Champion Aviation Products, Weatherly, PA; Notice of Negative Determination on Remand

DEPARTMENT OF LABOR

Employment and Training Administration

[NAFTA--01994]

Champion Aviation Products, Weatherly, PA; Notice of Negative

Determination on Remand

On June 4, 1999, the United States Court of International Trade

remanded this matter to the Secretary of Labor for further

investigation in Former Employees of Champion Aviation Products v.

Secretary of Labor, No. 98-02-00299 (Ct. Int'l Trade 1999).

The Department's initial negative determination of eligibility to

apply for NAFTA Transitional Adjustment Assistance (``NAFTA-TAA'') for

the workers and former workers of Champion Aviation Products,

Weatherly, Pennsylvania was issued on December 11, 1997 and published

in the Federal Register on January 6, 1998, see 63 FR 577 (1998). The

denial was based on the finding that criteria (3) and (4) of the group

eligibility requirements of Section 222 of the Trade Act of 1974, as

amended, 19 U.S.C. 2231(a)(1)(A)(iii) and (B), were not met: i.e.,

there were no increases in imports from Mexico or Canada of articles

like or directly competitive with articles produced by the workers'

firm or appropriate subdivision that contributed importantly to the

workers' separations; and there was no shift in production of such

articles from the workers' firm or subdivision to Mexico or Canada. See

Administrative Record (``AR'') 58-60.

The petitioners' request for reconsideration resulted in a negative

determination, which was issued on January 27, 1998 and published in

the Federal Register on February 6, 1998, see 63 FR 6208 (1998). The

Department's determination reaffirmed its finding that imports did not

contribute importantly to the workers' separations and that the

workers' firm did not shift production of aircraft displays or power

supplies to Mexico or Canada. AR 63-66.

On remand, the court ordered the Department to make additional

findings (1) determining the appropriate subdivision in light of the

intent of NAFTA-TAA and accounting for the possibility that a two-step

shift in production may have occurred; (2) providing a more detailed

explanation of whether the articles produced at the Pennsylvania

facility are like or directly competitive with the articles produced in

Mexico; and (3) describing the types and amount of equipment that moved

to Mexico from Pennsylvania. Champion Aviation, No. 98-02-00299, slip

op. at 10. In addition, the court suggested that the Department develop

a methodology that does not rely on product lines alone to determine

what constitutes the appropriate subdivision in a ``shift in

production'' case. Id. at 7.

The court further suggested that the Department.

1. Describe the parent company's (Cooper Industries) organizational

structure and the Weatherly's plant's position within it; id. at 8;

2. Interview other sources besides the former Weatherly plant

manager, id. at 9; and

3. Provide evidence that it did not base its denial of the

plaintiffs' two-step shift-in-production argument on the sole ground

that the workers at the Sparta, Tennessee facility did not apply for

adjustment assistance, ibid.

The Department contacted the successor parent firm of Champion

Aviation--Federal Mogul Corporation--to obtain the additional

information required by the Court.

New Methodology

At the outset, the Department respectfully disagrees with the court

that a new methodology for determining the appropriate subdivision in a

shift-in-production case is either apposite or warranted by the statute

or its legislative history. It is well settled under the Trade

Adjustment Assistance provision for group eligibility of the Trade Act,

19 U.S.C. 2271(a), that the ``determination of what constitutes an

appropriate subdivision must be made along product lines.'' See Kelley

v. Secretary, United States Dep't of Labor, 626 F Supp. 398, 402 (Ct.

Int'l Trade 1985). The Department's use of the same methodology for

determining what an appropriate subdivision is under the NAFTA-TAA

increased-import criterion for group eligibility, 19 U.S.C.

2332(a)(1)(A), is not in dispute. The court's broader interpretation of

the same ``firm or appropriate subdivision'' language in the NAFTA-TAA

``shift in production'' criterion for group eligibility, 19

U.S.C.(a)(1)(B), seems to rest on its inference that because Congress

intended to expand coverage of workers in NAFTA-TAA by adding that

criterion, it must also have intended to use these terms more

expansively in that criterion. We think that Congress achieved the

intended expansion by adding the ``shift in production'' criterion,

which accounts for over half of the certifications under NAFTA-TAA, and

that the Congressional desire to expand the program does not evince an

intent to use terms with a well-established judicial meaning in a

radically different manner.\1\

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\1\ In this regard is revealing that the court's quotation of

the NAFTA-TAA legislative history, Champion Aviation, No. 98-02-

00299, slip op. at 6 (``[T]he new program is designed to remedy what

has been identified as one of the current shortcomings of the

current TAA program'') omits the explanatory preceding clause ``By

expanding eligibility to include those who lose their jobs as a

result of shifts in production to Mexico or Canada, not only as a

result of increased imports,'', Senate Proceedings and Debates of

the 103rd Congress, First Session, 139 Cong. Rec. S16092-01, S16107

(Nov. 18, 1993). Contrary to the court's interpretation, this

passage demonstrates Congress's intent to expand coverage by adding

a new criterion but provides no evidence of a Congressional desire

to redefine established terms within that new criterion in a way

that would further expand coverage.

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Appropriate Subdivision and Like or Directly Competitive Articles

The petition was filed on behalf of workers and former workers who

produced aircraft power supplies (power converters) and cockpit

displays in the Weatherly, Pennsylvania plant, part of Cooper

Automotive's Ignition/Aviation Products Division, see Supplemental

Administrative Record (``SAR'') 28, 32. Weatherly was the only Cooper

facility that made these products before its closure, see SAR 36, and

it produced only these articles during the period covered by the

investigation. The articles were produced from 1994 until the plant

closed. The plant had previously manufactured automotive headlamps, but

production of these articles was stopped before 1994 and moved to

Cooper's Hampton, Virginia facility. See SAR 17. Workers who lost their

jobs as a result of this transfer of automotive headlamps cannot be

certified on the present petition because the transfer was domestic and

because any such workers lost their jobs more than a year before the

NAFT-TAA petition was filed.\2\

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\2\ The petition was received by the Commonwealth of

Pennsylvania on October 27, 1998. See SAR 35.

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By contrast, the Sparta, Tennessee facility is a part of Cooper's

Automotive Lighting Products Division. See SAR 29. The Sparta plant

produces automotive incandescent miniature lamps, halogen capsules and

molds, and assembles some automotive interior lighting fixtures. SAR

18. There were no common or similar products or production processes at

the Weatherly and Sparta plants from 1994 through the closure of the

Weatherly plant. See SAR 4, 18. The aviation display products produced

at Weatherly cannot

[[Page 47528]]

reasonably be considered like or directly competitive with the Sparta

automotive headlamps that were transferred to Mexico. The two products

are not substantially identical in their inherent or intrinsic

characteristics, nor are they commercially interchangeable or

substitutable. The aviation lamps made in Weatherly were very different

in size and method of production from the automotive lighting produced

in Sparta. See SAR 4, 18. Aviation lamps and automotive lamps are

produced by very different processes. See SAR 21, 24. Aviation lamps

are made by a very manual process. SAR 24. ``The lamp is extremely

small and the assembly requires the use of a microscope. The automotive

lamps are made of highly automated production lines and are of a much

larger size.'' Ibid.

In view of the fact that the Weatherly plant, the plaintiffs'

plant, was the only Cooper facility that produced aviation products

during the period covered by the investigation and that Weatherly

produced only those products during that period, I find that Weatherly

was the appropriate subdivision for determining wheather a shift in

production occurred. I have considered whether the automotive articles

produced at Sparta were sufficiently similar to Weatherly's aviation

products to warrant finding Sparta an appropriate subdivision. I

conclude, however, that the products' differences in inherent or

intrinsic characteristics, production process and commercial use

preclude such a finding. I also note that the facts that the two plants

that made these products belonged to different divisions of Cooper and

that neither plant made components or finished products for the other

provide additional support for my conclusion.

Two-Step Shift in Production

According to a vice president of Cooper, there was no relationship

between the transfer of automotive products from Sparta to Matamoros,

Mexico and the transfer of aviation lamp production from Weatherly to

Sparta. See SAR 4, 18. The same official stated that the move of

aviation lighting from Weatherly to Sparta could have happened even if

Cooper had not moved any operations to Mexico; in his opinion, the two

transfers were totally unrelated. See SAR 24. He also observed that the

Weatherly production that was moved to Sparta was a very small lamp

assembly operation, especially in comparison to the automotive lamp

production in Sparta. See ibid.

Both in our initial investigation and in our remand investigation,

the former Weatherly plant manager (who co-signed the plaintiffs'

petition for administrative reconsideration, see AR 62) asserted that

the plaintiffs lost their jobs because of the shift in production of

automotive lamps from Sparta to Mexico. See AR Business Confidential

Information (``BCI'') 5, 36; SAR 23. As noted above, however, a Cooper

vice president flatly rejected this contention. When informed of the

conflict the former plant manager's and the higher company official's

views on this matter, Cooper told us that the plant manager had no

responsibility for Sparta and that the vice president was more

knowledgeable about Sparta's operations. See SAR 24.

I also note that, during the initial investigation, the former

Weatherly plant manager gave us an inconsistent explanation of why his

plant closed. At that time, he attributed the closing to the plant's

loss of 80% of its capacity when it shifted its automotive line to

another Cooper domestic plant in 1992. See BCI 36 (``The Weatherly

plant is being closed because you can't support this size plant with

what's left''). As noted earlier, a 1992 domestic transfer of

production is not a ground for certifying workers who lost their jobs

in late 1997 or early 1998 under the NAFTA-TAA shift-in-production

criterion.

I conclude that the record does not support the theory that the

plaintiffs lost their jobs because of a two-step shift in production

form Weatherly to Mexico. The unrelated nature of the domestic shift of

aviation lamp production from Weatherly to Sparta and the shift of

automotive lamp production from Sparta to Mexico, and the great

differences between these two product lines both refute the notion that

a two-step shift in production occurred here. This conclusion is

further supported by the finding of our original negative determination

that the real cause of the plaintiff's separation was their employer's

failure to procure avionics contracts that were awarded to domestic

competitors. See AR 59.

Equipment Moved From Pennsylvania to Mexico

Notes taken during the initial investigation indicated that some

equipment was transferred from Weatherly to Mexico. On remand, the

Department queried Cooper executives and the former Weatherly plant

manager about the company's equipment transfers. The former plant

manager clarified his comments and stated that the only equipment

Cooper moved from Weatherly to Mexico consisted of two large air

compressors, which are not production equipment. See SAR 23. Two Cooper

vice presidents stated that the company transferred no equipment from

Weatherly to Mexico. Production equipment from Weatherly was either

sold at auction or transferred either to Cooper's Liberty, South

Carolina or Sparta, Tennessee facilities. See SAR 18, 24, 34.

Conclusion

After careful consideration of the results of the remand

investigation, I affirm the original notice of negative determination

of eligibility to apply for NAFTA-TAA for workers and former workers of

Champion Aviation Products, Weatherly, Pennsylvania.

Signed at Washington, DC this 17th day of August 1999.

Grant D. Beale,

Program Manager, Office of Trade Adjustment Assistance.

[FR Doc. 99-22591 Filed 8-30-99; 8:45 am]

BILLING CODE 4510-30-M