viewed a document dated June 13 entitled, ‘‘CONTINUE
TO OPERATE JEFFERSONVILLE?’’ The document listed
various advantages and disadvantages and concluded
with the recommendation, as discussed supra, ‘‘CON-
TINUE TO OPERATE JEFFERSONVILLE AT LEAST
THROUGH 1989.’’ The working group additionally con-
sidered a document showing that the Jeffersonville
plant had earned a year-to-date profit in 1989. The
document provides:
GROSS PROFIT
YTD dollars $920M
YTD % 17.6%
Thus, the working group headed by Leidy was rec-
ommending as of June 14 continued operation of the
Jeffersonville plant at least through 1989. The rec-
ommendation did not intimate that there was a signifi-
cant danger that Jeffersonville would slide to the point
that it would become unprofitable to run the plant only
2 months later. Leidy testified that at the conclusion of
the June 14 meeting he transmitted the recommenda-
tion of his working group to the Respondent’s negoti-
ating team at Jeffersonville.10
The monthly production chart dated July 14 shows
eight machines in operation at Jeffersonville, with six
machines projected to be in operation the following
month. The Respondent proposed its 1-year contract
extension on July 18, which the Union accepted imme-
diately. The Respondent’s extension of the contract for
1 year on July 18, its internal document showing eight
machines in operation in July and six projected in Au-
gust, and the recommendation of Leidy’s working
group are persuasive evidence that as of July 18 the
Respondent believed there was sufficient work to keep
Jeffersonville in operation.
Leidy further testified that he was involved in the
decision to close Jeffersonville. The Respondent con-
ducted its annual facilities operation review at a cor-
porate retreat on August 14–16. At that meeting, Leidy
testified that his superior, Scott Trimble, asked him,
‘‘[W]hat do you think we ought to do at Jefferson-
ville.’’ Leidy replied that ‘‘it looked very bleak, but
that he didn’t want to give up, and wanted sales to
take one more shot at looking at potential business [for
Jeffersonville].’’ Leidy and Trimble thereafter went on
a business trip to Japan. On their return, a meeting was
held on August 28 at which Trimble and Leidy were
told that no additional business had been found for Jef-
fersonville.11 The closure announcement was made on
August 29.
Leidy testified, and the Respondent stresses in its
brief, that at the time the decision was made on Au-
gust 27 or 28 to relocate the remaining work at Jef-
fersonville, only two machines were in operation at
Jeffersonville—substantially less than the six machines
524 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
12 We note that Leidy testified that in August 1989 Jeffersonville
was still profitable for the year.
13 The following exchange took place during Leidy’s cross-exam-
ination:
Q. So that [‘‘CM’’ on the monthly production charts] would
stand for the number of machines scheduled to be running for
that month?
A. Yes. However, normally, these are run a month behind,
but—okay. Go ahead.
Q. Well, would this—this dated August 28, is this the one
that—the ‘‘CM’’ then would be for the number of machines op-
erating during the month of August, is that correct?
A. I think this may well have been the number of machines
running in July.
Q. Are you certain of that?
A. That would be my guess, because the one in September—
these are made for our operations review. And our operations re-
view for the month of July would come in August.
And so they’re made out with the month—the next month
here would actually, I believe, be August.
Q. So, ‘‘NM’’ would be—so, this is a document prepared on
August 28. And you’re saying next month would be August 1
through August—the end of August, 1989; is that what you’re
saying?
A. I believe that is correct. I have not—I think that’s correct.
Q. Are you just guessing?
A. This—going back in my memory, looking through the—
looking through the numbers, this doesn’t agree with my recol-
lection of what the situation was.
14 Numerous other contradictions may be obtained by comparing
the Respondent’s citation to its production figures at 14 and 29 of
its brief and its monthly production charts.
15 We note the Respondent’s contention that production at Jef-
fersonville decreased due to the Respondent’s transfer of work to its
plants more closely located to its customers. The Respondent has
failed to specifically identify, however, any such transfer that can ac-
count for the precipitous fall in work at Jeffersonville during the crit-
ical period between July and August. (As noted, the Respondent
identifies solely the loss of the Colgate account.) We observe that,
according to the R. Exhs. 23(a) and (b), the transfer of the large
Jergens account from Jeffersonville to Cincinnati was accomplished
by June.
necessary to operate Jeffersonville at a profit.12 In con-
trast, the Respondent’s monthly production chart dated
August 28 shows six machines in operation at Jef-
fersonville.
Two troublesome ambiguities are presented by the
Respondent’s evidence. First, there is the contradiction
just noted regarding the number of machines actually
in operation at the time the decision to close was
made. Second, the Respondent has not identified what
business was lost at Jeffersonville between July 18—
when Jeffersonville was operating eight machines and
the Respondent entered into a 1-year contract exten-
sion—and less than 1 month later on August 14 or 15
when Leidy told his supervisor that the situation at Jef-
fersonville was ‘‘bleak,’’ resulting in the subsequent
decision on August 27 or 28 to relocate unit work
away from the Jeffersonville plant and to close the
plant.
The Respondent attempts to explain the first ambi-
guity by stating that the monthly production charts
refer to the production at the Respondent’s plants dur-
ing the prior month. Thus, the Respondent argues that
the chart dated September 15, showing two machines
in operation at Jeffersonville, actually refers to the sit-
uation in August at the time the decision to close was
made. Under this theory, the Respondent cautions that
its chart dated August 28 refers to its production for
the month of July.
The Respondent failed to explain this critical aspect
of the production charts when it introduced them into
evidence at the initial hearing. Rather, Leidy testi-
fied—in equivocal terms—to the retroactivity of the
charts at the supplemental hearing.13 In any event, the
Respondent’s initial brief submitted to the Board in
this case on July 31, 1990—before Leidy’s testimony
at the supplemental hearing on March 16, 1992—re-
peatedly cites to the monthly production charts as re-
ferring to production as of the date of the chart—not
as of the prior month.
For example, the Respondent states at 14 of its brief
that ‘‘[i]n May 1989, Respondent was utilizing 99%
percent of its shuttle machines (90 out of 91) . . . .’’
Indeed, the Respondent’s monthly chart dated May 11,
1989, confirms that 90 out of 91 shuttle machines were
in use in May, and 99 percent of shuttle capacity was
in use. Under the Respondent’s theory, however, it
should have cited the June 16, 1989 report to reflect
production in May. Contrary to the Respondent’s con-
tentions in its brief regarding May production at Jef-
fersonville, the June 16 report shows 87 of 91 ma-
chines in use, and 96-percent capacity.14 These con-
tradictions seriously erode the probative value of the
Respondent’s documentary and testimonial evidence.
Nor has the Respondent adequately explained what
loss of business caused production at Jeffersonville to
plunge from eight machines as of the contract renewal
on July 18—or even six machines under the Respond-
ent’s retroactivity theory—to allegedly two machines 1
month later. The Respondent has identified only its no-
tification in August that it would be losing its large
Colgate account 1 year hence. (The Colgate account
was primarily filled at the Respondent’s Louisville
plant but also provided overflow work for Jefferson-
ville.) The Respondent plainly acknowledges that it
knew in August it would maintain the Colgate account
for 1 full year, and in fact did so. Accordingly, the
loss of the Colgate account does not and cannot ac-
count for the decrease in business at Jeffersonville al-
leged by the Respondent between July and August, be-
cause the Colgate business was not lost until one full
year later. We are thus unable to identify any loss of
business in the critical period between July and August
to counter the Respondent’s own internal recommenda-
tion as of June 14 to ‘‘CONTINUE TO OPERATE JEF-
FERSONVILLE AT LEAST THROUGH 1989.’’15
525OWENS-BROCKWAY PLASTIC PRODUCTS
16 Thus, we have fully considered (and accepted as true) the Re-
spondent’s evidence concerning employee layoffs and excess capac-
ity in its midwestern group. As explained above, however, that evi-
dence does not satisfy the specific requirements of the second prong
of the Dubuque Packing test.
17 We note that the Respondent has not suggested that the parties’
bargaining history demonstrates that the Union ‘‘consciously yielded
or clearly and unmistakably waived its interest’’ with regard to bar-
gaining about work relocation. Rockwell International Corp., 260
NLRB 1346, 1347 (1982).
We accordingly cannot conclude based on this evi-
dence that the Respondent has satisfied its burden of
showing, by a preponderance of the evidence, that
business was so poor at Jeffersonville at the time the
decision to close and relocate unit work was made that
the Respondent could not even cover its fixed costs at
Jeffersonville, and therefore that no labor cost conces-
sions could have changed its decision.
The Respondent also argues that declining business
among its group of seven midwestern plants—which
includes Jeffersonville—along with the anticipated loss
of the large Colgate account necessitated the closure of
one of its midwestern plants to reduce excess capacity
in its midwestern group. The Respondent contends that
it had sound business reasons for selecting an ‘‘over-
flow’’ plant (Jeffersonville) as the plant to be closed.
The Respondent’s general assertions do not satisfy
the specific requirements of the Dubuque Packing test.
Under the second prong of Dubuque Packing, the pres-
ence or absence of a bargaining obligation depends on
whether ‘‘the union could and would offer concessions
that approximate, meet, or exceed the anticipated costs
or benefits that prompted the relocation decision.’’ 303
NLRB at 391. However, despite the opportunity af-
forded it at the second hearing, the Respondent failed
to introduce any evidence indicating how much money
it expected to save from the reduction in excess capac-
ity. Having failed to establish in the record the specific
cost savings it anticipated from its decision, the Re-
spondent has failed to show that the Union could not
have offered labor cost concessions that would have
enabled the Respondent to ‘‘approximate, meet, or ex-
ceed’’ those savings.16
C. The Respondent’s Waiver Defense
We also reject, as did the judge, the Respondent’s
contention that the Union waived its right to bargain
over the decision to close the Jeffersonville plant and
to relocate the work performed there. It is well estab-
lished that waiver of statutory rights must be clear and
unmistakable. Metropolitan Edison Co. v. NLRB, 460
U.S. 693, 708 (1983). In the circumstances of this
case, we cannot find that the Union clearly and unmis-
takably waived its right to bargain over the decision at
issue.
The Respondent contends that the management-
rights provision of the parties’ collective-bargaining
agreement, along with language contained in the pre-
amble to the agreement, permits the Respondent unilat-
erally to close the Jeffersonville plant and to relocate
the work performed there. The Respondent accordingly
argues that the Union contractually waived its statutory
right to bargain over that subject.
The management-rights clause provides, in pertinent
part:
[I]t is recognized and agreed that the management
of the plant and the direction of the working
forces is vested in the Employer. Among the
rights and responsibilities which shall continue to
be vested in the Employer shall be the right to in-
crease or decrease operation, the types of prod-
ucts made, methods, processes, and means of pro-
duction, use and control of plant property, selec-
tion of employees for hire, price determination,
and other aspects of relationship to customers, to
establish such rules as are deemed necessary for
the proper and orderly operation of the plant, re-
move or install machinery and increase or change
production equipment, introduce new and im-
proved productive methods and facilities, relieve
employees from duty because of lack of work, and
to discipline or discharge employees for just cause
. . . . [Emphasis added.]
The management-rights provision does not specifically
address the permanent transfer of production and
equipment from the Jeffersonville plant to other facili-
ties. The Respondent accordingly does not and cannot
argue that the management-rights clause explicitly
grants it unilateral authority to transfer unit work.
Rather, the Respondent’s position in essence is that its
right to increase or decrease operations, remove or in-
stall machinery, and relieve employees because of lack
of work extends to and encompasses the right to close
the plant and transfer production elsewhere.
The critical question is not, however, whether such
a right might reasonably be inferred from the manage-
ment-rights clause; it is whether that interpretation is
supported by ‘‘clear and unmistakable language.’’ Uni-
versal Security Instruments, 250 NLRB 661, 662
(1980). The language in the management-rights
clause—granting the Respondent unilateral authority
with respect to increasing or decreasing operations but
without any reference to work relocation—does not
meet the clear and unmistakable standard governing
the waiver of statutory rights. Johnson-Bateman Co.,
295 NLRB 180, 184–185 (1989).17
The preamble to the parties’ agreement does not
constitute a waiver by the Union. The preamble pro-
vides:
This agreement covers the employees and the
plant while it and they are in the Jeffersonville
526 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
18 Of course, nothing in the Act required that bargaining unit work
remain at Jeffersonville. We hold only the Respondent should have
bargained with the Union to agreement on bona fide impasse. In ne-
gotiations, the Respondent might have achieved the concessions that
would have made the relocation unnecessary. Alternatively, the Re-
spondent could have lawfully implemented its decision after bar-
gaining to impasse.
19 We adopt in its entirety the judge’s recommended remedy pro-
viding for, inter alia, reinstatement of Jeffersonville employees to
positions at the Respondent’s other plants where the bargaining unit
work has been relocated, and making the employees whole by pay-
ing them what they would have earned from the date of their termi-
nation to the date of the offer of reinstatement. We leave to the com-
pliance stage of these proceedings whether the closure of any of the
plants to which the Jeffersonville work was relocated affects the ex-
tent of employee reinstatement and backpay rights under the terms
of the remedy in this case.
1 All dates are in 1989 unless otherwise indicated.
area. This means that if the plant should close
down and reopen in this same area, the Agree-
ment would continue to be effective as to the new
plant.
The provision’s thrust is that if the Jeffersonville plant
should close down and reopen in the same vicinity, the
parties’ contract would continue to apply. Although the
provision indeed refers to plant removal, there is noth-
ing in the clause that affirmatively authorizes the Re-
spondent to transfer bargaining unit work outside the
unit. A generally worded contractual provision will not
be construed as a waiver of statutory bargaining rights.
See Dubuque Packing, supra at 397.
The Respondent additionally contends that waiver is
established by the Union’s failure to object to transfers
of work from the Jeffersonville plant prior to the sum-
mer of 1989. However, the Union’s failure to file a
grievance claiming that work transfers violated the
contract is not tantamount to an acknowledgement that
the contract authorized the Respondent to act unilater-
ally. See Dubuque Packing, supra at 397–398. Further-
more, with respect to the Union’s alleged failure to re-
quest bargaining over prior work transfers, the Board
has held that ‘‘[a] union’s acquiescence in previous
unilateral changes does not operate as a waiver of its
right to bargain over such changes for all time.’’
Owens-Corning Fiberglass, 282 NLRB 609 (1987);
Dubuque Packing, supra at 397.
IV. CONCLUSION
For all the foregoing reasons, we find that the Gen-
eral Counsel has established a prima facie case that the
decision to close the Jeffersonville plant and perma-
nently relocate its work to other plants was a manda-
tory subject of bargaining and that the Respondent has
failed to rebut it or proffer a defense supported by a
preponderance of the evidence. Accordingly, we con-
clude that the Respondent’s refusal to bargain over the
decision violated Section 8(a)(5) and (1) of the Act.18
ORDER19
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, Owens-Brockway Plastic
Products, Inc., Jeffersonville, Indiana, its officers,
agents, successors, and assigns, shall take the action
set forth in the Order.
David L. Ness, Esq., for the General Counsel.
R. Jeffrey Bixler and Mark E. Curry, Esqs., of Toledo, Ohio,
for the Respondent.
Alton Priddy, Esq., of Louisville, Kentucky, for the Charging
Party.
DECISION
STATEMENT OF THE CASE
DAVID L. EVANS, Administrative Law Judge. This matter
under the National Labor Relations Act (the Act) was tried
before me on February 27 and 28, 1990, in Louisville, Ken-
tucky. The charge against Owens-Brockway Plastic Products,
Inc. (the Respondent) was filed on October 6, 1989,1 by
International Chemical Workers Union, AFL–CIO, Local No.
728 (the Union). The complaint issued on December 5 alleg-
ing that, in violation of Section 8(a)(5) of the Act, the Re-
spondent failed and refused to negotiate with the Union ‘‘re-
garding its decision to close [its] Jeffersonville, Indiana facil-
ity and to relocate the operations at said facility to other fa-
cilities of Respondent.’’ Respondent duly filed an answer ad-
mitting jurisdiction but denying the commission of any unfair
labor practices.
On the entire record, and my observation of the demeanor
of the witnesses, and after considering the briefs filed by the
parties, I make the following
FINDINGS OF FACT
I. JURISDICTION
During the 12-month period immediately preceding the
issuance of the complaint, the Respondent, a corporation,
was engaged in the manufacture and sale of plastic bottles
and other containers at its Jeffersonville, Indiana facility (the
Jeffersonville plant). During that period, in the course of
business operations, the Respondent purchased and received
at its facility products, goods, and materials valued in excess
of $50,000 directly from suppliers located at points outside
Indiana. Respondent admits and I find that it is an employer
engaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act and that the Union is a labor organi-
zation within the meaning of Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. Facts
1. History of the Jeffersonville plant
The Jeffersonville plant was constructed in 1961, and it
closed in October 1989. During those years the plant was the
place of manufacture of plastic containers of various types,
527OWENS-BROCKWAY PLASTIC PRODUCTS
2 This second extension of the contract was never formally exe-
cuted by the Union; however, the parties treated the agreement as
if it had been executed, and there is no issue that a binding contract
was entered on July 18, 1989. 3 There was no ‘‘Section 2’’ of this article.
mostly bottles for the food and cosmetic industries. In June
1984, Brockway Plastics, Inc. acquired nine plastic container
manufacturing plants of IMCO Division of the Ethyl Cor-
poration. One of those plants was the Jeffersonville plant and
another was a similar plant in Louisville, Kentucky (the Lou-
isville plant). The Jeffersonville and Louisville plants are
about 15 miles apart. In April 1988, Brockway Plastics, Inc.
merged with Owens-Illinois Corporation, and Respondent is
now an incorporated division of Owens-Illinois. At the time
of the merger, Owens-Illinois owned 17 plastic bottle plants,
so that there became a total of 26 such plants in the Owens-
Illinois system which had 52 total plants. The headquarters
of Owens-Illinois is in Toledo.
From 1962, and continuing through the various changes in
ownership, the Union was the collective-bargaining rep-
resentative of the Jeffersonville plant’s production and main-
tenance employees. The last multiyear contract covering the
unit employees was between the Union and Brockway Plas-
tics, Inc., effective from July 19, 1985, until July 18, 1988.
When the April 1988 merger occurred, Respondent assumed
that contract. On July 19, 1988, the parties signed a 1-year
extension of the 1985–1988 contract, including a 30-cent
across-the-board wage hourly wage increase. As detailed
infra, the parties agreed to a second 1-year extension of the
1985–1988 contract on July 18, including a 2-percent (40-
hour) ‘‘signing bonus’’ to each unit employee, but no other
changes.2
The 1985–1988 contract, as twice extended, included the
following provision at the preamble:
This agreement covers the employees and the plant
while it and they are in the Jeffersonville area. This
means that if the plant should close down and reopen
in this same area, the Agreement would continue to be
effective as to the new plant.
And, at article XIX, ‘‘Management Rights,’’ the contract
provided:
Section 1. Subject to the provisions of this Agree-
ment, it is recognized and agreed that the management
of the plant and the direction of the working forces is
vested in the Employer. Among the rights and respon-
sibilities which shall continue to be vested in the Em-
ployer shall be the right to increase or decrease oper-
ation [sic], the types of products made, methods, proc-
esses, and means of production, use and control of plant
property, selection of employees for hire, price deter-
mination, and other aspects of relationship to cus-
tomers, to establish such rules as are deemed necessary
for the proper and orderly operation of the plant, re-
move or install machinery and increase or change pro-
duction equipment, introduce new and improved pro-
ductive methods and facilities, relieve employees from
duty because of lack of work, and to discipline or dis-
charge employees for just cause; provided that none of
such rights shall be exercised in violation of any provi-
sion of this Agreement, and further provided that all
employees shall receive equal treatment under the ap-
plication of this clause. Rights not expressly waived by
this Agreement shall be retained by the Employer. The
listing of specified rights in this Agreement is not in-
tended to be[,] nor shall they be considered restrictive
of, or a waiver of[,] any rights of the Employer not list-
ed herein, whether or not such rights have been exer-
cised by the Employer in the past.3
The Jeffersonville plant reached an employment com-
plement high of 300 in 1986. There was a steady atrophy,
so that at the time the plant closed in 1989, there were only
36 unit employees steadily employed.
2. Negotiations preceding plant closure
Dale Leidy is vice president in charge of manufacturing
and engineering for the Plastic Products Division of Owens-
Illinois. Leidy reports to Scott Trimble, vice president and
general manager of the division.
Leidy testified that, in early January, Kraft Foods was so-
liciting bids for a contract which could be performed by the
Jeffersonville plant, but the Jeffersonville plant would be in
competition with the Wisconsin plant of a competitor. The
Jeffersonville plant had just lost a bidding war with that
competitor over a contract let by a purchaser in Cincinnati.
Speaking of the lost contract, Leidy stated:
and for some reason they were able to make it in Wis-
consin and ship it to [the customer in] Cincinnati at a
lower price than what we were able to make it in either
Florence [Respondent’s plant in Florence, Kentucky] or
in Jeffersonville. So they [the competitor] wound up
with the business [the lost contract], and they were in-
vited to bid on this piece of business [the Kraft con-
tract]. So we knew we had difficulties in being able to
effectively compete, and we wanted that [the potential
Kraft] business.
For this reason, Leidy testified, he and a group of managers
decided to hold meetings with the Union and the Jefferson-
ville employees.
Leidy and the other managers met during the first week
of January with three groups at the Jeffersonville plant: sala-
ried personnel, the Union’s business committee, and the bar-
gaining unit employees. Leidy told each group that Respond-
ent had the opportunity to bid for a Kraft Foods contract
which would benefit the Jeffersonville plant, but there were
problems: the competition was fierce and the costs of pro-
duction was high at Jeffersonville. Leidy told the groups that
management at corporate headquarters in Toledo had cut
costs in several areas, including:
the shutdown of the Kansas City Technical Center, the
consolidation of those activities, the number of people
that had been cut out in Toledo overall, and that as a
way of doing business to be more competitive, that we
were taking steps to cut costs in all areas.
Leidy told the groups that ‘‘we’ve got a limited time to make
this happen, and we can be more aggressive in our bid if we
think there’s reason to believe that we can lower our costs.’’
528 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Leidy was asked and testified on direct examination:
Q. Now in your presentations, did you say anything
about the possibility of the plant closing?
A. I said there was that possibility. I don’t remember
the exact language.
Gary Boles is Respondent’s manager of labor and employ-
ees relations. Boles handles contract negotiations and admin-
istrative matters for several of Respondent’s plants. James
Rumpel was an employee of the Jeffersonville plant and
president of the Local. On January 5, Boles sent Rumpel a
letter stating:
Our current Labor Agreement remains in effect
through July 19, 1989. However, in line with our recent
discussions concerning the viability of the Jeffersonville
Plant, it is the desire of the Company to immediately
initiate discussions with the Union around issues related
to Contract language, wages and benefits.
Boles proposed a meeting on January 10. Rumpel imme-
diately replied by letter stating:
Although you did not specifically request to reopen
our current contract, our membership voted unani-
mously not to do so. However, our membership did
give our Committee the authority to meet with you to
discuss your concerns. In these discussions we expect
[that] you will present documentation to back up your
claims made to our members on January 4, 1989.
We look forward to meaningful, honest and frank
discussions about our welfare and job security.
The parties did meet on January 10 in what Respondent
called an ‘‘informational meeting.’’ There were two other of
these informational meetings, on February 28 and March 9,
before ‘‘formal’’ negotiations began on June 21 for renewal
of the contract which was to expire on July 19.
John Frechette is the vice president in charge of labor rela-
tions for Owens-Illinois. Frechette was Respondent’s prin-
cipal spokesman at the informational meetings and later
served as Respondent’s principal spokesman in the formal
contract renewal negotiations. On direct examination
Frechette was asked what prompted the informational meet-
ings. Frechette replied:
The division felt that the plant was getting itself into
a noncompetitive situation relative to the other plants of
the Owens-Brockway operation as well as the outside
world.
Frechette was assisted by Boles and the Jeffersonville plant
manager Norman Lilly. The Union was represented at the in-
formational meetings by Charles Chapman, vice president
and International representative of the Union’s parent body,
Randy Peterson, another International representative, Rumpel,
and, at the last informational meeting, several members of
the Local’s in-plant bargaining committee. Chapman was the
Union’s principal spokesman.
At the January 10 meeting, Respondent presented the
Union with two documents. The first was an untitled five-
paragraph listing which Frechette described as ‘‘a very broad
outline of the steps needed to increase the flexibility of the
Company and to improve the competitive situation of the Jef-
fersonville business.’’ The five paragraphs were:
1. Revision in the current concept of job classifica-
tions to provide a more flexible approach to getting the
work done in a more efficient manner with a higher
consciousness toward quality.
2. Revision in the wage rate schedule that will pro-
vide for labor costs that are more in line with the mar-
ketplace competition.
3. Greater emphasis on job training and performance
accountability. Qualifications and ability must play a
more significant role in assignment decisions than has
been the case in the past.
4. Revise procedures and practices that are not cost
effective or are restrictive to an extent that the most ef-
ficient manner of performing the work is prevented.
5. Modify programs that establish cost penalties on
the Jefferson Plant that promote additional pay for time
not worked.
Frechette also presented the Union with a sheet entitled
‘‘Contract Modifications.’’ This document was a proposal to
change the 1985–1988 contract, as extended, in several re-
spects including: a requirement that, to receive holiday pay,
an employee scheduled to work a holiday must do so; elimi-
nation of departmental seniority; restrictions on the use of se-
niority in bidding, promotions and recall, making, for the
first time, ability to perform the job a factor; and consolida-
tion of 11 job specific classifications to 4 general ones, and
calling for concomitant wage reductions from 8 cents to
$1.07 for the affected employees. Respondent further pro-
posed that the next collective-bargaining agreement expire on
July 18, 1991.
Respondent further presented the Union with a chart that
compared the wage rates for seven classifications at the Jef-
fersonville plant with the wage rates for the same classifica-
tions at nine other of Respondent’s plants. The chart listed
the Jeffersonville plant’s wages as being much higher than
the other plants.
Chapman did not testify. Peterson testified for General
Counsel that Frechette presented the above documents stat-
ing:
[T]he Company needed these concessions to become
more competitive, that the Jeffersonville plant, the way
it stood at this time, could not compete [in] the market
because of flexibility, restrictions and the seniority and
the cost factor of the plant, what it cost to put the prod-
uct out.
Peterson testified that Chapman asked if the Union gave Re-
spondent everything it wanted, would they guarantee that the
plant would stay open. According to Peterson:
Mr. Frechette said that it was not the Company’s in-
tention to close the plant, that they had no intentions
of closing this plant. They wanted this plant to stay
open, that they were going to try to get out and bring
business into this plant, but he could not give us guar-
antees on anything.
On direct examination Frechette testified that there was
discussion of plant closing, but
529OWENS-BROCKWAY PLASTIC PRODUCTS
4 Tr. 231, L. 19, is corrected to change ‘‘liability’’ to ‘‘viability.’’
[t]he discussion of the plant closing was simply to the
effect that I had no desire or intent as the Company’s
chief spokesman to close Jeffersonville.
Frechette further testified that when Chapman asked for
guarantees that the plant would remain open:
I told them that there was no way that we could
guarantee the future of the plant and the reason for that
was that all of the concessions that we had asked for
couldn’t guarantee [the Jeffersonville plant’s remaining
open] because the rise and fall of the plant was going
to depend upon the market structure and not upon the
cost structure of the Jeffersonville plant.
Frechette testified that the Union replied that they did not be-
lieve Respondent’s figures, that they would not give up their
seniority rights, and that, if Respondent could not run the
plant at a profit, it should sell it to someone who could.
On cross-examination Boles was asked and testified:
Q. Now, what happened basically at these [three in-
formational] sessions is, is it not, that the Company told
the Union, ‘‘We need some relief on the wages and the
work condition issues in the contract in order to remain
competitive at Jeffersonville.’’ That’s what the Com-
pany was telling the Union at these discussion meet-
ings, was it not?
A. That’s correct.
Q. You were telling—the Company was telling the
Union at these meetings that, ‘‘We need concessions on
these issues, that it’s essential to improve the situation
at Jeffersonville, that we get these concessions, isn’t
that right?’’
A. We told them that we felt that it was very nec-
essary in order to be able to attract additional business.
Q. In fact, you told them that it was very necessary
to get those concessions for the Jeffersonville plant to
remain viable, isn’t that right?
A. Words to that effect.
At the January 10 meeting, the Union further asked for in-
formation to support Respondent’s assertions made at the
sessions. Boles testified that some was then given, and some
was given later. General Counsel does not contend that, at
any point, Respondent unlawfully refused to supply informa-
tion to the Union.
At the February 28 informational session the Company re-
iterated its need for concessions and, according to the undis-
puted testimony of Peterson, Frechette told the Union:
that it was the most costly plant in the system, that we
needed to understand the Company’s reasons behind
asking for all these things, and . . . Mr. Frechette said,
‘‘You know, the company doesn’t have any intention of
closing the plant, but that’s what we need these things
for is to try to keep this plant open, to make it more
competitive so it’ll be here.’’
Boles consistently testified:
So we did talk about the competitive bid situation; we
talked about the viability4 of the plant, and the im-
provement that they had shown to that point [in] time,
and somewhat rehash the other points that we were
looking to achieve some relief in to make the plant
more competitive.
On March 1, Boles sent Rumpel a detailed, multipage pro-
posal consistent with the objectives listed in the January 10
presentation.
At the March 9 informational meeting, according to Peter-
son, Frechette started with ‘‘a little speech’’ which included
the statement that ‘‘the Company had no desire to close this
plant.’’ Peterson further remembered that Frechette stated
that Jeffersonville was the only 1 of 52 Owens-Illinois plants
which did not have ability coupled with seniority rights in
procedures for bidding, layoffs, etc., and that Jeffersonville
needed to ‘‘get in line’’ with the other plants.
Boles testified that at the March 9 meeting, Respondent
presented the Union with a document entitled ‘‘Competitive
Situation’’ and marked ‘‘Confidential.’’ The document lists
Respondent’s production costs at the Jeffersonville plant and
compares them with costs incurred by competitors for four
different sizes of plastic bottles. Jeffersonville is higher for
each size bottle. The memorandum concludes:
8% GROSS PROFIT, 1% NET PROFIT BASED ON CURRENT
JEFFERSONVILLE COSTS CONCLUSION—we cannot com-
pete on this business
The second line is bold faced, as well as capitalized.
Chapman reviewed the figures and, according to the undis-
puted testimony of Frechette, stated that if Respondent was
going to close the Jeffersonville plant, it was going to close
the plant, and there was nothing the Union could do about
it.
On June 21, the parties met for formal contract renewal
negotiations. At that meeting, instead of responding to Re-
spondent’s requests for wage and seniority concessions, the
Union made many additional demands, including a demand
for a ‘‘substantial wage increase’’ and a paid lunch period.
According to the undenied testimony of Peterson, Frechette
became visibly, and audibly, upset, and Frechette made re-
marks including: ‘‘[H]ere we are trying to get concessions at
this plant to make it more competitive, and you’re adding
more costs to the most costliest plant in the system.’’ The
meeting ended with no agreements on the concessions that
Respondent had demanded.
On July 10, the parties met for a second formal negotia-
tion. Most of the time was consumed with the union rep-
resentatives’ stating that the Union could not understand Re-
spondent’s seniority demands and Frechette’s responding that
the modifications were necessary for efficiency and, again,
that Jeffersonville was the only 1 of 52 Owens-Illinois plants
that did not consider ability, as well as seniority, in pro-
motions and recall decisions.
The parties met again on July 11. Respondent submitted
a proposal that continued to demand economic and seniority
concessions, but then sought only a 1-year contract. The
Union refused to grant any concessions and persevered in its
economic demands, including those for substantial wage in-
creases and a paid lunch period.
The parties met again on July 17. Respondent dropped its
demand for a consolidation of classifications, but continued
530 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Tr. 148, L. 2, is corrected to change ‘‘without it not’’ to ‘‘we.’’
to insist on wage and seniority concessions. The Union’s po-
sition remained unchanged.
The parties met again on July 18. The Union proposed a
2-year contract with 45-cent across-the-board wage increases
in each year, and it made other demands. Respondent pre-
sented its ‘‘Final Proposal’’ which called for a dropping of
all union demands, the dropping of all of Respondent’s de-
mands, and the payment of a 2-percent (40 hours’ pay)
lump-sum payment for all unit employees, and a 1-year ex-
tension of the expiring contract.
After a vote by the membership, the union committee ac-
cepted this proposal, and the contract immediately went into
effect.
Peterson testified that during either the meeting of July 17
or 18, the Union5 asked if Respondent was going to shut the
Jeffersonville plant,
And the response was either that it’s not the Com-
pany’s intentions to close the plant down, or the Com-
pany does not intend to close the plant down, or the
company has no desire to close it.
This testimony was not denied; Frechette testified, without
contradiction, that Respondent’s representatives never told
the Union that the Jeffersonville plant would close if the con-
cessions were not granted, and they did not tell the Union
that the plant would remain open if the concessions were
granted.
3. Announcement of plant closure
On August 29, the in-plant union committee was called to
the office to attend a meeting with Plant Manager Lilly,
Boles, and Leidy. Leidy read the following announcement to
the union committee.
We are announcing today the Jeffersonville Plant
will be permanently closed effective October 28, 1989.
This information was provided today to the appropriate
international officers of the International Chemical
Workers Union, the president of Local 728, the Mayor
of Jeffersonville and the state officials required by the
Workers Adjustment and Retraining Notifications Act.
We plan to operate two machines until the current
job requirements have been completed. It is uncertain
at this time, if other customer orders will be available
for the Jeffersonville Plant. In any event, all employees
actively working will receive regular pay and benefits
through the sixty day notice period as required under
plant closing legislation, provided employees work until
released by the Company.
The decision to permanently close this plant was
based on a general weakening of customer orders in the
Midwest coupled with the anticipation of major cus-
tomer conversions to materials that will transfer signifi-
cant orders to our competitors in other geographic mar-
kets. We regret this has happened.
During the next few weeks, we will be meeting with
local state employment officials and private employ-
ment agencies to discuss job opportunities that may be
available in this area. Information will be provided as
it becomes available.
. . . .
Questions about specific details can be directed to
Norm Lilly.
The committee tried to ask several questions; Leidy re-
fused to answer them, but Boles did tell the committee that,
if they put their questions in writing, he would answer them.
On August 30, Peterson sent Boles a list of questions
about the plant closing, and Peterson further demanded the
opportunity to bargain over the decision and its effects. Boles
replied:
I am responding to your letter of August 20, 1989.
As we discussed in our telephone conversation of Sep-
tember 15, 1989, we are prepared to meet with you to
bargain concerning the effects of the closing of the Jef-
fersonville plant on the employees you represent. We
look forward to our meeting with you on September 22,
1989 to begin this process.
The Company finds itself in the unfavorable position
of not having sufficient business to fill its production
facilities located in the Midwest. At the time the deci-
sion was made to close the Jeffersonville plant, the
Company’s other plants in the Midwest (Chicago, Illi-
nois; Louisville, Kentucky; Cincinnati, Ohio; Florence,
Kentucky; Kansas City, Missouri and Vandalia, Illinois)
had idle machines. Each of these plants, with the excep-
tion of Vandalia, had employees on layoff. Presently,
the situation remains the same.
As such, Jeffersonville’s location was influential in
the decision to close the plant because of freight costs,
which are paid by the customer, and the desire of cus-
tomers to establish supply relationship with and be sup-
plied by plants located near their facilities that fill the
packages we make. The Company chose to direct its
existing business to these other plants which are more
suitably located to serve our present base of customers.
You were advised beginning in January, 1989, of the
possibility that Jeffersonville would not continue to op-
erate. Through our discussions in 1989, you were ad-
vised that concessions were necessary in regard to labor
costs and certain contractual language in order to make
the Jeffersonville plant more competitive, and to be
able to offset part of the location disadvantage.
Throughout this time, however, you were also advised
that even if the Company were granted the concessions
it had requested, the Company could not guarantee that
Jeffersonville would remain open. The decision to close
Jeffersonville did not turn upon labor costs. Had the
concession been granted, the decision to close Jef-
fersonville would not be different, given current busi-
ness conditions. Simply, there is inadequate business in
the Midwest to support Jeffersonville’s continued oper-
ation.
The decision to close the plant was made August 27,
1989 by the senior management of O-I Brockway Plas-
tics Products, Inc. after careful consideration and re-
view of the business available to the Company. The re-
view of its business began June, 1988. The decision did
not involve action by or discussion with the Board of
531OWENS-BROCKWAY PLASTIC PRODUCTS
6 The grievance was under the preamble, as quoted above. In it the
Union objected only to the failure of Respondent to apply the Jef-
fersonville contract to its Louisville plant (to which some of the pro-
duction was to be transferred), and not to the decision to close the
Jeffersonville plant.
Directors and was not made by the Board of Directors.
There is no agenda, there are no minutes and there is
no analysis, research or report as requested by your de-
mands No. 3 and 12. If there were, any such document
would be considered confidential. The decision does not
turn on labor costs. The decision does not turn on the
content of the last contract negotiations for contract.
The individuals who bargained with you for the exist-
ing labor contract did not participate in making the de-
cision to close Jeffersonville.
Boles closed the letter by offering to meet and bargain about
the effects of Respondent’s decision to close the Jefferson-
ville plant.
On September 26, Peterson sent Boles a list of 13 addi-
tional questions stating that the information was necessary
for the purposes of bargaining about the decision and its ef-
fects and necessary for the purpose of processing a grievance
which the Union had filed.6 Boles replied by letter dated Oc-
tober 10 which attached a series of answers to the September
26 questions. The cover letter concludes:
Please also refer to my letter to you of September 19,
1989. As we have discussed, the Company does not be-
lieve that the decision to close the Jeffersonville plant
is a mandatory subject of bargaining.
In the answers, Boles states that the product line at Jefferson-
ville had not been increasing over the preceding 5 years; that
‘‘6–7 percent’’ of the Jeffersonville product to be produced
in the future at other locations would be produced at Louis-
ville; no employees who are on layoff status at Louisville
would be recalled because of the closing of Jeffersonville;
production at Louisville of products formerly produced at
Jeffersonville began on September 25, 1989; and there is
‘‘essentially no difference’’ in freight costs to customers for
products produced in Louisville and Jeffersonville. Boles list-
ed four accounts that had been transferred from Jeffersonville
to Louisville; these four accounts constituted $596,000, or
4.8 percent, of a projected $12,190,000, over the next 12
months, in sales of products formerly produced in Jefferson-
ville—the remainder going to other plants owned by Owens-
Illinois. The answers of October 10 also include the state-
ment by Boles:
The decision to close Jeffersonville was made Au-
gust 27, 1989, by the senior management of O-I
Brockway Plastic Products, Inc. The decision to transfer
business to Louisville was made after that point in time
by those individuals responsible for coordinating pro-
duction scheduling with customer requirements.
Finally, Boles told the Union that there was no documenta-
tion that formed the basis of the decision to close the Jef-
fersonville plant, no documentation that formed the basis for
the decision to move part of the production to Louisville, no
internally generated communications with respect to the deci-
sions, and, even if there were such documentation, it would
not be furnished as Respondent considered such to be con-
fidential.
Boles testified that production at the Jeffersonville plant
ceased in early September, and the plant closed in late Octo-
ber, at which time there were 36 unit employees who were
actively employed and 47 employees on layoff.
The Jeffersonville plant had operated with 10 blow-mold
(as opposed to injection mold) machines to make plastic bot-
tles out of a polyvinylchloride (PVC) compound. Of the 10
machines, 4 were sent to the Louisville plant, 2 to Respond-
ent’s Toledo research facility, 2 to Respondent’s plant in
Florence, Kentucky, and 2 to Respondent’s Harrisonburg,
Virginia plant. Jeffersonville Plant Manager Lilly and three
other supervisors also transferred to Louisville on the closing
of the Jeffersonville plant. After the shutdown of the Jef-
fersonville plant, orders that would have theretofore been
filled there were filled at Respondent’s plants at Louisville,
Chicago, Vandalia, and Florence.
None other of Respondent’s plants has been closed.
Respondent contends that the decision to close the Jef-
fersonville plant did not ‘‘turn upon’’ labor costs, as that
phrase is used in cases discussed infra. In support of that
contention, Respondent relies on the following testimony.
Boles testified that the decision to close the Jeffersonville
plant was made ‘‘several days’’ before the August 29 an-
nouncement. Prior to that time, the Louisville plant had sup-
plied the Colgate-Palmolive Company with PVC-based bot-
tles in such quantities that the Colgate business made up 65
percent of the Louisville production. But in late August,
Colgate told Respondent that it was going to convert to a
type of container that would require another hydrocarbon
base, PET. Neither the Louisville plant, nor any other of Re-
spondent’s plants, according to this record, could manufac-
ture containers out of PET.
Leidy testified that he and a group of managers, including
Trimble (who did not testify), made the decision to close the
Jeffersonville plant on July 28. Leidy was asked and testi-
fied:
Q. Okay. What then were all the factors, Mr. Leidy,
that contributed to the recommendation—the decision to
close down Jeffersonville?
A. The overbearing [sic] issue was bottles to run.
You know, what have you got that we can manufacture
was the overbearing [sic] issue out of the thing. I
mean—you can’t keep a plant open if you’ve got noth-
ing to run out of it. So we had an awful [lot] of costs
sitting there with no way of absorbing, so you’ve got
to reduce the capacity, and that was the only really log-
ical thing to do.
Q. Any other factors that you considered?
A. Well, in the meantime also along with that,
Colgate’s coming back to it, and that they had made the
conclusion that they were going from PVC into PET.
So then—for surge capacity or anything of that, and
then when they did that, we were going to have excess
machines in Louisville when the transition occurred.
We already had excess machines throughout our system
and we could see with that that we were going to have
them again, unless there was something done to go out
and fill those machines, get orders.
532 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
7 ‘‘Plant loading’’ was defined by Leidy as the percentage of a
plant’s capacity used by one order.
Q. Now why wasn’t Louisville taken down then if
they were going to be in jeopardy as far as Colgate was
concerned?
A. Louisville supplied, and has for many years, the
Jeffersonville Colgate plant. It was the plant of choice
and where we had run it for, I’m not sure how long.
As long, for sure, as I’ve been involved with it, and be-
yond. They had the relationship, they had the knowl-
edge of how to make it. We had also transferred some
equipment in there such as an automatic case set-up
machines from one of our Owens facilities to be able
to set up cartons automatically, and there was no reason
to transfer the business from one plant to the other, go
through the learning curve in the new plant and then
turn around and understand that we were losing the
business anyway because it was going out of PVC.
Q. What’s the status of the Colgate business today?
A. Well, we’re running Colgate.
Q. In Louisville?
A. On our machines in Louisville. The Colgate peo-
ple have ordered their machines. Where they’re going
to put them, I’m not sure because also in that was
inhouse manufacturing, so they—and then where they
locate those machines, it doesn’t matter because we
were told that we would not participate.
Q. Do you know when the Colgate business will
completely dry up?
A. It will dry up in about September of this year—
September of October [1990] is about our best guess.
On cross-examination Leidy acknowledged that Colgate’s
‘‘going from PVC into PET’’ was the ‘‘major customer con-
versions’’ referred to in the August 29 plant closure an-
nouncement. Leidy’s reference to the Louisville plant’s sup-
plying the Jeffersonville plant was an apparent reference to
Jeffersonville’s doing the ‘‘overflow’’ work of the Louisville
plant, or production of work that Louisville could not, from
time to time, handle. Respondent considered the Jefferson-
ville plant to be an ‘‘overflow’’ plant because it did such
work regularly for various plants owned by Respondent.
Two memoranda that preceded the formal negotiations and
the plant closing are relevant.
In a memorandum from Leidy to various company offi-
cials dated May 16, or after the informational sessions and
before the formal negotiations, Leidy calls for a meeting of
the officials to discuss Jeffersonville ‘‘plant performance,
present plant loading, potential plant loading, etc.’’ The
memorandum states:
The agenda will include:
1. Plant performance year-to-date
2. Present plant loading7 and 60 day forecast
3. Business outlook for second half
4. If plant were to shut down
where would business operate and do we have ca-
pacity
can we service the business
profitability of relocated business versus Jefferson-
ville
5. Recommendation
shutdown or extend
6. Next steps
After the first four topics, initials of management staff mem-
bers to lead the discussion were listed; after the last two,
‘‘team’’ was indicated. Also received in evidence were topic
outlines of discussions at the meeting. Operating advantages
and disadvantages of the Louisville, Vandalia, and Jefferson-
ville plants were listed. One paper entitled ‘‘Continue to Op-
erate Jeffersonville?’’ lists as disadvantages of the Jefferson-
ville plant:
Location Relative to customers and other Plants
Unionized workforce with high wage rates and
fringes
Restrictive contract language
Rebuild of Barkum in Louisville.
Leidy explained the reference to the unionized work force as:
Jeffersonville did have the highest average hourly
rate in any plant that we had, and with their fringes and
what have you, and then the seniority article with flexi-
bility to move people around or out, the people that
could do the job without having excess people was—
the contract was very restricted [sic].
The reference ‘‘Barkum’’ was handwritten by Leidy. Leidy’s
testimonial explanation of this reference was somewhat con-
voluted, but it is clear from the testimony that the note was
an indication that, as early as May 16, Leidy was contem-
plating removing an obsolete ‘‘Barkum’’ machine from Lou-
isville and placing one or more of the Jeffersonville plant’s
machines there.
The paper concludes:
RECOMMENDATION
Continue to operate Jeffersonville at least through
1989
Reduce or eliminate contract disadvantage above
Evaluate PVC outlook—Colgate, Flammables, Envi-
ronmental
About the reference to Colgate (the PVC contract served by
Louisville), the direct examination of Leidy was:
Q. Now, how did the reference to Colgate pertain to
Jeffersonville?
A. The reference to Colgate meant that if that went
to PET, we had considerable excess capacity, excess
machines in that area. More machines than we needed.
Q. Okay. So how would that affect Jeffersonville?
A. How would that affect Jeffersonville? Knowing
that that may well happen, then what we would do is
run the leftover business at Louisville, or what was left
when that happened.
Another paper presented at the May 16 management meeting
showed that the Jeffersonville plant was operating at a 17.6-
percent gross profit for the year then to date.
Received in evidence was a June 23 memorandum from
Boles to Frechette, Leidy, and other management entitled
‘‘Jeffersonville Negotiations Update.’’ It includes:
533OWENS-BROCKWAY PLASTIC PRODUCTS
8 In the industry, customers usually pay shipping costs.
In light of our discussions with employees of the Jef-
fersonville plant, local union officials, and international
union representatives over the past six months con-
cerning an operation whose future is extremely uncer-
tain without concessionary demands made by the Com-
pany being met, and given the extensive nature of the
Union’s list of demands, it goes without saying we are
miles apart in reaching a settlement.
B. Analysis and Conclusions
The complaint alleges that, in violation of Section 8(a)(5)
of the Act, Respondent refused to bargain with the Union re-
garding its decision to close the Jeffersonville plant. Re-
spondent admits refusing to bargain about the matter. As its
defenses, Respondent asserts that the decision to close the
Jeffersonville plant was a managerial decision which is not
a mandatory subject of bargaining; alternatively Respondent
contends that, assuming that its actions involved a mandatory
subject of bargaining, the 1983–1985 contract, as extended
on July 18, vested it with the right unilaterally to close the
plant.
In Otis Elevator Co., 269 NLRB 891 (1984), the Board
addressed the issue of whether there is a duty to bargain
when a decision to close or transfer part of a business is
based both on considerations involving the employment rela-
tionship and separate business considerations. In Otis, a man-
agement appraisal of employment costs prompted a review of
operations which resulted in the transfer of a research func-
tion from one facility to another. The Board found that, al-
though employment considerations prompted the review, the
decision was based on purely business considerations (obso-
lescence and work duplication of the facility that was aban-
doned). The plurality opinion held (supra at 892):
Despite the evident effect on employees, the critical
factor to a determination whether the decision is subject
to mandatory bargaining is the essence of the decision
itself, i.e., whether it turns upon a change in the nature
or direction of the business, or turns upon labor costs;
not its effect on employees nor a union’s ability to offer
alternatives. [Emphasis in original.]
The Board found that the employer’s decision did not turn
on labor costs, and therefore dismissed the complaint.
Therefore, the primary issue is: Did the decision turn on
labor costs? If so, the decision is a mandatory subject of bar-
gaining, and an employer must secure agreement of the col-
lective-bargaining representative, or bargain to impasse over
the issue, before implementing its decision, unless, as Re-
spondent contends, there is a waiver that precludes the neces-
sity of such bargaining.
1. Mandatory subject of bargaining
In the August 29 announcement to the Union committee,
Respondent cited as the reasons for the plant closing ‘‘a gen-
eral weakening of customer orders in the midwest coupled
with the anticipation of major customer conversions to mate-
rials that will transfer significant orders to our competitors
. . . .’’ There was no evidence of ‘‘a general weakening of
customer orders in the midwest’’ for Respondent or any of
its competitors. Layoffs had occurred at most of Respond-
ent’s plants, including Jeffersonville, but there was no evi-
dence that further layoffs were contemplated at the time.
Also, Leidy admitted that the ‘‘conversion’’ referred to in the
announcement was the PVC to PET conversion that Colgate
had decided to make, a decision that would cost the Louis-
ville plant 65 percent of its business. When asked on direct
examination how the loss to the Louisville plant would affect
the Jeffersonville plant, Leidy replied that ‘‘what we would
do is run the leftover business at Louisville, or what was left
when that happened.’’ Respondent repeatedly emphasized
that the Jeffersonville plant was only an ‘‘overflow’’ plant
since it had no primary contracts of its own. Therefore,
Leidy’s answer as to why Jeffersonville had to be closed
when the Louisville plant lost the Colgate business was that
Louisville was going to get Jeffersonville’s overflow busi-
ness when the Colgate business was lost. A better example
of circular reasoning can hardly be imagined. At minimum,
this reasoning provides no answer to the obvious question of
why, if the Colgate contract would still have a year to run,
as it did, the Jeffersonville plant was precipitously closed on
the learning of the loss of the Colgate contract by Louisville.
There is no evidence that the Louisville plant had lost any
other business, and presumably there would still be overflow
work to be done by Jeffersonville until October 1990, when
the last Colgate contract is completed.
While, as Respondent argues, the future loss of the
Colgate business by the Louisville plant would tend to exac-
erbate a condition of excess plant capacity, the issue imme-
diately arises: Why was the Jeffersonville plant, and only the
Jeffersonville plant, chosen to be closed? Leidy testified that
Jeffersonville was remote from any of its customers and,
since customers pay shipping costs, closing Jeffersonville and
transferring business elsewhere would save the customer
money; Louisville was not closed because it still had a year’s
time left on its contract with Colgate, and Jeffersonville had
no such contract, so Jeffersonville was closed instead of Lou-
isville.
However, Leidy testified that the January meetings with
the three groups of plant personnel were called because a
competitor could manufacture and ship to a customer at less
cost to the customer, even though the competitor was much
further away from the purchaser than was the Jeffersonville
plant.8 This factor belies any argument that a reduction in
transportation costs was the primary problem. Moreover,
transferring some of the business to Louisville would not
save customers any money, as Boles’ October 10 letter to
Peterson acknowledged, because the plants are only 15 miles
apart. Finally, if the transfers of business to the other plants
had lowered costs to customers, Respondent would have ef-
fectuated the transfers of business without going through the
exercise of trying (for 7 months) to secure wage (and senior-
ity) concessions from the Union.
Which is to say, the reasons cited for the closing of the
Jeffersonville plant do not withstand scrutiny.
When false reasons are given for an action, logic compels
the conclusion that the real reason lies elsewhere. Although
in his announcement to the union committee, and in his testi-
mony at trial, Leidy did not admit that labor costs were even
a partial consideration in the decisional process, and although
Boles twice stated in his October 10 letter to Peterson that
534 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
9 First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981).
10 Leidy acknowledged that the work quality of the Jeffersonville
plant was very high, and he told the employees so.
11 On January 10, the Union answered that it agreed to listen be-
cause it was concerned about ‘‘our welfare and job security.’’ The
letters of January 5 and 10 make it clear that the Union had reason
to think, and did think, that it was being told that there was a direct
relationship between the demanded concessions and the vitality of
the plant. Respondent made no attempt to disabuse the Union of this
impression.
the decision did not turn on labor costs, the evidence is that
it did.
In Reece Corp., 294 NLRB 448 (1989), the employer op-
erated one manufacturing plant in Waltham, Massachusetts,
three others in the United States, and one other in Holland.
During renewal negotiations at Waltham, it sought economic
concessions from the union, contending that its direct labor
costs were too high. The employer was unable to get any of
the concessions it demanded, and signed a contract without
them. Thereafter, expressing concern for the viability for the
Waltham plant, the employer again sought union conces-
sions, citing excess manufacturing capacity and a sharp de-
cline in demand for the product. Again, no agreement was
reached with the union. Without bargaining, the employer
closed the Waltham plant and transferred the unit work, and
about 57 percent of its machinery, to its other plants.
As here, the employer in Reece argued that the decision
to close its plant was not a mandatory subject of bargaining
and, alternatively, that the union had waived its right to bar-
gain over the matter. The Board first noted that the decision
to close the Waltham plant was not a decision to terminate
the production involved, but a decision to transfer work to
different plants where it would be done by other employees,
and held that that the decision was a mandatory subject of
bargaining under First National Maintenance9 and Otis. In so
doing, the Board reviewed the requests for concessions made
by the employer, both before and after the contract was
signed, and held that
In light of its bargaining positions, however, it is unrea-
sonable for the Respondent now to argue that the deci-
sion turned essentially on factors other than labor costs.
In a footnote, the Board specifically noted that the employ-
er’s concession demands were themselves effective admis-
sions that concessions by the union might negate the neces-
sity of a relocation of the unit work.
Unlike Reece, the Board in this case need not rely on con-
structive admissions, or even deduce, that there was a direct
relationship between labor costs and plant closure. Respond-
ent’s representatives assiduously avoided saying, in haec
verba, that the plant would close if the concessions were not
granted, as Respondent strenuously points out. But such a
categorical statement is not required to find that there was
a causal relationship between the decision to close the Jef-
fersonville plant and the labor costs of that plant. Before, and
at trial, Respondent’s representatives made it clear that labor
costs were the determining factor in the prognosis of the
plant’s vitality.
When asked why the management had decided, in January,
to go to the plant and meet with the employees and the
Union, Leidy answered that ‘‘for some reason’’ a competitor
had been able to manufacture and ship at lower cost, even
though the competitor was further away from Jeffersonville.
That ‘‘some reason’’ was labor costs; there was simply no
other reason for talking to the employees and the Union
about the situation.10 Then, as he admitted, when Leidy went
to the plant to talk to the employees, he told them that
‘‘there was that possibility’’ that the plant would close, al-
though he denied remembering ‘‘the exact language’’ of his
statement.
In his January 5 letter requesting early negotiations, Boles
expressly stated that ‘‘viability of the Jeffersonville plant’’
was the reason for management’s request for discussions of
wages and benefits.11 Additionally, on direct and cross-ex-
amination, admitted that Respondent told the Union in the in-
formational meetings that the concessions were necessary for
the viability of the Jeffersonville plant.
Immediately thereafter, in the first ‘‘informational’’ ses-
sion on January 10, and continuing through the penultimate
‘‘formal’’ session in July, Respondent demanded labor cost
concessions while, at the same time, expressing concerns for
the Jeffersonville plant’s vitality. Respondent’s representa-
tives repeatedly referred to the Jeffersonville plant as the
most costly in the Owens-Illinois system. This cost factor,
the Union was repeatedly told, was the labor cost factor, and
it was placing the Jeffersonville plant in a mortal state be-
cause of the ‘‘competitive factor.
Frechette testified that the reason for the request for the
early negotiation (‘‘informational’’) meetings was to tell the
Union that the Jeffersonville plant was becoming ‘‘non-
competitive.’’ In the January 10 presentation, the Union was
told that there was required:
Revision in the wage rate schedule that will provide for
labor costs that are more in line with the marketplace
competition. [Emphasis added.]
Respondent necessarily lumped together its references to
‘‘marketplace competition’’ and ‘‘labor costs’’ to make it
clear that competition was the problem and labor costs were
the solution (and not some considerations of geography or
the production capacity of other plants in the Midwest).
The Union was told in the ‘‘confidential’’ memorandum
presented at the March 9 meeting that costs, meaning only
labor costs, were the problem; that memorandum recited, in
capitals and bold face, that the Jeffersonville plant was mak-
ing only a 1-percent net profit because of ‘‘current Jefferson-
ville costs’’ and that Respondent had concluded that ‘‘we
cannot compete on this business.’’
While Respondent’s representatives never told the Union
that the plant would stay open if the concessions were grant-
ed, only Frechette ventured to testify that he told the Union
that other elements may be the determining factor. Frechette
testified that, at the January 10 meeting, he told the Union
that ‘‘the rise and fall of the plant was going to depend upon
the market structure and not upon the cost structure of the
Jeffersonville plant.’’ However, Peterson testified that
Frechette told the Union that the Company ‘‘could not com-
pete in the market because of . . . the cost factor of the
plant, what it cost to put the product out.’’ If Frechette’s tes-
timony were true, there would have been no point in Re-
spondent’s requesting the meeting in the first place. The par-
ties were there, and everybody knew they were there, to talk
535OWENS-BROCKWAY PLASTIC PRODUCTS
12 Member Johansen dissented because he found that the manage-
ment-rights clause, coupled with a severance pay clause, constituted
the relevant waiver. In that case, the management-rights clause was
much broader than that here, and the severance pay clause had been
invoked to provide over $1 million in pay to the unit employees.
13 Park-Ohio Industries, 257 NLRB 413 (1981), enfd. 702 F.2d
624 (6th Cir. 1983).
14 See Fibreboard Corp. v. NLRB, 379 U.S. 203, 215–216 (1964).
about ‘‘the cost factor of the plant, what it cost to put the
product out’’; and the ‘‘cost’’ factor they were there to talk
about was the ‘‘labor cost’’ factor, the only one over which
the Union had control. I credit Peterson.
Additionally, the clear thrust of the May 16 internal
memoranda was that the peril to the plant was ‘‘Unionized
workforce with high wage and fringes . . . restrictive con-
tract language,’’ and not anything else. Indeed, one of the
stated problems with closing the Jeffersonville plant was
‘‘where would business operate and do we have capacity.’’
Finally, the management’s June 23 ‘‘Jeffersonville Nego-
tiations Update’’ plainly stated that the Jeffersonville plant
was ‘‘an operation whose future is extremely uncertain with-
out concessionary demands made by the Company being
met.’’
All of which is to say, Respondent’s representatives be-
lieved, and they told the Union that they believed, that com-
petition was a threat to the plant, and the threat could be al-
leviated by the reduction of labor costs, and only by the re-
duction of labor costs.
In this posture, as in Reece, it must be concluded that it
is unreasonable to say, post hoc, that Respondent’s decision
turned essentially on factors other than labor costs. There-
fore, there are no distinguishing factors between this case
and Reece.
Accordingly, I find and conclude that the decision to close
the Jeffersonville plant turned on labor costs and, therefore,
was a mandatory subject of bargaining, and that Respondent
had a duty to bargain over the decision, unless the Union
waived its right to demand such bargaining.
2. Waiver
To be effective, a waiver of a statutory right must be
‘‘clear and unmistakable.’’ Metropolitan Edison Co. v.
NLRB, 460 U.S. 693, 708 (1983). Respondent’s brief, page
35, quotes the preamble of the contract and argues:
In addition, the Management Rights clause provides,
in pertinent part, that the Respondent has the right to
decrease operations at Jeffersonville and to relieve em-
ployees from duty because of lack of work. Read to-
gether, the [preamble] and the Management Rights
clause establish that Respondent had the authority to
make the decision to close the Jeffersonville plant and
to transfer the work elsewhere. The only restriction on
this right pertains to the conditions that will apply once
the decision is made. The authority to make the deci-
sion, however, clearly remains with the Employer.
The preamble does nothing more than state that the con-
tract will be applied to a new plant if one in the area is ac-
quired. Moreover, the Board in Reece rejected an attempt to
create such a right to close a plant and distribute the busi-
ness, and the unit work, among other of an employer’s
plants. The Board noted that the management-rights clause
before it did not ‘‘addresses the situation in which produc-
tion and equipment are not permanently discontinued or sold,
but rather are transferred elsewhere.’’ In the absence of lan-
guage giving the employer the right to take such action, the
Board, Member Johansen dissenting,12 refused to find a
‘‘clear and unmistakable’’ waiver of the union’s right to bar-
gain, as required by Metropolitan Edison. There was no such
management right in the contract between the parties here,
either.
Respondent additionally argues that the Union’s failure to
object to a previous transfer of work (to Respondent’s Cin-
cinnati plant) establishes a permanent waiver of the Union’s
right to object to such transfers. Such an argument was spe-
cifically rejected in Litton Systems, 283 NLRB 973 (1987),
enf. denied 868 F.2d 854 (6th Cir. 1989). Moreover, there
is no evidence that, in the previous transfer, the Union was
presented with a fait accompli, as here, and that there was
no bargaining over the decision.
Therefore, as the management-rights clause on which Re-
spondent relies also contains no explicit right to transfer the
unit work to other plants and to close the Jeffersonville plant,
and there is no other basis to find a clear and unmistakable
waiver of the Union’s right to bargain over Respondent’s de-
cision to close the Jeffersonville plant, I find and conclude
that there was no such waiver.
Conclusion
I conclude, therefore, that by refusing to bargain collec-
tively and in good faith with the Union concerning the deci-
sion to close the Jeffersonville plant, and to relocate unit
work permanently to other of its plants, Respondent has en-
gaged in unfair labor practices affecting commerce within the
meaning of Section 8(a)(5) and (1) and Section 2(6) and (7)
of the Act.
THE REMEDY
The usual remedy for failing to bargain about a decision
to close a facility and transfer work elsewhere is an order to
require the employer to restore the status quo ante, to bargain
about the decision, and to reinstate and make whole the em-
ployees who lost jobs as a result of the unlawful conduct.13
If, however, such an order would be unduly burdensome, res-
toration of the status quo ante will not be required.14 Appar-
ently, the administrative investigation satisfied General Coun-
sel that this case falls in the latter category, as the complaint
asks only the following remedy:
Offer the Jeffersonville, Indiana, employees imme-
diate and full reinstatement to their former jobs or, if
those jobs no longer exist, to substantially equivalent
positions at the other plants where the bargaining unit
work has been relocated, with necessary traveling and
moving expenses for them and their families and their
household effects, without prejudice to their seniority or
any other rights or privileges previously enjoyed, dis-
missing, if necessary, any persons hired after the clos-
ing of the Jeffersonville plant. If there are not a suffi-
536 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
15 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
16 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
cient number of jobs for all the employees to be offered
reinstatement, the Respondent shall place the names of
those for whom jobs are not available on a preferential
list in the order of their seniority, and thereafter offer
them reinstatement before other persons are hired. Em-
ployees offered reinstatement shall be allowed a reason-
able period of time for accepting such offers. Also, Re-
spondent shall make whole the Jeffersonville, Indiana,
employees by paying them what they would have nor-
mally earned from the date[s] of their termination[s] to
the date of the offer[s] of reinstatement or, for the em-
ployees who decide not to relocate, until the date[s]
they secure substantially equivalent employment with
other employers.
This remedy, as also requested in the brief (p. 19), essen-
tially tracks the remedy ordered in Reece, where, unlike here,
the issue of burden was litigated. Since the matter was not
litigated, I can do no more than order the requested remedy.
Backpay shall be based on the earnings that employees
normally would have received during the applicable period,
less any net interim earnings, and shall be computed in the
manner set forth in F. W. Woolworth Co., 90 NLRB 289
(1950), with interest computed in the manner set forth in
New Horizons for the Retarded, 283 NLRB 1173 (1987).
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended15
ORDER
The Respondent, Owens-Brockway Plastic Products, Inc.,
Jeffersonville, Indiana, its officers, agents, successors, and
assigns, shall
1. Cease and desist from
(a) Refusing to bargain collectively and in good faith with
International Chemical Workers Union, AFL–CIO, Local No.
728 as the exclusive representative of its employees in the
appropriate unit, as set forth below, concerning the decision
to close the Jeffersonville, Indiana plant and to relocate work
permanently to its other plants. The appropriate unit is:
All production, maintenance, shipping and receiving
employees employed at Respondent’s Jeffersonville, In-
diana facility, but excluding quality control employees,
office clerical employees, guards, professional employ-
ees and supervisors as defined in the Act.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Offer the Jeffersonville plant unit employees immediate
and full reinstatement to their former jobs or, if those jobs
no longer exist, to substantially equivalent positions, at the
other plants where the bargaining unit work has been relo-
cated, with necessary traveling and moving expenses for
them and their families and their household effects, without
prejudice to their seniority or any other rights or privileges
previously enjoyed, dismissing, if necessary, any persons
hired after the closing of the Jeffersonville plant. If there are
not a sufficient number of jobs for all the employees to be
offered reinstatement, the Respondent shall place the names
of those for whom jobs are not available on a preferential
list in the order of their seniority, and thereafter offer them
reinstatement before other persons are hired. Employees of-
fered reinstatement shall be allowed a reasonable period of
time for accepting such offers.
(b) Make the Jeffersonville plant employees whole for any
loss of earnings and other benefits suffered in the manner set
forth in the remedy section of this decision.
(c) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of backpay due under the terms of this Order.
(d) Mail a copy of the attached notice marked ‘‘Appen-
dix’’16 to each of the Respondent’s employees who were em-
ployed at the Jeffersonville plant in the appropriate unit who
were terminated or laid off as a result of the plant closure
and transfer of work. The copies, on forms provided by the
Regional Director for Region 9, shall be mailed after being
signed by Respondent’s authorized representative.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT refuse to bargain collectively and in good
faith with International Chemical Workers Union, AFL–CIO,
Local No. 728 as the exclusive representative of our employ-
ees in the appropriate unit, as set forth below, concerning the
decision to close our Jeffersonville, Indiana plant and to relo-
cate work permanently to our other plants. The appropriate
unit is:
All production, maintenance, shipping and receiving
employees employed at our Jeffersonville, Indiana facil-
ity, but excluding quality control employees, office
clerical employees, guards, professional employees and
supervisors as defined in the Act.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce you in the exercise of the rights guaran-
teed you by Section 7 of the Act.
537OWENS-BROCKWAY PLASTIC PRODUCTS
1 303 NLRB 386.
WE WILL offer the Jeffersonville plant employees, who
were employed in the above appropriate unit, immediate and
full reinstatement to their former jobs or, if those jobs no
longer exist, to substantially equivalent positions, at the other
plants where the bargaining unit work has been relocated
with necessary traveling and moving expenses for them and
their families and their household effects, without prejudice
to their seniority or any other rights or privileges previously
enjoyed, dismissing, if necessary, any persons hired after the
closing of the Jeffersonville plant. If there are not a sufficient
number of jobs for all the employees to be offered reinstate-
ment, we shall place the names of those for whom jobs are
not available on a preferential list in the order of their senior-
ity at the Jeffersonville plant and thereafter offer them rein-
statement before other persons are hired. Employees offered
reinstatement shall be allowed a reasonable period of time
for accepting such offers.
WE WILL make the Jeffersonville plant unit employees
whole, with interest, for any loss of earnings and other bene-
fits they have suffered.
OWENS-BROCKWAY PLASTIC PRODUCTS, INC.
David L. Ness, Esq., for the General Counsel.
R. Jeffrey Bixler, Esq., of Toledo, Ohio, with Margaret J.
Lockhart, Esq. (Cooper, Straub, Walinski & Cramer), of
Toledo, Ohio, on brief, for the Respondent.
Alton D. Priddy, Esq., of Louisville, Kentucky, for the
Charging Party.
SUPPLEMENTAL DECISION
STATEMENT OF THE CASE
DAVID L. EVANS, Administrative Law Judge. The original
administrative law judge’s decision (ALJD) in this case
issued on June 15, 1990. The Respondent filed exceptions
and a supporting brief.
On June 14, 1991, while the ALJD was pending review,
the National Labor Relations Board (the Board) issued Du-
buque Packing Co.,1 in which it announced a new test for
analyzing whether an employer’s decision to relocate unit
work is a mandatory subject of bargaining. The issue ad-
dressed by the Board in Dubuque is also raised in the instant
proceeding. Accordingly, on September 30, 1991, the Board
afforded the parties an opportunity to submit statements of
position on this issue in light of the Board’s decision in Du-
buque.
In its position statement, the Respondent requested the op-
portunity, in light of the new standard established in Du-
buque, to establish that the Union could not have offered
concessions that would have changed the decision to relocate
the unit work.
By Order dated December 31, 1991, the Board granted Re-
spondent’s request and remanded the proceeding to me ‘‘for
the limited purpose of receiving further evidence on the con-
cession issue in light of Dubuque.’’
A hearing pursuant to the Board’s Order was conducted on
March 16, 1992, at Louisville, Kentucky. At the remand
hearing Respondent adduced the testimony of Dale W.
Leidy, director of manufacturing and engineering for the
plastic products division of Respondent. Leidy testified, in
general and conclusionary terms, that market considerations
would have made it impossible for Respondent to act any
differently than it did (as described in the ALJD).
On the concession issue involved here, the Board’s deci-
sion in Dubuque offers little guidance regarding what evi-
dence might rebut General Counsel’s prima facie case. How-
ever, the law assuredly requires more than the bare testimony
of a witness such as Leidy. This is especially true where
such ‘‘evidence,’’ and more, has already been found to be
false and misleading, as it was in the ALJD.
Accordingly, I adhere to my original decision and rec-
ommended Order.