[Federal Register Volume 64, Number 168 (Tuesday, August 31, 1999)]
[Notices]
[Pages 47527-47528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22591]


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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