Shell Oil Co.

National Labor Relations Board - Board Decisions

Aug 8, 1967

166 N.L.R.B. 1064 (N.L.R.B. 1967)

1064 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Shell Oil Company and Oil, Chemical and Atomic
Workers International Union, Local 4-367,
AFL-CIO. Case 23-CA-1469
August 8, 1967
DECISION AND ORDER
On September 28, 1966, Trial Examiner Samuel
M. Singer issued his Decision in this matter, finding
that the Respondent had not engaged in the unfair
labor practices alleged in the complaint and recom-
mending that the complaint be dismissed, as set
forth in the attached Trial Examiner's Decision.
Thereafter, the General Counsel and the Charging
Party (Oil, Chemical and Atomic Workers Interna-
tional Union, Local 4-367, AFL-CIO, herein
called the Union) filed exceptions to the Trial Ex-
aminer's Decision and supporting briefs. The
United Steelworkers of America, AFL-CIO, filed
a brief as amicus curiae. The Respondent filed a
brief in support of the Trial Examiner's Decision.
The National Labor Relations Board has
reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. The
Board has considered the Trial Examiner's Deci-
sion, the exceptions and briefs, and the entire
record in this case, and hereby adopts the Trial Ex-
aminer's findings, conclusions, and recommenda-
tions as modified herein.
The amended complaint alleged in material part
that the Respondent violated Section 8(a)(5) and (1)
of the National Labor Relations Act, as amended,
by unilaterally contracting out work customarily
performed by unit employees without prior con-
sultation with the Union as the bargaining repre-
sentative of the Respondent's employees and that,
by such unlawful refusal to bargain, Respondent
caused and prolonged a strike called by the Union
on August 19, 1962. At the conclusion of the
General Counsel's case, Respondent moved to
dismiss the complaint. Respondent variously
claimed that it had bargained on the issue of sub-
contracting and that resulting contracts had defined
the limits of its liability and obligations; that the
Union had waived its right to consultation concern-
ing subcontractual decisions; and that there was no
showing that the contracting out of work had a sig-
nificant adverse impact on the bargaining unit. I
The issue presented by the Respondent's motion
to dismiss was, as the Trial Examiner observed,
whether the General Counsel had made a prima
facie showing that Respondent's subcontracting
conduct involved a refusal to bargain within the
meaning of Section 8(a)(5) of the Act. He con-
cluded that the General Counsel had not done so.
The Trial Examiner viewed the complaint as en-
compassing four separate time periods during which
the Respondent allegedly had an obligation to con-
sult with the Union before taking such subcontract-
ing action. The first period extended to March 29,
1962, the termination date of the parties' 1961 con-
tract; the second was the interval between the ter-
mination date of the 1961 contract until the
beginning of the strike on August 19, 1962; the
third was the strike period itself from August 19,
1962, to August 7, 1963; and the fourth was the
poststrike period extending to May 3, 1966.
The Respondent has a refinery and chemical
plant at Houston, Texas, where it is engaged in the
manufacture and sale of petroleum products, chemi-
cals, and related products. The Union has been the
exclusive bargaining representative of the hourly
paid production and maintenance employees since
1935, and during the following 30-year period
Respondent contracted out various types of work
and services without prior notice or consultation
with the Union. The Union has sought to modify
this practice and, at the Union's behest, the parties
have continually discussed the matter since 1935,
in contract negotiations, grievance meetings, and
correspondence, without any notable concession
from the Respondent. In 1941, the Respondent did
agree to a union proposal to incorporate a protec-
tive wage clause which, in essentially the same
form, has appeared in all successive contracts.
Designated as article IV, section 4 (subsequently
designated as section 4.04), in the March 24, 1941,
agreement, the clause reads as follows: "Any con-
tract work shall be contracted for with the provision
written into the contract specifying prevailing
refinery rates as the minimum rates for all work
done under contract in the refinery." In other agree-
ments, Respondent undertook to supply the Union
with contract work information, to hold within
reasonable limits the amount of work sent out of the
plant, to keep the Union informed of any decision
respecting in-plant work and, except in unusual cir-
cumstances, to give such notice "in advance of the
beginning of the work."2 In 1953, the parties also
entered into an agreement known as the Downey-
Battery Limits Agreement, which divided the work
in the chemical plant into three groups (capital jobs,
plant revisions, and maintenance work), and
I Respondent also asserted that, at most, the General Counsel
established only contract violations for which there were contract
remedies, including arbitration. The Trial Examiner found it unnecessary
to pass on this defense In view of our disposition of the case, we also find
it unnecessary to reach this issue
2 On July 1, 1957, in response to a union proposal that "when condi-
tions warrant contracting maintenance normally performed by employees
in the bargaining unit, advance notice will be given," the Respondent com-
nutted itself to inform the Workmen's Committees , either orally or in wast-
ing, of any "decisions" which may be reached with respect to the per-
formance of jobs by contractors within the two plants Except in unusual
circumstances , this was to precede the beginning of the work . Although
the General Counsel and Charging Party argue that this committed the
Respondent to notify the Union before the decisions were taken to con-
tract out work, the Trial Examiner found otherwise, and we agree with his
finding.
166 NLRB No. 128
SHELL OIL COMPANY 1065
established "battery limits" or divisions of work
between contractors and plant employees.
Although the Union thereafter sought further
limitations on Respondent's subcontracting, it was
unsuccessful in obtaining any.
Relying on the Board's decision in a case involv-
ing Respondent's Norco, Louisiana, plant (Shell Oil
Company, 149 NLRB 283, herein called Norco),
the Trial Examiner found that, as in Norco, the
presence of article IV, section 4, the protective
wage clause, was reasonably to be construed as
vesting in Respondent the unilaterial right to sub-
contract maintenance work without prior notice to
the Union and, insofar as the prestrike periods were
concerned, there was no "radical" departure from
established practice. Nor, the Trial Examiner
found , did the Respondent, in the face of an
economic strike,3 exceed reasonable limits and
business needs in subcontracting work during the
strike period. As to the poststrike period, the Trial
Examiner was persuaded that the record
established a prima facie showing of "expanded
Company subcontracting since the strike, and that
such subcontracting had a significantly adverse ef-
fect on unit employees." He concluded, however,
that as the parties had bargained to a good-faith im-
passe on the Union's many demands for further
contract work restrictions, and in view of the
Respondent 's insistence on its management
prerogative of subcontracting without notice or
consultation , the Respondent was "entitled to
operate in the post-strike period under the contract
work limitations in effect before the impasse." Ac-
cordingly, the Trial Examiner found that the
General Counsel had failed to make out a prima
facie case showing that the Respondent in violation
of Section 8(a)(5) of the Act refused to bargain with
the Union by unilaterally contracting out work
customarily performed by unit employees, and thus,
that the strike of August 19, 1962, was neither
caused nor prolonged by Respondent 's alleged un-
lawful conduct.4
We agree with the Trial Examiner that the com-
plaint herein should be dismissed on the ground that
the General Counsel has failed to establish a prima
facie showing of a violation of Section 8(a)(5) of the
Act. But, unlike the Trial Examiner, we find no per-
suasive evidence that Respondent had engaged in
expanded subcontracting to the significant detri-
ment of the employees in the unit.
We approach the problem by observing at the
outset that it can hardly be disputed that for years
the Respondent followed a practice of contracting
out maintenance work, work which was or could
have been performed by unit employees . We have
no doubt that this practice was economically
motivated , as the General Counsel in effect con-
cedes , and that the Union was afforded every op-
portunity during general contract negotiations to
bargain and did bargain on the matter of subcon-
tracting. We therefore agree with the Trial Ex-
aminer that the adoption in 1941 of the protective
wage clause (article IV, section 4) was, as we held
in the Norco case, an implicit recognition by the
parties of Respondent's right to act unilaterally in
this area without prior notice or consultation with
the Union. Predicated as it was upon observance
and implementation of article IV, section 4, the
Respondent's practice of contracting out main-
tenance work on a unilateral basis thus was, as we
held in the Norco case, an established term and
condition of employment at the time the 1961 con-
tract expired. However, while Respondent's right
to maintain this practice did not expire with the con-
tract, it is not entitled to depart substantially from
the established practice without first bargaining on
the matter with the Union. We thus must determine
whether, as the General Counsel and Charging
Party contend, the record establishes such substan-
tial deviation in in this case.5
To support his claim of expanded subcontracting
during the prestrike periods , the General Counsel
adduced certain statistical data, culled from the
Respondent's business records, of employee layoffs
and man hours of contracting work performed in the
plants. As the Trial Examiner noted, this statistical
data showed only a total of 26 refinery layoffs dur-
ing the period from January 1 to August 18, 1962,
compared with 88 in the entire preceding year,
1961. Other data showed that contractors worked
a total of 36,418 man hours in the refinery in the
period from January 1 to August 28, 1962, as com-
pared with 94,028 man hours in 1961 and 82,528 in
1960. In the chemical plant, the figures show a total
of 12,614 man hours in the period before the 1962
strike as compared with 15,364 man hours in 1961
3 The General Counsel in effect conceded, by not adducing any
evidence on the point, that Respondent's contracting of work during the
strike was not unlawful, even if unilateral and without prior consultation
However, the Charging Party did take the position, and offered to prove,
that Respondent had unlawfully contracted out work during that period
and that such conduct adversely affected the unit. The offer was rejected
by the Trial Examiner on the authority of the Board's decision in the
Norco case. In pressing its contention herein, the Union does not indicate
the nature of the evidence it purposed to adduce. Moreover, as we ob-
serve in Norco, and as the Trial Examiner found, the Union
acknowledged in one of the letter agreements at the end of the strike that
the "layoffs were the combined effects of accumulated technological
changes and the Company's estimate of the effects of more efficient
utilization of operating and maintenance personnel." We find the Union's
exceptions in this regard to be without merit
4 Unlike the situation in Norco where the Board found that the
presence of the protective wage clause in a contract executed after the
strike was a "capitulation" by the union to the company's position with
respect to its unilateral right to subcontract maintenance work, the Trial
Examiner found that the present circumstances were not comparable
since the Union had executed the 1963 poststrike contract with the ex-
press understanding that it was without prejudice to its action to have the
Board rule on the contract work issue The view we take of the issues in
this case makes it unnecessary to express any opinion on this finding of
the Trial Examiner
5 Westinghouse Electric Corporation, 150 NLRB 1574, Allied Chemi-
cal Corp, 151 NLRB 718
1066 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and 14,384 in 1960. Even if we were to assume that
these statistical tabulations constituted, without
more, competent evidence of Respondent's con-
tract work, both as to type and amount, we could
not say that the comparative figures, showing fewer
layoffs and fewer man hours of contract work dur-
ing the critical prestrike complaint periods, lend
themselves to any finding of expanded contracting
or significant detriment.
While the General Counsel apparently argues
that the figures are not conclusive on whether there
has been expanded subcontracting, our attention is
not called to any other supporting evidence of suffi-
cient explicitness that would establish the point.
The General Counsel does contend that the
precomplaint subcontracting consisted mainly of
work traditionally performed by contactors, work
which unit employees were unable to perform,
whereas later subcontracting consisted essentially
of day-to-day maintenance. But, evidence of
precomplaint period negotiations shows the Union,
time and again, either in the course of grievance
discussions or general bargaining, complaining of
the increasing amount of "day-to-day maintenance"
work being contracted out. We thus find no merit to
the General Counsel's claims of subcontracting oc-
curring during the prestrike complaint periods dif-
fering in kind and extent from that which existed as
an established practice.
With respect to the poststrike period, we find the
same infirmities of proof. In that period, the Trial
Examiner found expanded subcontracting had an
adverse impact on unit employees. But these
findings appear to rest on the most tenuous
evidence. What the General Counsel offered as
substantial evidence consisted again of statistical
data gathered from more than 25,000 pages of sub-
penaed documents showing that outside contractors
performed at least 306,439 man hours of "main-
tenance" work between 1962 and 1966, and docu-
ments, not showing man hours, showing $264,795
labor costs or $2,145,177 "fixed price" for all jobs.
In addition, the General Counsel offered the
testimony of certain employee witnesses. This
testimony consisted of the most generalized esti-
mates of the amount of unit work performed by con-
tractors before and after 1962, usually in terms of
percentages of the particular type of work that they
had observed unit employees perform, as opposed
to contractors. But, as the Trial Examiner correctly
observed, "[I]t is difficult to evaluate the sig-
nificance of the statistical tabulations on `main-
tenance' subcontracting relied on by the General
Counsel in view of absence of comparable pre-1962
company experience ...."6 In addition, when con-
sideration is given to the volume of maintenance
6 Data furnished by Respondent to the Union showed during the 1964
"Layoff Avoidance Program" negotiations , 440,874 man hours of "In-
plant Maintenance Contract Work" to have been performed during the 5-
year period (1957-61) before the complaint period. Here again , we cannot
work performed in the plants over a period of al-
most 10 years and the large number of maintenance
employees involved, the testimony of the General
Counsel's witnesses in its totality is insubstantial,
and we cannot accept it as persuasive evidence of
a significant departure from precomplaint period
subcontracting.7 Moreover, as Respondent points
out, no evidence was adduced to "break down" the
fixed price work into labor costs, material costs,
overhead, and profit, or to differentiate between the
various types of maintenance work, or between in-
plant maintenance work and that performed by
contractors away from the premises.
It is true, as the Trial Examiner observed, that
during the poststrike period there was a change in
contracting procedures, the Respondent changing
from a practice of awarding individual contracts to
entering into a blanket maintenance contract. But
a mere change in such procedures is not in itself
evidence that the change was accompanied by ex-
panded subcontracting that can be said to have
changed terms and conditions of employment.
Furthermore, despite the fact that Respondent may
have in the course of contract negotiations ex-
pressed the view that "increased subcontracting
was in store, in line with industry automation
trends," such speculative expression hardly
establishes that increased subcontracting had in fact
occurred, that it was substantial, and resulted in sig-
nificant detriment to unit employees. On the record
we have here, we are accordingly constrained to
hold that the General Counsel has not made out a
prima facie case against the Respondent of in-
creased contracting out during the poststrike
period.
Nor do we find adequate support in the record for
the Trial Examiner's finding that poststrike contract
work had a substantial impact on unit employees. It
is true that the documentary evidence indicates
gradual year-to-year contraction of the bargaining
unit, but this evidence alone is not susceptible of an
inference that the contraction resulted from the
Respondent's subcontracting. The Trial Examiner
properly noted in this connection that the "precise
causal relationship between subcontracting and unit
erosion is difficult to determine. Further, the reduc-
tion in the unit is largely attributable to automation,
technological advances, improved techniques and
materials, as well as normal attrition. Moreover, the
great bulk of the complaint period layoffs were ef-
fected during the strike, not thereafter ...." It may
again be noted that the Union conceded in a letter
agreement following the termination of the strike
that "The causes of this announced layoff were the
combined effects of accumulated technological
change and the Companies' estimate of the effects
say that the comparative figures conclusively show a departure from
established practice.
' See Allied Chemical Corp., supra
SHELL OIL COMPANY 1067
of more efficient utilization of operating and main-
tenance personnel."8 In any event, we have no
specific evidence that any work contracted out in
the poststrike period resulted in layoffs or in any
other significant detriment to unit employees. The
Trial Examiner's comment that "Indeed, it would
appear that except for its contracting out practices,
employees laid off during the strike would in all
likelihood have been recalled," we believe, has no
relevance.9
In view of the foregoing, and on the basis of the
record before us, we conclude that the record does
not establish that the Respondent violated Section
8(a)(5) and (1) of the Act by unilaterally contracting
out bargaining unit work without prior consultation
with the Union. It follows that the strike of August
19, 1962, was neither caused nor prolonged by
Respondent's alleged unlawful unilateral conduct.
Accordingly, we shall dismiss the complaint.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board orders that the compalint herein
be, and the same is, hereby dismissed.
Member Brown, dissenting:
With respect solely to the issue of Respondent's
conduct after the termination of the strike on Au-
gust 7, 1963, I agree with the Trial Examiner to the
extent of finding that the record herein establishes
a prima facie showing that, following the termina-
tion of the strike, the Respondent substantially in-
creased its subcontracting without prior notice to or
consultation with the Union to the significant detri-
ment of the employees in the unit. Accordingly, I
would deny the Respondent's motion to dismiss the
complaint herein and remand the case to the Trial
Examiner for the purpose of affording Respondent
an opportunity to present evidence in support of its
defense to that' allegation of the complaint.
8 The parties further agreed that in the event of future reductions in
plant forces "due either to technological change or to more efficient
utilization of bargaining unit personnel ," the Respondent would give the
Union 60 days' advance notice prior to the proposed reduction to permit
discussion on "possible ways" to avoid or "cushion" the layoffs and to
"treat such layoffs in as liberal a manner as those that already have been
announced."
9 See American Oil Company, 152 N LRB 56. Also Shell Oil Company,
149 NLRB 283, where it appears that there had been substantial layoffs
during the strike period for the same reasons which dictated the layoffs in
the instant case.
TRIAL EXAMINER'S DECISION ON
RESPONDENT'S MOTION TO
DISMISS COMPLAINT
STATEMENT
SAMUEL M. SINGER, Trial Examiner: This is a decision
on Respondent's motion to dismiss the complaint at the
conclusion of General Counsel 's case . The complaint, as
amended , alleges that Respondent , in violation of Section
8(a)(5) of the Act, unilaterally contracted out bargaining
unit work without prior consultation with the Union as
representative of Respondent 's employees . It also alleges
that Respondent unlawfully caused and prolonged a
strike called by the Union on August 18, 1962.'
The hearing , originally opened on February 12, 1963,
before Trial Examiner Phil Saunders , was adjourned in-
definitely to afford General Counsel opportunity to seek
court enforcement of subpoenas duces tecum directed to
Respondent .2 At the hearing reopened before me on May
3, 1966, I granted General Counsel' s motion to enlarge
the complaint period from 1 year (February 9 , 1962, to
February 7, 1963) to over 4 years (February 9, 1962, to
May 3 , 1966), and Respondent 's motion for a con-
tinuance to enable it to meet the expanded complaint.
The resumed hearing was held on various dates
between June 22 and July 15 , 1966 . In addition to 2,000
pages of testimony , the record includes 21 volumes con-
sisting of thousands of documents bearing on the impact
of Respondent 's contract work on the bargaining unit,
and 5 volumes of historical documents about the parties'
dealings on the contract-work issue.3
Upon the entire record and the briefs filed by the
parties , I make the following:
FINDINGS AND CONCLUSIONS
1. THE BUSINESS OF RESPONDENT
Respondent (herein sometimes called the Company)
is a Delaware corporation , with plants known as Deer
Park Refinery and Chemical Plant at Houston , Texas,
where it is engaged in the manufacture and sale of petrole-
um products, chemicals, and related products . During the
past 12 months, a representative period , Respondent
manufactured, sold, and shipped goods valued in excess
of $50 ,000 to points outside Texas.
II. THE LABOR ORGANIZATION INVOLVED
Oil, Chemical and Atomic Workers International
Union, Local 4-367, AFL-CIO (the Charging Party,
herein called the Union), is a labor organization within
the meaning of the Act. It is the exclusive bargaining
representative of Respondent 's hourly paid employees at
the above-mentioned plants.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Introduction : The Issue
The bargaining unit herein consists of hourly paid em-
ployees engaged in production operations and main-
I The charge was filed on August 8, 1962, and the original complaint on
November 13, 1962. As amended on December 11, 1962, and February
7, 1963, the complaint also alleged that Respondent violated Section
8(a)(5) by unilaterally laying off employees and granting employees wage
increases . At the hearing, I granted General Counsel 's request to
withdraw these allegations.
2 Respondent opposed enforcement on the ground that the subpenas
were unreasonably broad and burdensome The subpenas, as modified,
were enforced by the United States District Court for the Southern Dis-
trict of Texas, in conformity with the mandate of the Court of Appeals for
the Fifth Circuit.
3 Respondent estimates the documentary evidence at 25,000 pages.
1068 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
terance functions . This case involves the latter group (en-
gineer field department ) which includes persons skilled in
various building crafts , such as painters , machinists, wel-
ders , fitters , boilermakers , electricians , and laborers. For
over 30 years Respondent contracted out various types
of work and services to construction contractors whose
employees are members of building trade unions. The
Union 's attempt to limit or circumscribe Respondent's
freedom in this area has been the subject of discussion in
contract negotiations , grievance meetings , and correspon-
dence since 1935.4 The central issue here is whether
Respondent was legally obligated , under Section 8(a)(5)
of the Act, to notify and consult with the Union before
contracting out all work customarily performed by bar-
gaining unit employees. It is undisputed that Respond-
ent's actions in this respect were economically motivated.
Respondent 's motion to dismiss is grounded on the
claim that the uncontroverted evidence at the conclusion
of General Counsel's case establishes that the Company
bargained on the issue of subcontracting and as a result
had signed agreements defining the limits of Respond-
ent's liabilities and obligations; that the Union had
waived its right to be consulted concerning contract deci-
sions ; that there is no showing of significant adverse im-
pact of the contract work on the bargaining unit in the
complaint period; and that , at most, General Counsel
established only contract violations for which there were
contract remedies , including arbitration. Respondent al-
leges that the Union is merely attempting "to obtain that
which it failed to obtain by collective bargaining and
economic force."
The following factual statement, in three parts, details
the collective-bargaining history and contracting-out
practices of Respondent in: (a) 1935-59, (b) 1960-61;
and (c) 1962-66. Sections (a) and (b) briefly highlight the
background evidence, (b) in greater detail because it
covers the period immediately preceding excution of the
collective agreement in effect at the start of the complaint
period (February 9, 1962). Section (c) is necessarily more
detailed in view of the ultimate finding herein that
Respondent had bargained extensively, to a good-faith
impasse, on the contract-work issue. The findings are
based almost entirely on uncontroverted, documentary
evidence (verbatim transcripts of negotiation and
grievance meetings , collective-bargaining agreements,
letters of understanding , correspondence, etc.), General
Counsel having adduced only minimal amount of oral
testimony thereon.-"
B. Background: 1935-59
As General Counsel points out in his brief, Respondent
and the Union have been concerned with the issue of con-
tract work since the beginning of their collective-bargain-
ing relationship in 1935 . In 1941, Respondent agreed to
the Union's demand to incorporate a protective wage
clause (article IV, section 4), reading:
Any contract work shall be contracted for with the
provision written into the contract specifying prevail-
ing refinery rates as the minimum rates for all work
done under contract in the refinery.
Except for minor modification, the clause reappeared in
i Respondent and the Union entered into colleLtive agreements (or
renewed same t at least 12 times between 1935 and 1965
The great bulk of the testimony relates to the alleged impact of
all successive agreements since 1941.6
In the ensuing years-in contract negotiations,
grievance discussions , and correspondence -the Union
raised a variety of complaints concerning the type and
amount of work let out by Respondent to outside contrac-
tors. As the Union's representative epitomized it at one
meeting (August 21, 1952), although the Union recog-
nized Respondent 's justification for contracting out new
construction work, "many of the contracts are not new
construction . Many of them are maintenance and repair,
overhauling, general work of the employee group." There
were recurring union complaints on the contracting out of
painting , repairs to equipment (e.g., pumps, valves, tube
bundles, furnaces), hauling , grading , and "tie-ins" (i.e.,
connecting new additions to existing facilities), and con-
tinuing contract maintenance on supplies or equipment
installed by contractors. As early as November 23, 1949,
the Union protested that Respondent was contracting out
work while unit employees were being laid off and
demoted to the "bull gang," and it asked for relief "either
by shorter hours or disposition of the contractors." These
complaints increased in vigor and frequency over the
years. Thus, at a 1951 meeting (September 20) the Union
objected to "maintenance work contracted . . day-by-
day, week-by-week," as a result of which "some of our
present men [are] being bumped back to helpers." At a
1955 meeting (March 16), it complained that the contrac-
tors "are just gradually edging in to the point where they
are doing a tremendous amount of work -doing work that
years ago had always been done by our personnel." How-
ever, at times the Union also stated that it had no objec-
tion to subcontracting so long as it did not affect unit
work. By 1957, the Union saw in Respondent's contract-
ing out of work a grave threat to job security. Thus, on
April 27, 1957, it warned that "unless management takes
a different look at this, that it is going to be necessary for
us to have some protection either in contract writing or
some other way. We also know from experience that
these changes have not only cut our jobs short ... it has
not only taken less manpower, but it has changed the na-
ture of our job .... their [the employees'] promotion has
been stopped, their pay has been cut, because they
haven't been allowed to advance, and their jobs at times
has been lessened." At some meetings the Union ob-
jected to the fact that the Company had not hired new
craftsmen despite its ever increasing expansion program.
It pointed to Respondent's failure to replace even those
who had quit or died.
Respondent repeatedly assured the Union that it was
using unit employees whenever feasible, stressing that it
was neither practical nor economical in all cases. The
Company's February 20, 1959, letter to the Union states
in typical language:
... while the question of what work is to be con-
tracted is one for the Company to decide, we greatly
prefer to use our own employees, all other things
being equal. So often, however, all other things are
not equal.
As to contract painting , Respondent explained that it
could not maintain a full year-round crew since painting
was intermittent and involved weather. It repeatedly
Respondent 's contract work on unit employees
6 "Contract work" was changed to "contract " in 1947
SHELL OIL COMPANY 1069
emphasized that it was neither good business nor good
labor relations for the Company to hire men in "peak"
periods only to have to lay them off in "valleys." It also
claimed lack of necessary plant equipment , shortage of
skilled manpower , and inability to compete with the ever
increasing specialized activities of contractors as justifi-
cations for subcontracting . At the same time , Respondent
contended that only a small amount of contracting out
was involved . Indeed , at one meeting (March 26, 1957)
it expressed pride in its past ability to furnish full employ-
ment , while competing plants were resorting to layoffs.
Respondent continually maintained the position that it
must retain , with minimum restrictions , the prerogative
to contract out work. Answering the Union's specific
complaints about a layoff in the chemical plant in 1958
(33 were laid off that year), Respondent insisted that it
had never made "any commitment to maintain any par-
ticular level of employment."
Respondent nevertheless yielded to several union de-
mands for contracting out restrictions, after agreeing to
the "prevailing refinery" wage limitations in 1941. By
letter of October 5, 1951, it agreed to furnish the Union
with certain contract-work information , including a
description of work done, location of jobs, and
contractor-employee classifications and rates. At the
same time it stipulated that it "cannot agree that no main-
tenance work will be contracted for in the future." On
October 15 , 1952, Respondent agreed to "continue our
efforts to hold within reasonable limits the amount of
work sent out of the plants ." (No similar assurance was
given as to in-plant work.) On March 26, 1953, the
parties signed what became known as the "Downey Bat-
tery Limits Agreement ." This categorized the work in the
chemical plant into three groups (capital jobs , plant revi-
sions , and maintenance work), and established "battery
limits," or divisions of work , between contractors and
plant employees.
Finally , on July 1 , 1957, in response to a union
proposal that "when conditions warrant contracting
maintenance normally performed by employees in the
bargaining unit, advance notice will be given," Respond-
ent gave the Union the following commitment by
"Letter Agreement":
We are willing, so far as practical, to keep the respec-
tive Workmen 's Committees informed, either orally
or in writing, of any decisions which may be reached
with respect to the performance of jobs by contrac-
tors within the two plants . Except in unusual circum-
stances, this will be in advance of the beginning of
the work. However, we cannot see our way clear to
undertake any obligation which would expressly or
impliedly limit our right to contract work.
C. The 1960-61 Contract Negotiations
Negotiations on the 1961 contract governing the rela-
tions between the parties at the beginning of the com-
plaint period (February 9, 1962), opened on July 16,
1960 . At the outset , the Union proposed to amend the
standard contract-work clause (sec. 4.04) so that Re-
spondent "will promote all Helpers to Mechanic classifi-
cation who are qualified" in "those departments affected
by contractors." At the May 11, 1960, meeting, the
parties discussed the matter of manpower from the stand-
point of both eliminating overtime and contract work.
The Union complained that there had been a steady man-
power decline in the refinery since 1958 through attrition;
that more work was being done by contractors than ever
before in the past 15 years; that "the contractors are Bat-
ting us up out there ... as a result of the manpower being at
the lowest ebb possible"; and that the contractors were
performing work that could be performed by unit em-
ployees "if they [the Company] had the manpower
available." At the next meeting (May 12), the Company's
spokesman (Keegan), agreeing that there had been a
gradual decline in plant force from 1957 to 1960, main-
tained that the in-plant contract maintenance had also
decreased . Keegan noted that the Company had not
resorted to layoffs as other refineries had, because of
careful planning, making sure that the plants were not
overmanned , arranging for shutdowns in slack periods,
and counting on normal attrition . He also insisted that
contractors were receiving "less and less of our main-
tenance work." Recognizing the need for contracting out
new construction work , the Union complained against
subcontracting specified maintenance jobs and against
the reduction (by 1960 ) of 120 men in the engineering
field department. It also complained that because of auto-
mation new units were being staffed with fewer em-
ployees.
Contract work was a recurring topic in succeeding
meetings . In response to the Union's November 30,
1960, complaint about elimination of helpers, Respond-
ent stated it desired only a "minimum of them" in in-
terest of efficiency. At the January 27, 1961 , session, the
Union stressed the desirability of training "future or
potential mechanical people" so as to help avert in-
creased contractor work. The Union again raised the
manpower question , pointing out that the bargaining unit
had lost 367 men (through attrition), who had never been
replaced . Company Representative Keegan insisted that
Respondent needed no additional men, stating, "Now,
that may be brutal, but, honestly, gentlemen we have no
need for any more men .... The fact of the matter is that
we have so many men at the moment that I think if
something doesn't happen, I think we are going to have a
layoff of men." At the March 2, 1961 meeting, the Union
raised the question of notice, complaining that:
... when you let a contract for a certain amount of
maintenance work and we raise a protest, it's too late
to untangle it, because the Company says, "We have
already let that contract." The Company doesn't
notify us of their planning schedule.
At the March 6, 1961, meeting, the Union voiced fear of
ultimate replacement of unit employees by contractor
forces. One of its spokesmen stated:
Now, where is all this going to stop? If you people
continually cut our work out and replace us with
other people, certainly you don't have a need for any-
body if that's going to be the trend of your actions.
As in other meetings, the Company sought to justify its
actions on business grounds ("peak-loads" contracting,
lack of skilled manpower, etc.), and argued that the
amount of contracting out was "de minimis," at times
contending that "most of our contract people are on
firewall maintenance and tank painting work."
On May 5, 1961, the Union wrote Respondent that due
to "recent" and "anticipated" reductions in force it
proposed, among other things, that:
1070 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
No employee in any classification shall be laid off so
long as any work is being done under contract in the
plants.
(The Union also sought to reduce the 40-hour week to 36
hours and pressed for new severance pay provision.)
Respondent refused to go beyond its July 1, 1957, com-
mitment on contract work (supra, section B). On July 24,
1961, the Union softened its proposal with one that there
be "No layoff while customary maintenance is being con-
tracted out." Respondent refused also to go along with
this. On August 7, 1961, the parties agreed to extend the
existing collective agreement from July 27, 1961, to May
15, 1962, with modifications , not including change of
the existing contract-work agreements . Respondent
reiterated its contract work policy in a letter agreement
(finalized on September 7, 1961) as follows:
As to contract work, we are willing to reiterate and
confirm as our present policy the following statement
which was made to you in 1957: "We are willing, so
far as practical, to keep the respective Workmen's
Committees informed, either orally or in writing, of
any decisions which may be reached with respect to
the performance of jobs by contractors within the
two plants. Except in unusual circumstances, this
will be in advance of the beginning of the work. How-
ever, we cannot see our way clear to undertake any
obligation which would expressly or impliedly limit
our right to contract work.
D. The Complaint Period: 1962-66.7
1. January 26-August 18, 1962 (prestrike period)
Prior to finally notifying Respondent on March 14,
1962, of its desire to cancel the existing (1961) contract,
the Union (on January 26, 1962) sought to reopen that
contract to discuss wages and, later (February 20), to
discuss a 36-hour week. On Feburary 15, the Union re-
minded Respondent of its concern over recent layoffs and
the "possibility that the Company may be depleting the
crafts in an effort to justify using outside contractors in
the future"; and it asked for assurance "that this was not
the case, that the Company did not have any intentions of
contracting out the work that has been performed by the
plant forces." On March 6, 1962, Respondent advised
the Union:
These layoffs have occurred, as has been discussed
with you at some length , as the direct result of a sur-
plus manpower that had come about because of a
number of factors such as the leveling in the rate of
growth of the Plant, the use of materials which in-
crease the length of time between shutdowns or
decrease the need for day-to-day maintenance, etc.
. As far as the general subject of contractor work
is concerned, this has, of course, been covered at
some length in our negotiations and certain commit-
ments have been made as a result of those negotia-
tions.
At their March 29 meeting , the Union complained of a
10-percent manpower loss and that "there is still plenty
of contract work going on , with several hundred Shell em-
ployees walking the streets." On April 27, the Union
proposed the following modification of the contract-work
clause (sec. 4.04):
No contract shall be contracted for with outside
firms to perform work on either equipment within the
plant or equipment taken out of the plant , while laid
off employees are subject to recall.
Respondent 's more general May 7 proposal merely called
for discussions of "changes necessary to achieve a better
utilization of manpower."
In ensuing negotiations (about 20 meetings in 1962-63)
the parties engaged in extensive discussions of the con-
tract-work issue and the impact of Respondent's con-
tracting out on unit work . As hereafter noted , Respond-
ent had laid off a substantial number of unit employees
in 1961-63 - before and during a protracted , 1-year strike
(August 18, 1962-August 7, 1963). These layoffs played
a significant part in the negotiations and the positions
taken by the parties.
At a June 6, 1962, meeting, the Union indicated that its
most recent contract -work proposal "includes, at a
minimum all the work that has been done by our people
in the past." Rejecting the proposal because it "ties our
hands completely," Respondent 's spokesman Kelbaugh
told the Union, at a June 27 meeting:
We feel quite strongly about contract work.... The
number I objective of our plant is to make our
product economically .... [O]ur contract work has
been confined largely to peaks and large construction
and modification of plants, special equipment and as-
signments wherein we may not have the skills or
equipment . . . [T]he contractors do it cheaper
.... The cost is considerably less. These are ap-
proaches to a competitive position. . . . [T]his
proposal will ... work to the detriment of our or-
ganization.
At the July 3 meeting, Kelbaugh asserted: "We have and
will continue to tell you people , the overriding decision
remains with us, we feel we must retain it." At the next
meeting (July 13), Respondent adhered to its position
that it must have the "unfettered right" to contract out
work , but said that it "would stand on [its ] statement
made to the [Union] last year" regarding contract work.
The Union (through its negotiator, Crossland) raised the
question of notice , claiming, "we receive very little, if
any, notice of contract work, generally the contract has
already been let. We don 't get notice of all the contract
work being done." Conceding "a few errors of omission,"
Kelbaugh insisted that the Company had "made an
honest effort in this area." Crossland predicted that the
Union would hereafter press for advance notice on all
contract work- outside as well as inside the plant-in
view of the recent 300-man layoff and bumping or "cut-
7 Unlike the pre-1962 negotiations , those in and after 1962 are not
covered by verbatim transcripts The findings herein are based primarily
on documents (e g., correspondence and agreements between the parties),
and extensive negotiation notes of General Counsel 's witness Barnes (an
executive member and , since 1963 , president of the Local) admitted as
past recollection recorded. Barnes could not recall anything of substance
not recorded in his notes since he had no "independent recollection" of
the matters discussed in the meetings I have also relied on General Coun-
sel's witness Rentfro, the International 's former general counsel, who
testified briefly on the 1962 strike settlement negotiations.
SHELL OIL COMPANY 1071
backs" in classifications.8 Crossland added that the
Union wanted "[nlot only advance consultation" on all
contract work, but also immediate "recovery" of work al-
ready contracted out.
At an August 17 meeting, the Union again raised the
subject of inadequate notice on contract work. In the final
prestrike meeting on August 18, 1962, the Union
amended its April 27 proposal to read that "No Bargain-
ing Unit work will be contracted which can be performed
by employees."
As to the impact of the contract work on plant em-
ployees, Kelbaugh admitted that some of it was inevitable
and that "there will be some continuing impact."9 At a
June 28, 1962, meeting, Respondent attributed the Com-
pany's reduced manpower requirements to improved
"methods, materials, and procedures," citing superior
tools and techniques , automation , more careful screening
for shutdowns and turnarounds,10 and spreading intervals
between shutdowns. When Union Representative Cross-
land complained of excessive emphasis on automation,
Kelbaugh insisted that "automation is here to stay"; that
although "our people can do the jobs very well ... the
contractors are specialists"; and that "contract work is
essential to our efficient operation." Crossland com-
mented: "As long as there were no layoffs it wasn't up to
us to get excited about the [Company] farming out small
amounts of work, but the situation has changed." Union
Representative Garner added that the most senior crafts-
men were being demoted and transferred to operations.
At an August 16, 1962, meeting, Respondent informed
the Union that although it recognized that unit employees
"were sustaining considerable hardship due to bump-
backs and layoffs," it could see "no solution" in sight
since "[d]ue to circumstances completely beyond our
control we find that we have too many craftsmen." Kel-
baugh could say "nothing statistical that would indicate
that there's a trend toward maximation of ... contract
work," citing 1960-61 and projected 1962 figures on in-
plant contract work. Kelbaugh claimed that, "There is no
trend to erode away the maintenance work by using con-
tractors. We subscribe to the principle that it is essential
that organization such as ours include contract work."
Crossland replied that the cited figures were "fuzzy" in
failing to cover outside contract work, and he insisted that
the Union "should recover some of the contract work due
to the Co.'s [Company's] reduction of forces of some
10%."
At an August 17, 1962, meeting, the Union complained
it had previously agreed to the contract-work clause in
belief that the Company's "statement of policy" was
made "in good faith" and "would work"; and Crossland
charged that the Company "refused to bargain on this
matter." Kelbaugh replied, "I cannot offer any change
the letter we gave you last year covers our position.
This is our basic philosophy."
2. August 19, 1962-August 6, 1963 (strike period)
The parties discussed the contract work issue in at least
nine meetings during the strike. At their October 3, 1962,
meeting, Respondent 's Kelbaugh insisted that the Com-
pany had been bargaining in good faith , with the "net
result ... to date " that Respondent "will not change [its]
position." Crossland stated:
In the past the Co. has only notified us that contract
work was going on without giving us an opportunity
to discuss or bargain on these items .... The mo-
tions the Co. has gone through in the past are not suf-
ficient .... [W] e want an opportunity to participate
in decisions on such things and discuss them.
At the October 17 meeting, Crossland argued that the
Company "must bargain on contract work, not just give
information as you have done in the past." Kelbaugh's
response was, "We have bargained, not only this year but
in the past. We do not intend to change our position."
In a November 30 meeting, the Company read a
"statement and proposal " regarding "manpower utiliza-
tion" and "manpower requirements ," explaining that as
a result of its strike experience (Respondent had operated
almost entirely with "staff" or managerial help), it had
discovered that it could operate more efficiently by utiliz-
ing craft employees to work outside of strict jurisdictional
lines and operations personnel to perform incidental craft
maintenance work. Respondent accordingly proposed a
provision authorizing it to utilize its work force in that
manner at the conclusion of the strike. Respondent also
indicated that, subject to still "further adjustments" in fu-
ture manpower requirements, it intended to reduce its
plant forces by 250 refinery and 140 chemical plant em-
ployees. To "try to lessen the impact of the necessary
reductions," Respondent proposed a "special payments"
plan for affected employees (basically retirement pay for
men over 50). Of the 390 projected layoffs, 171 (105 at
the refinery and 66 at the chemical plant) were to be from
operations, where there was no contract-work issue."
At their December 27 meeting, the parties discussed
the Union's request to minimize impact of the proposed
layoffs by interdepartmental (maintenance and opera-
tions) transfers of affected employees. Turning to the
contract-work issue, the Union again complained of the
"ineffective" contract language and of its dissatisfaction
with "movement of work from bargaining unit employees
to contractors." Kelbaugh again replied that the Com-
pany was "not prepared to make any changes in our posi-
tion on contract work." The proposed layoffs were
thereafter discussed at three further meetings (January 29
and 31 and February 5, 1963).
On April 1, 1963, Respondent advised the Union that
it was ready to notify 131 employees at the refinery and
95 at the chemical plant of the layoff about which it had
told the Union on November 30, and indicated it was
8 Under the contract, unit maintenance employees were entitled to
"bump" employees of lower seniority into lower classifications in the
same department (engineering field) or another department (operations).
9 As hereafter noted, Respondent laid off 92 chemical plant and 88
refinery employees in 1961; 74 1n the chemical plant and 26 in the refinery
in 1962 before the strike; and 94 and 126 during the strike (August 19,
1962, to August 6, 1963)
10 A "turnaround" is a major periodic shutdown of a unit for overhaul
or repair.
11 When Crossland asked if Respondent's layoff figures were subject to
bargaining, Kelbaugh replied, the "figures we think are proper and right,
and cannot be changed." The Union's brief states "This unilateral deci-
sion was the basis for the portion of the complaint dealing with layoffs
which was withdrawn." (See supra, fn 1.)
1072 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ready to confer with the Union before sending out the
notifications. In its reply of April 5, the Union com-
plained that "there has been no bargaining on this subject
and certainly no impasse has been reached," and that it
wanted to meet with Respondent on this matter.
At an April 11 meeting, Kelbaugh reviewed in detail
the contract-work information previously supplied to the
Union. Responding to the Union's proposal that "no bar-
gaining unit work will be contracted out which can be per-
formed by employees of the Company," Kelbaugh stated
the Company's position to be, "We're going to stay with
the status quo." When Crossland said , "You have tried to
infer that the practice hasn't changed in the last 2 or 3
years," Kelbaugh said, "we haven't changed our posi-
tion." At the next meeting (April 12), Respondent
furnished information as to maintenance contracts let out
in 1962. Respondent again expressed concern about com-
petitive conditions and pointed to the technical develop-
ments reducing manpower requirements. Acknowledging
a "trend and movement ... toward eliminating man-
power altogether," Crossland nevertheless pleaded for
consideration of the workmen's plight. He reiterated this
at the next meeting (April 17):
Management will have to recognize the fact that in
the oil industry particularly, there have [been] in-
creases in staff and decreases in the Bargaining
Units. Simply because the Oil Industry is hell-bent
on Bargaining Unit reductions and increases in staff
doesn't mean we will offer no resistence .... The
Co. has failed to recognize the Union's request in
any substantial way ... •. The employees have
thought of this for some years and they'd rather not
go back into the plants until some consideration is
shown them.
In response to the Union's request, Respondent sub-
mitted a statement of its position on outstanding issues on
April 23. With regard to the Union's contract-work
proposal, Respondent stated: "The Companies are un-
willing to make concessions beyond those already con-
tained in the articles of agreement and as explained in the
letter of September 1, 1961." Among subjects discussed
was the comparative manpower reductions and contract-
ing out practices at other Shell plants, including Norco,
Louisiana, the Company taking the position that "There's
nothing unusual about [the] local situation" in Houston.
The Union amended its contract-work proposal at the
May 23 meeting as follows:
Bargaining unit work contracted out without notifica-
tion or bargaining shall be reviewed. The Union shall
be notified of future contemplated contract work and
given an opportunity to evaluate manpower, material
and equipment needed. It is not the intent of the
Union to restrict or interfere with the bona fide need
12 A Federal Conciliator had entered the negotiations as early as June
27, 1962.
13 As previously noted , at the hearing I granted General Counsel's mo-
tion to withdraw all allegations not bearing on the contract -work issue, in-
cluding the portion involving the alleged unilateral layoff of unit em-
ployees during the strike
1¢ It was agreed that the causes of Respondent 's "announced layoff'
during the strike "were the combined effects of accumulated technological
of contracting of work as a supplement to plant
forces.
The Union commented that it is now "unmistakable that
we're trying to approach this in a bipartite participation
manner." At the next meeting (July 5), the Union com-
mented in similar vein that "We've softened this issue to
the limit." At the July 17 meeting, the parties discussed
manpower and "bumping" procedure.
The next two sessions (August 1 and 2, 1963) were at-
tended by high officials of Respondent (including its
assistant industrial relations director, Moore, from New
York), of the Union (the International's general counsel,
Rentfro), and of the United States Federal Mediation and
Conciliation Service (Director W. E. Simkin, of
Washington).12 The parties discussed Respondent's and
Conciliator Simkin's strike-settlement proposals. On the
contract-work issue, Respondent proposed that the pend-
ing unfair labor practice charges be withdrawn "without
prejudice." Conciliator Simkin proposed that only the
portion of the complaint related dealing with the contract-
work issue be retained. On August 6, 1963, the parties
accepted the Simkin proposal and the Union agreed to
request the Regional Director to dismiss all portions of
the charge unrelated to contracting.13
The parties' Articles of Agreement of August 7, 1963,
retained section 4.04 in the identical language of past
agreements. In addition, a number of letter agreeements
were executed dealing with a variety of subjects, includ-
ing amalgamation of the valve repairmen into the machin-
ists or pipefitter crafts; placing into effect Respondent's
November 30, 1962, proposals on "manpower require-
ments" and "special payments" substantially as outlined
in the strike negotiations; 14 incorporating Respondent's
November 30 proposals respecting "manpower utiliza-
tion ," "running maintenance" by operators and "in-
cidental maintenance work" by the respective crafts; and
adding in the contract a new "craft supplementation"
clause dealing with work assignments.
Except for some six grievances about contracting out
claimed unit work and complaint that Respondent had
violated the agreement on amalgamation of the valve
repair department, nothing eventful transpired in the
balance of 1963.
3. 1964-65 (poststrike period)
At a March 10, 1964, meeting, Respondent handed the
Union a letter stating that since the Company had an ex-
cess of 124 employees in the refinery taking "into ac-
count their foreseeable work load," in accordance with
the notice requirement of the August 9, 1963, letter
agreement it was notifying the Union that their reduction
in force would be accomplished by October 1. The letter
further stated that, in keeping with the letter agreement,
Respondent proposed a plan to avoid the layoff by apply-
ing the "Special Early Retirement Plan" and "a signifi-
cantly liberalized severance payment" plan. The parties
change and [Respondent's] estimate of the effects of a more efficient
utilization of operating and maintenance personnel." It was further agreed
that in the event of future reductions in plant forces "due either to
technological change or to more efficient utilization of bargaining unit per-
sonnel," the Union would receive 60 days' advance notice prior to the
proposed reduction to permit discussion on "possible ways" to avoid or
"cushion" the layoffs and to "treat such layoffs in at least as liberal
manner as those that already have been announced."
SHELL OIL COMPANY
discussed the proposed layoff at the next two meetings.15
At the first (March 18 ) meeting, Respondent furnished
the Union with requested information on employees eligi-
ble for early retirement, junior employees in the refinery,
and the amount of in-plant maintenance contract work
since August 1963. In response to the Union 's request for
the Company 's position regarding future contracting,
Respondent replied that it was "obliged to continue" its
past "course of contracting ." Company Representative
Moore explained the evolutionary increases in the oil in-
dustry maintenance contracting since World War II, par-
ticularly in the last decade, on the basis of growing con-
tractor specialization ; and commented on increasing
rivalry between the craft and building trade unions forju-
risdiction in this field . Another company representative
(Wilson) admitted that there would be "more contracting
on the major turnarounds " in the coming year.
In the next (March 24) meeting , the parties again
discussed Respondent 's proposed layoff. The Union
complained that although automation justified some
reductions , it did not warrant wholesale layoffs and
blamed the reductions largely on substitution of contrac-
tors for unit employees.
On March 26, 1964 , the parties signed a letter agree-
ment on the proposed reductions , agreeing to apply the
"Layoff Avoidance Program ," including its special early
retirement and severance pay provisions . " On April 1,
1964, the Union wrote Respondent that it still opposed
the layoffs , notwithstanding its signature of the March 26
letter agreement.
Since none of the parties had given 60-day written
notice of desire to change or cancel the August 7, 1963,
collective agreement , that agreement was by its terms au-
tomatically renewed for an additional year. However, on
August 26 , 1964 , the parties agreed to certain amend-
ments to the 1963 contract , including its extension
5 The findings as to what transpired at those meetings (as at the crucial
1962-63 meetings ) are based on notes taken by Union President Barnes,
a General Counsel witness
16 Union President Barnes testified that because of the early retirement
and severance pay features of the agreement , there were no involuntary
1073
through . August 31 , 1966 . On October 13 , 1965, the
parties again extended the contract to December 31,
1966. Union President Barnes testified that the reason
"that the Union did not bring up the subject of contract
work in these [ 1964 and 1965] negotiations" was
because "we felt that the only course we had open was to
the NLRB."
E. Impact of Contracting Out
As already noted , Respondent furnished General
Counsel with thousands of subpenaed purchase orders
and invoices (21 bulky volumes) describing work con-
tracted out to named companies between February 9,
1962 (the beginning of the complaint period ), and the last
amendment to the complaint (May 3, 1966). Witnesses
called by General Counsel identified what they termed as
"representative" documents covering claimed unit work.
According to General Counsel's tabulations , the sub-
penaed documents demonstrate that outside contractors
performed at least 306,439 man hours of "maintenance"
work between 1962 and 1966 ; and documents not show-
ing man hours show $264,795 labor cost or $2,145,177
"fixed price" for all jobs.
However, the record contains no comparable statistical
data of contractor performance prior to 1962. Several
General Counsel's witnesses (unit employees) testifying
on this point, gave only generalized estimates of the
amount of unit work by contractors before 1962 -usually
in terms of percentages of the particular type of work they
had observed unit employees , as opposed to contractors,
do before and after the August 1962 strike . The record
does contain statistical data (supplied by Respondent to
the Union in the course of the contract and grievance
discussions) permitting some comparison . The following
table summarizes such data:
layoffs . He further testified that even chemical plant employees (proposed
reductions were confined to the refinery) took "advantage of the layoff
avoidance program" (i.e., early retirement and severance pay incentives)
and left the plant
1074 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In-Plant Maintenance Contract Work
Refiner Chemical Plant
t.ontractor nours
(Estimated)
' ontruers t.ontractor pours t.ontracts Jource
(Estimated)
1957 106,288 28 5/12/60
neg. meetg.
minutes
1958 84,623 52 ii
1959 73,407 34 "
1960 82,528 48 14,384 7 GC Exh.
(69i)
1961 94,028 36 15,364 9 of
1962
1st Q. 14,231 11 5,657 2 GC Exh.
69(x)
2nd Q. 15,370 12 6,957 4 11
3rd Q. 6,817 6 - it
36,418 29 12,614 6
1963
3rd Q. cJ 14,153 2,463 GC Exh.
70(a)
4th Q. 13,986 9,631 to
1964
1st Q. J 7,339 14,800 GC Exh.
35,478 26,894 70(a)
a/ To August 20 (i.e., to strike).
bJ 2nd and 3rd quarters to August 20.
J August 7-September 30.
dJ To March 12.
In addition, manpower data (General Counsel Exh, 82 and 83) show:
Payroll (operations and maintenance employees)
Refine
Year
(Jan. 1)
1957
1958
1959
1960
1961
1962 J
1963 ,f/
1963 g/
1964
1965
1966
No. of employees
1877
1886
1841
1776
1731
1576
(1484)
(1258)
1098
959
945
Chemical Plant
Reductions
No. of employees
Reductions
1193 2
1212 33
1142
1149
88 1120 92
26 976 74
126 (877) 94
6 (704)
674 hJ
635
626
J January 1 through August 18 (date strike began).
August 19, 1962 - August 6, 1963 (strike period).
/ August 7 - December 31, 1963.
Although there were no layoffs, 55 were released at the refinery and 17 at the chemical
plant under the special retirement and severance pay programs.
f January 1 - April 30.
SHELL OIL COMPANY 1075
Other manpower statistics show a numerical break-
down of employees in the engineering field (maintenance)
and operations departments. Finally, the record contains
employment records, showing dates of employee trans-
fers with changes in classifications and pay rates (if any),
from which General Counsel and the Union would infer
that many maintenance employees were "bumped,"
transferred, and demoted to less desirable or lower-paid
positions as a result of increased contracting out of main-
tenance unit work.
F. Conclusions
1. introduction
The General Counsel's case is predicated on the claim
that Respondent failed to fulfill its statutory bargaining
obligation in the complaint period because it contracted
out unit work without prior notification to, and bargaining
with, the Union. In subcontracting, as in other mandatory
bargaining subjects, "the obligation to bargain is not an
obligation to agree." East Bay Union of Machinists
(Fibreboard Paper Products) ., N.I.R.B., 322 F.2d
411, 415 (C.A.D.C.), affd. 379 U.S. 203. See also Allied
Chemical Corp., 151 NLRB 718, 721-722, enfd. 358
F.2d 234 (C.A_ 4). For purposes of Respondent's
motion to dismiss, it will be assumed that Respondent
failed to give the Union notice of its decision and inten-
tion to contract out unit work. The issue is whether
General Counsel established a prima facie showing that
Respondent's unilateral conduct, in the circumstances
presented, constituted a refusal to bargain within the
meaning of Section 8(a)(5). 17
As noted earlier, the findings respecting the negotia-
tions and dealings on the contract-work issue are based
on documentary evidence-largely minutes of meetings
taken by Union President Barnes (General Counsel wit-
ness). Viewing the evidence, as it must for purposes of
the motion, in the light most favorable to General Coun-
sel, I am compelled to conclude that he has failed to make
out a prima facie case of refusal to bargain on the part of
Respondent.
2. The complaint period February 9, 1962-
August 7, 1963
(a)
Contending that the Norco case 18 is "virtually identi-
cal with the present case on the material and governing
facts," Respondent urges that the Norco decision- to the
effect that the unilateral subcontracting there was law-
ful - is also dispositive here. General Counsel and the
Union, on the other hand, perceive significant factual dif-
ferences and urge an opposite conclusion.
It cannot be gainsaid that the factual settings of the two
cases bear strong resemblance-even in the timing of
major events. As here, Norco's management had been
subcontracting maintenance work for many years. Also,
as here , until March 29, 1962, the parties were operating
under a 1961 collective agreement, containing a clause to
the effect that in the event the employer subcontracts, he
shall require the contractor to pay prevailing refinery
wages. Until the 1961 negotiations on a new (1962) con-
tract, the Norco union (Independent Oil and Chemical
Workers Union of Louisiana) Voiced no objection to the
employer's practice of unilaterally contracting out occa-
sional maintenance work. However, it vigorously con-
tested his right to do so, and pressed for restrictive sub-
contracting provisions, during the 1961 negotiations. The
employer, on the other hand, insisted on full freedom to
subcontract unit work. The union struck on August 18,
1962 (same day as the Union here). In the interim, the
employer continued to comply with the 1961 contract-
work clause. When the strike ended on February 17,
1963, the parties signed a new contract retaining, without
material modification, the old clause. In upholding the
Employer's contention that both pre-1962 and post-1962
contracts vested in it the unilateral right to subcontract
without prior notice to or bargaining with the Norco
union, the Board considered four different time spans: (1)
the effective period of the 1961 contract up to its termina-
tion on March 29, 1962; (2) the interval between expira-
tion of that contract and the strike (March 29-August 18,
1962); (3) the strike period (August 18, 1962-February
17, 1963); and (4) the poststrike period.
As to (1), the Board held that the "key provision
[article XIV] regulating the interests of Employer and
Union in the area of subcontracting ... [is] reasonably
to be construed as embodying an implicit, yet clear, un-
derstanding that ... Respondent had the right to act uni-
laterally without prior notice or consultation, so long as
it complied with the conditions of the protective wage
requirement of that Article." As to (2), the Board held
that the employer had the right to maintain its established
practice of unilaterally subcontracting during the "hiatus
between contracts." As to (3), it held that unilateral sub-
contracting, necessitated by a strike, "did not transcend
the reasonable measures an employer may take in order
to maintain operations in such circumstances." As to (4),
the Board found that "the reappearance of article XIV,
without material change, in the new contract must
reasonably be viewed as a capitulation by the Union to
the Respondent's bargaining position and as a reaf-
firmance of the contractual understanding implicit in arti-
cle XIV, namely, that it gave Respondent the right to
continue occasional maintenance subcontracting without
prior consultation with the Union."
(b)
In my view, the Board's rationale and conclusions as to
the first three time intervals in Norco also apply to the
first three comparable intervals here: (1) February 9 to
March 29, 1962-the final weeks governed by the 1961
bargaining contract; (2) March 29 to August 18,
1962-the hiatus period during which the parties con-
tinued to apply the contract-work provisions, of the ex-
pired 1961 contract; and (3) August 19, 1962, to August
7, 1963-the strike period. As the Union states in its
11 As noted at the beginning of this Decision, General Counsel con-
cedes that the subcontracting was economically motivated. The record in-
dicates that technological and automation influences of the past decade
have accounted for much of the oil industry trend to contract out con-
struction and maintenance work This, in turn, has generated Jurisdictional
conflicts between industrial unions (representing in-plant employees) and
craft or building-trade unions (representing outside contractor employees)
over in-plant maintenance and construction work Cf. Labor Law Journal,
Vol 14(CCH,July 1963), p 601 etseq.
is Shell Oil Company, 149 NLRB 283, involving Respondent's Norco,
Louisiana , plant See also the companion case to Norco decided the same
day, 149 N LRB 298, presenting substantially the same issues.
1076 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
brief, "The Board's decision in the Norco case, which the
Respondent relies upon, contained a finding on the con-
tracting out clause which is worded in like fashion with
the contracting out clause appearing in the collective bar-
gaining agreement herein." Both clauses (article XIV in
Norco and article IV, section 4.04 in this case) provided
that in the event of subcontracting, the contractor shall
pay prevailing refinery wages. To be sure, Respondent (in
a side letter agreement) also agreed to supply the Union
contract-work information, but this is an obligation which
the employer in Norco likewise had by operation of law,
since a union is entitled to such information in order to
enable it to administer its collective agreement. See, e.g.,
N.L.R.B. v. The Item Co., 220 F.2d 956, 958 (C.A. 5),
cert. denied 350 U.S. 905. In addition, Respondent un-
dertook to exert its "efforts to hold within reasonable
limits" the amount of work sent out of the plants; "so far
as practical" to keep the Union "informed ... of any
decisions" respecting in-plant work; and "except in
unusual circumstances" to give such notification "in ad-
vance of the beginning of the work." However, at the
same time (and in the same letter agreements) Respond-
ent made it clear that these assurances were subject to
the understanding that none "would expressly or im-
pliedly limit our right to contract work." It is to be noted,
moreover, that Respondent agreed to limited union notifi-
cation only after it made its decision to contract out the
work, not before.
The Union relies on the background of the contract-
work provisions to support its position that Respondent
was not authorized to subcontract unilaterally. It con-
trasts the situation here, where the record "is replete with
many instances showing the Union's concern and com-
plaint on the subject of subcontracting through the
years," with that in Norco where, until the most recent
1961 negotiations on a new contract, it was "not disputed
that ... the Union voiced no objection to [the]
established method of subcontracting." However, the
Union overlooks the fact that here it is not acquiescene
in, but capitulation to, Respondent's position that com-
pels the conclusion that the contract-work provisions
vested in Respondent unilateral right to let out unit
work."' The undisputed evidence demonstrates that the
Union had for years vigorously sought to limit Respond-
ent's prerogative to subcontract. In the very negotiations
preceding the 1961 collective agreement, Respond-
ent successfully resisted several union proposals to ex-
tend the restrictions the Union had obtained in earlier
years. It rejected proposals designed to minimize the
need for outside contractors by requiring Respondent to
maintain adequate plant forces, to promote qualified help-
ers to mechanics in departments "affected by contrac-
tors," and to train "future or potential" mechanics. It
turned down other proposals restricting the Company's
right to lay off unit employees "so long as any work is
being done under contract in the plants," or "while custo-
mary maintenance is being contracted out." The parties
also discussed the Union's claim of inadequate
notice-after the Company "already let that con-
tract" - and its concern regarding increased company
subcontracting and reductions in plant forces. As in earli-
er years, the Union protested that "the contractors are
eating us up out there" and that the size of the unit was
steadily diminishing through attrition and failure to hire
replacements. Respondent steadfastly adhered to its posi-
tion that it could not go beyond its previous commitments
and the Union ultimately signed the collective agreement
recognizing Respondent's right to subcontract, subject to
a protective wage clause and certain assurances (includ-
ing company notification after decision to subcontract) in
letter agreements.
In International Shoe Co., 151 NLRB 693, 699, the
Board held that "where the parties have as a result of
their bargaining entered into a contract which contains a
provision dispositive of a particular issue ... the parties
are said to have `bargained away' or `abandoned' all posi-
tions contrary to their agreement." See also Allied
Chemical Corp., supra, 151 NLRB at 721-722; Ador
Corp., 150 NLRB 1658, 1660. Here, too, "as a result of
their bargaining," the parties executed agreements which
are "dispositive" of the contract-work issue. These agree-
ments defined the limits of Respondent's obligations and
responsibilities in regard to contracting out work.
Although there is evidence that over the years the Union
had complained-sometimes through formal
grievances -that Respondent had failed to comply with
contractual provisions and assurances, this is not
equivalent to proof that Respondent did in fact violate
them in the complaint period up to the strike (February
9-August 18, 1962). At best, the Union's complaints
about contractors' past failure to pay prevailing refinery
wage rates and company failure to supply required con-
tract-work information, were isolated and sporadic and,
in any event, were usually satisfactorily settled. As to in-
adequate contract-work notification, the thrust of the
Union's complaints went not to alleged violations of com-
pany assurances concerning notification "in advance of
the beginning of the work," but to lack of notification in
advance of company decision to subcontract and actual
letting of contracts.
The fact that in Norco the subcontracting was "occa-
sional," whereas here recurrent and extensive, is not
determinative. In Norco, the Board found that the "prac-
tice of contracting out occasional maintenance work on
a unilateral basis ... had "become [the] established em-
ployment practice and, as such, a term and condition of
employment." 149 NLRB at 287. Here, as in
Westinghouse Electric Corp. (Mansfield Plant), 150
NLRB 1574, 1579, it is "recurrent" subcontracting that
became the established practice and condition of employ-
ment. The subcontracting represented a continuance, not
an alteration, of an existing practice.
Nor is there proof of a "radical departure" from past
contracing out practices in the prestrike period (February
9-August 19, 1962) as claimed by the Union. Respond-
ent had been contracting out maintenance, as well as
new and major construction work, for years. In the main,
General Counsel's witnesses fixed the time of the alleged
drastic changes as the beginning of the strike. Total
refinery layoffs during January 1-August 18, 1962, were
only 26 as compared to 88 in the (entire) preceding year
1961; chemical plant layoffs in the same period were 74
as compared to 92 in 1961. According to data supplied by
Respondent to the Union in the negotiations (and relied
on by the Union in its brief), contractors worked a total of
36,418 man hours in the refinery in the same period
'' Compare the doctrine of "capitulation " which the Board relied on in
Norco to support its finding that the employer there was authorized to let
out unit work in the poststrike period.
SHELL OIL COMPANY 1077
(January 1-August 20, 1962) as compared to 94,028 in
1961 and 82 ,528 in 1960 ; they worked 12,614 man hours
in the chemical plant in this pre-1962 strike period as
compared to 15,364 in 1961 and 14,384 in 1960.7n any
event , the Union can hardly claim that it was unaware of
Respondent 's position that the contract-work clause did
not bar increased subcontracting and layoffs in view of
Respondent 's repeated rejections of union proposals (in
the precontract negotiations) to curtail Respondent's
"rights" thereon. Cf. Norco, 149 NLRB at 289. Further-
more, the record shows that the Union agreed to the 1961
collective agreement after wholesale layoffs that year in
the chemical plant.20
Finally , there is no reason to believe that with practi-
cally all of its plant forces on strike Respondent 's subcon-
tracting during the strike exceeded reasonable limits and
business need , any more than in Norco . General Counsel
did not adduce any evidence on the nature and amount of
the contract work in the strike , having disclaimed that
Respondent's strike conduct , even if unilateral and
without antecedent consultation , was unlawful.21 The
record does show that Respondent laid off employees
during the strike, after explaining to the Union that its
strike experience demonstrated it could operate more ef-
ficiently and less expensively with fewer employees.
Although it initially proposed to lay off 390 of its approxi-
mately 2,500 unit employees (250 in the refinery and 140
in the chemical plant) it terminated only 220 (126 refinery
and 94 chemical plant employees). The situation is com-
parable to that in Norco where the employer's prestrike
337 engineeting field force was reduced to 170 (149
NLRB at 292, 297).22 Moreover, it is to be noted that
Respondent had negotiated on the implementation of the
layoffs (as on general subcontracting) throughout the en-
tire strike period; and that in one of the letter agreements
(at the end of the strike), the Union acknowledged that
the "layoffs were the combined effects of accumulated
technological change and the Companies' estimate of the
effects of more efficient utilization of operating and main-
tenance personnel."
I conclude that Respondent fulfilled its statutory
obligation in the complaint period February 9-August
18, 1962, when its obligations in regard to contracting-out
work were governed by the 1961 bargaining contract and
side letter agreements. I further conclude that Respond-
ent was under no legal obligation to consult with the
Union in regard to contracting out unit work during the
strike (August 18, 1962-August 7, 1963).
3. The complaint period August 7, 1963-May 3,1966
While agreeing with the Union's contention that
Respondent's unilateral subcontracting after the strike
(and signing of the August 7, 1963, collective agreement)
is' not governed by Norco, I nonetheless conclude that its
poststrike conduct was lawful. As the Union urges, here,
unlike Norco, "the reappearance" of the prestrike con-
tract-work provisions-in the new 1963 agreement cannot
"reasonably be viewed as a capitulation by the Union to
the Respondent's bargaining position and as a reaf-
firmance of the contractual understanding ... that it gave
Respondent the right to continue ... maintenance sub-
contracting without prior consultation with the Union"
(149 NLRB at 289), since here the Union signed the
agreement with the express understanding-commu-
nicated to Respondent-that it was "without prejudice"
to its right to pursue its position on the contract-work is-
sue. See Puerto Rico Telephone Co., 149 NLRB 950,
963-964.
In my opinion, dispositive of the issue herein is neither
the doctrine of "capitulation" nor of "waiver," but of
"good-faith impasse." In this case it was the established
contractual procedure-prior to the strike-for Respond-
ent to notify and negotiate on contract work after com-
pany decision to let out the work and "in advance of the
beginning of the work." The Union vigorously sought to
change this practice in the strike and prestrike negotia-
tions by insisting that Respondent afford it more notice
and by imposing on Respondent further subcontracting
limitations.
The undisputed documentary evidence establishes that
the contract-work issue was raised and discussed in 20
bargaining sessions and in correspondence preceding
consummation of the August 7, 1963, agreement.
Respondent insisted on retaining the existing provisions
which it interpreted as giving it the right to unrestricted
subcontracting, regardless of impact on the unit and
without necessity to consult the Union in advance of
decision to subcontract. The Union, on the other hand,
was firmly resolved to limit the Company's rights and dis-
cretionary practices in this area. At one of the earliest
meetings (April 27, 1962), the Union proposed a blanket
no-contract work clause banning subcontracting while
unit employees were in layoff status. At a later meeting
(August 18, 1962), it pressed for another blanket no-con-
tract work provision, barring contract work "which can
be performed by employees." Expressing discontent with
the limited notice requirement of past agreements, the
Union also pressed for "an opportunity to participate in
decisions on such things and discuss them." Finally, the
Union formally proposed (May 3, 1963) that it "shall be
notified of future contemplated contract work and given
an opportunity to evaluate manpower, material and
equipment needed." Respondent's representatives ex-
plained the Company's reasons for maintaining its posi-
tion against going beyond existing commitments. These
included considerations of efficiency and economy, in-
dustrywide trend toward, automation, general competitive
conditions, dearth of skilled manpower and of special
equipment, and reluctance to build up company forces in
"peaks" only to lay them off in "valleys." The Company
argued that it "must retain" the "unfettered" right and
"overriding decision" on subcontracting. It maintained its
position in the face of a protracted and costly strike.
As the Board has said, the statute does not "obligate"
the employer "to yield to a union's demand that a subcon-
tract not be let, or that it be let on terms inconsistent with
management's business judgement." Town & Country
Mfg. Co., 136 NLRB 1022, 1027, ei fd. 316 F,2d 846
(C.A. 5). See also, Allied Chemical Corp., supra, 151
20 Thus, 73 of the 92 layoffs in the chemical plant were made by May
26, 1961, over 3 months before the Union signed the September 7, 1961,
letter agreement. However, all 88 layoffs at the refinery took place after
September 7
-" Taking a contrary position, the Union offered to prove that Respond-
ent had unilaterally contracted out unit work in the strike and that such
conduct adversely affected the unit I rejected this offer on the authority
of Norco. See also Empire Terminal Warehouse Co , 151 N LRB 1359
22 My factual references to Norco here, and in other instances, are
limited to findings set forth in the Board's decision. I deem it unessential
to take official notice of the hearing transcript in that case as Respondent
requested at the hearing.
308-926 0-70-69
1078 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
NLRB at 721-722. Since "the Act does not require final
agreement or the grant of concessions, the parties may
reach an impasse which does not reflect on the good faith
of the bargaining." National Maritime Union ofAmerica,
78 NLRB 971, 981. "Not capitulation, but bona fide ef-
fort is the criterion." N.L.R.B. v. Mayer, 196 F.2d 286,
290 (C.A. 5). Nor is "hard bargaining," as such, tan-
tamount to a refusal to bargain. See Phillip Carey Manu-
facturing Co., 140 NLRB 1103, 1104-05; Proctor and
Gamble Manufacturing Company, 160 NLRB 334;
Intercontinental Engineering & Mfg. Co., 151 NLRB
1441,1446-47.
As I see it, this case involves only "hard bargaining,"
with each_ side maintaining irreconcilable positions on
what it regarded as a crucial issue-from the Employer's
point of view an issue touching its managerial prerogative
and from the Union's point of view an issue touching the
contraction of the bargaining unit. In each case, however,
the irreconcilable issue went to the heart of the Em-
ployer's method or system of operations. There appears
no reason in principle why an employer may not insist on
the right to unilateral subcontracting after bargaining on
that matter to a good-faith impasse if, as the Supreme
Court held in N.L.R.B. v. National Insurance Co. (343
U.S. 395, 408-409, 411-412), he may so insist on a
geneal management prerogative clause. See Norco, 149
NLRB at 295-296. Cf. Ador Corp., supra; International
Shoe, supra, 151 NLRB at 699. As in other mandatory
bargaining subjects, the statute only "compels negotia-
tions ... it contains no authority to force an agreement
where the parties have reached an impasse." (N.L.R.B.
v. United Clay Mines Corp., 219 F.2d 120,126 (C.A. 6).)
There still remains the question of the scope of
Respondent's poststrike subcontracting. According to the
Union, the poststrike period ushered in a "new era" of
massive subcontracting to, the detriment of the unit.
Respondent, on the other hand, characterizes the Union's
claim as a gross exaggeration. Although as noted (supra
section E), it is difficult to evaluate the significance of the
statistical tabulations on "maintenance" subcontracting
relied on by General Counsel, in view of absence of com-
parable pre-1962 company experience, I am nevertheless
persuaded that the record in its present posture
establishes a prima facie showing of expanded company
subcontracting since the strike and, also, that such sub-
contracting; had a significantly adverse effect on unit em-
ployees. Thus, the record shows that since the strike
Respondent has farmed out more and more tie-ins, paint-
ing,' revisions to existing equipment, and "turn-
arounds"- work performed by unit employees before
the strike.23 It has also made extensive use of "blanket"
type purchase orders in letting the work to its chief con-
tractors. Respondent's representatives admitted in
negotiation meetings that increased subcontracting was
in store, in line with industry automation trends.
Moreover, the documentary evidence indicates gradual
year-by-year contraction of the bargaining unit. To be
sure, precise causal relationship between subcontracting
and' unit erosion is difficult to determine. Further, the
22 The finding is based primarily on testimony of General Counsel's
witnesses creditedfor purpose of the motion to dismiss
24 See Westinghouse Electric Corporation, 150 NLRB 1574; Allied
Chemical Corp, 151 NLRB 718, affd. 358 F.2d 234 (C.A. 4)
25 In Norco, the Board reserved the question "whether or not Respond-
reduction in the unit is largely attributable to automation,
technological advances, improved techniques and materi-
als, as well as to normal attrition. Moreover, the great
bulk of the complaint period layoffs were effected during
the strike, not thereafter, and, finally, Respondent did not
callously ignore impact since it bargained thereon. What-
ever the true motivation, the record justifies the inference
that Respondent's poststrike contract work had substan-
tial impact on unit employees and unit work. Indeed, it
would appear that except for its contracting out practice,
employees laid off during the strike would in all likelihood
have been recalled.
In my opinion, the existence of impact is not, however,
decisive of the issue herein. Although impact could be a
critical factor in determining legality of unilateral subcon-
tracting in certain circumstances '24 it is not determinative
where, for example, a union, aware of potential impact,
waives its right to object to unilateral action. In
International Shoe Co., 151 NLRB 693, 698, the Board
found that the union "bargained away" or "abandoned"
its rights, although the employer's unilateral action
resulted in a unit reduction from 700 to 500 employees;
and in Ador Corp., 150 NLRB 1658, 1660, the Board
reached a similar conclusion respecting unilateral discon-
tinuance of operations which resulted in a layoff of all af-
fected employees. Similarly, there appears to be no statu-
tory bar to unilateral subcontracting where, as here, the
union, cognizant of the increasing contracting out activity
of the employer, is unable to wrest concessions on
minimizing impact after good-faith negotiations to im-
passee.25 This is not to say that the employer is absolved
of the duty to bargain on the impact itself. He may not
ignore the Union's interest in orderly resolution of
problems generated by unilateral subcontracting, includ-
ing possible layoffs, reassignments, etc. But Respondent
discharged it statutory duty in this regard. Thus, it
negotiated on the number of employees to be reduced,
proposed ways and means to soften the impact, and
through joint effort of the Union, put into effect the
"Layoff Avoidance Program" of 1964 under which af-
fected employees could avail themselves of early retire-
ment and obtain appropriate severance pay.
In reaching these conclusions, it should be emphasized
that this decision is limited to the question of the right of
an employer under the circumstances here presented to
act unilaterally after bargaining to an impasse on subcon-
tracting. An employer does not acquire the right to act
unilaterally with respect to all mandatory bargaining sub-
jects once he bargains to impasse. For example, the fact
that an employer bargains to impasse on the question of
furnishing a union with relevant bargaining information
does not necessarily deprive the Union of its statutory
right to such information and vest in the employer un-
restricted freedom of action in this sphere. This decision
holds only that in subcontracting- an inherent managerial
function-an employer bargaining to good-faith impasse
may in certain circumstances retain his right to continue
to exercise this managerial prerogative in accordance
with the contractual contract-work limitations in effect
before the impasse.
ent may, in the future, lawfully expand its subcontracting practice
without prior notice and consultation with the Union." 149 NLRB at
289-290. But Norco did not involve the right to subcontract after good-
faith impasse, the parties having resolved the subcontracting' issue by con-
tract
4. Summary
SHELL OIL COMPANY 1079
In brief, I find that Respondent fulfilled its statutory
bargaining obligation on the issue of contracting out work
during the complaint period in that: (1) it operated under,
and complied with , a collective agreement concluded (in
1961) after good-faith bargaining, which governed their
relations on that matter between February 9 and August
18, 1962; (2) it was not under any duty to notify and bar-
gain over individual work contracted out in the strike,
August 18, 1962-August 7, 1963; and (3) having bar-
gained to a good-faith impasse on the Union's demands
for further contract-work restrictions, it was entitled to
continue to operate in the poststrike period under -the
contract-work limitations in effect before the impasse.26
5. Nature of the strike
The allegation in the complaint that Respondent unlaw-
fully caused and prolonged the August 18, 1962, strike
-'S In view of the findings and conclusions herein, it is unnecessary to
pass upon Respondent's alternative ground for dismissal of the complaint,
namely, that, at the most, the case against it is predicated on alleged dif-
ferences of opinion as to the meaning and application of the contract-work
provisions-for which the Union had adequate contract remedies, includ-
ing arbitration and court enforcement. Section 5.03 of the governing col-
turns on whether or not Respondent's contracting out of
work before and during the strike constituted unlawful
unilateral conduct. Since I have found that General
Counsel failed to make a prima facie showing of such un-
lawful conduct, I further find that there is no prima facie
showing that the strike was caused or prolonged by un-
lawful company conduct.
RECOMMENDED ORDER
Upon the entire record in this case, I recommend that
the complaint herein be dismissed on the ground that
General Counsel did not make a prima facie showing (1)
that Respondent, in violation of Section 8(a)(5) of the
Act, refused to bargain collectively with the Union by
unilaterally contracting out work customarily performed
by unit employees; and (2) that the strike of August 18,
1962, was caused or prolonged by Respondent's alleged
unlawful unilateral conduct.
lective agreement provided that in the event the parties "fail to reach an
agreement in the settlement of any complaints arising out of the applica-
tion or interpretation of this Agreement, the complaint may be settled by
arbitration." Cf. Vickers, incorporated, 153 NLRB 561, Cloverleaf Divi-
sion of Adams Dairy Co., 147 NLRB 1410, 1414-16; Crescent Bed Co.,
Inc, 157 NLRB 296.