[Federal Register Volume 70, Number 16 (Wednesday, January 26, 2005)]
[Notices]
[Pages 3735-3737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-258]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-51,120, TA-W-51,120A and TA-W-51,120B]


Sun Apparel of Texas, Armour Facility, Sun Warehouse Facility and 
Goodyear Distibution El Paso, TX; Notice of Negative Determination on 
Remand

    The United States Court of International Trade (USCIT) remanded to 
the Department of Labor (Department) for further investigation in 
Former Employees of Sun Apparel of Texas, et al v. U.S. Secretary of 
Labor, No. 03-00625.
    On March 11, 2003, a company official filed a petition for Trade 
Adjustment Assistance (TAA) on behalf of workers at the subject firm. 
Supplemental Administrative Record (SAR) 50. While the petition was 
dated January 8, 2003, 29 CFR 90.2 provides, in the definition for 
``Date of the petition,'' that, for TAA purposes, the date of the 
petition shall not be more than thirty days prior to the date of the 
filing. Thus, given the March 11, 2003 filing date, the petition date 
is considered to be February 11, 2003. In accordance with Section 
223(b) of the Trade Act, no certification may apply to any worker whose 
last total or partial separation from the subject company occurred 
before February 11, 2002, one year prior to the date of the petition. 
Thus, any worker separated before February 11, 2003 falls outside the 
subject worker group.
    In addition, 29 CFR 90.2 provides, in the definition for 
``Increased imports,'' for comparison between domestic production 12 
months prior to the date of petition and domestic production for the 
12-month period starting two years before the date of the petition. 
Therefore, during the initial investigation, the Department requested 
and received sales, production, employment, import and shift of 
production information from the subject company for the period that the 
Department determined to be the relevant period: The two calendar years 
prior to the date of the petition (2001 and 2002). SAR 74. Information 
pertaining to 2001 is relevant only to the extent that it provides a 
basis for comparison with 2002 events. The Department determined that 
the petition covered three facilities in El Paso, Texas: Armour, Sun 
Warehouse, and Goodyear Distribution. Further, the Department found 
that the only production of an article (manufacture of jeans at the 
Armour Facility) had ceased by June 2000 and that the production 
activity had been shifted to Mexico.
    On April 7, 2003, the Department issued a negative determination 
regarding eligibility to apply for TAA for the workers of the subject 
facilities. SAR 82. Workers at the Armour Facility generated patterns 
used for jeans production in Mexico. Workers at the Sun Warehouse 
Facility included laundry workers, trim workers and administrative 
staff. Workers at the Goodyear Distribution facility were forklift 
operators and shipping and receiving clerks. The negative determination 
was based on the investigation's finding that the Armour Facility did 
not import patterns or shift pattern production abroad during the 
investigatory time period (2001 and 2002) and that neither the Sun 
Warehouse Facility nor the Goodyear Distribution facility produced an 
article. The Notice of determination was published in the Federal 
Register on April 24, 2003 (68 FR 20177). SAR 87.
    On May 22, 2003, the petitioners requested administrative 
reconsideration of the Department's negative determination. In the 
request, the petitioners stated that the workers at the Armour Facility 
produced samples and that a shift of sample production from the Armour 
Facility to Mexico was supported by a TAA certification that expired in 
September 2002. SAR 111.
    On July 1, 2003, the Department issued a Notice of Determination 
Regarding Application for Reconsideration. SAR 130. The Notice of 
determination was published in the Federal Register on July 15, 2003 
(68 FR 41847). SAR 137. The allegations about the production of samples 
had first appeared in the request for reconsideration. In response, the 
Department conducted a comprehensive inquiry of all operations, 
including sample production, at the subject facilities during the 
relevant period (2001 and 2002). SAR 123-129.
    In the request for reconsideration, the petitioners alleged that 
sample production at the Armour Facility shifted to Mexico and inferred 
that samples were being imported from Mexico by the subject firm. The 
Department conducted an inquiry into this allegation and determined 
that sample production did not shift to Mexico and that the subject 
firm did not import samples from Mexico. SAR 123-129.
    The reconsideration investigation also revealed that patterns were 
generated and transmitted ``primarily'' (See SAR 123) electronically 
and, therefore, did not constitute an article. SAR 123-129. Therefore, 
the Department determined that, with regard to the petitioner's 
allegations, production of an article did not occur at the Armour 
Facility. Accordingly, the Department reaffirmed the negative 
determination for that worker group.
    During the reconsideration investigation, the Department also found 
that the functions at the Armour Facility's ``Print Shop'' constituted 
production, that label production had shifted to Mexico during the 
relevant period, and that the subject firm was relying exclusively on 
the labels produced at the affiliated facility in Mexico. SAR 123-129. 
Therefore, the Department determined that there were increased subject 
firm imports of labels and certified the separately-identifiable 
``Print Shop'' workers.
    The petitioners also stated that trim functions shifted to Mexico. 
According to the petitioners, the ``TRIM Department in the 
administrative area'' controlled entry and exit of inventory of sample 
production (See SAR 96) and involved ``checking that the orders for 
thread, zippers, patches, whatever accessories were needed for the 
production were distributed correctly here in El Paso as well as 
Mexico.'' SAR 121. In response to the allegations, the Department 
inquired into the matter (See SAR 123-129) and determined that trim 
work was a service incidental to internal quality control procedures 
and

[[Page 3736]]

did not constitute production of an article.
    The Department also investigated petitioners' allegation that the 
subject firm produced articles other than samples and labels and found 
that only sample and label production took place during the relevant 
period. SAR 123.
    The Department also inquired into the petitioners' assertion that 
the basis for certifications of previous petitions filed on behalf of 
the subject firm (TA-W-37,187 and TA-W-37,412) should be used to 
establish eligibility for the immediate TAA petition. The basis for TAA 
certification for the more recent of the two petitions (TA-W-37,412) 
was increased imports of articles like or directly competitive with 
laundered denim produced at the subject firm. The certification was 
issued on July 7, 2000. Because the shift to Mexico had been completed 
by June 2000, which was prior to the relevant period (See SAR 126), the 
basis for certification for the previous petition could not provide a 
basis for certification of the immediate petition.
    On reconsideration, the Department determined that only sample 
production and label production at the ``Print Shop'' took place at the 
Armour Facility during the relevant period; that there was no shift of 
production or imports of samples during the relevant period; and that 
neither the Sun Warehouse Facility nor the Goodyear Distribution 
facility produced an article. Therefore, the Department reaffirmed the 
negative determinations for those worker groups. SAR 130.
    On August 20, 2004, the USCIT ordered the Department to conduct a 
full and complete investigation into the petitioners' allegations and 
to determine subject workers' TAA eligibility.
    During the remand investigation, the Department requested 
information from the petitioners (See SAR 163, 276), and even requested 
extensions of the deadline for filing its findings with the USCIT in 
order to fully elicit and consider the petitioners' input. SAR 246, 
271.
    The Department also requested the subject firm to provide extensive 
information regarding job functions, production operations, and 
organizational structure, as well as sales, production, employment and 
import figures for each subject facility for periods 2001, 2002, 
January through March 2002 and January through March 2003. For each 
subject facility, the firm completed a Business Confidential Data 
Request (BCDR) form which required sales, production, employment, 
imports, and production shift figures for specified time periods. The 
subject firm also provided detailed and comprehensive responses to an 
extensive questionnaire as well as clarification of their responses on 
specific matters during follow-up inquiries.
    A careful review of the company's submissions reveals that the 
Armour Facility handled a wide variety of operations during the 
relevant period, including administrative and accounting functions 
(such as billing, payroll, and human resources), sample production, 
label production, pattern/marker design, and product development. SAR 
249.
    During 2002, production planning and raw material management 
functions were reduced due to the installation and use of a new 
computer system, Apparel Business Solutions (ABS), and some 
administrative functions, such as billing, transferred to the parent 
company's corporate headquarters in Bristol, Pennsylvania. SAR 249. In 
2003, the ``Print Shop'' moved to Mexico and all production planning 
and raw material management functions were shifted to New York and/or 
California prior to its closure on March 3, 2003. SAR 232, 238, 249
    While patterns and markers were created at Armour Facility, the 
design process did not constitute production of an article. The 
patterns and markers were custom-designed for specific uses and were 
created by using special computer programs. The patterns and markers 
were neither stored nor transmitted in a physical medium, but existed 
in an electronic form (such as a file on a computer server or an 
electronic mail); were electronically manipulated; and were sent 
exclusively via electronic mail. SAR 124, 127, 213, 214, 215. 
Therefore, pattern and marker design were services and, thus, the 
Department does not consider these patterns and markers to be articles, 
for TAA purposes.
    After the ``Print Shop'' operation shifted to Mexico, the only 
production activities remaining at the Armour Facility was sample 
production. SAR 274. According to the BCDR for the Armour Facility, 
sample production did not shift abroad. Rather, sample production 
shifted to California. SAR 216, 282.
    An analysis of the BCDR for the Armour Facility shows that both 
subject company imports and subject company reliance upon imports 
declined during the relevant period. Subject company production 
decreased slightly in 2002 from 2001 levels while subject company 
imports decreased significantly in 2002 from 2001 levels.
    Further, the remand investigation considered data for the first 
quarter of 2003. The Department found that the decline in imports 
during January through March 2003 from January through March 2002 
levels was more than triple the decline in 2002 from 2001 levels. SAR 
217. The decline in subject company production during January through 
March 2003 is attributable to the shift of production to California. 
SAR 236, 282. During the same time period, the decrease in subject 
company imports was even more significant than the decline in 
production. SAR 217. Further, since the product samples are used 
internally by the subject firm, rather than provided to customers, a 
customer survey was not conducted.
    In addition, the remand investigation found that repair work was 
performed, infrequently, at the Armour Facility. SAR 273, 274. The 
Department has consistently maintained that repair work does not 
constitute production, since the activity merely returns an item to its 
original condition. Hence, repair is a service. In any event, the 
repair work was done at irregular intervals and at insignificant 
levels, making it irrelevant to the case at hand because it cannot be a 
basis for certification.
    The Sun Warehouse Facility was the only warehouse until April 2000, 
when Goodyear Distribution facility opened. SAR 209. Both facilities 
perform shipping and handling activities (receiving, stocking, packing 
and labeling, billeting, loading, quality control, etc.) and 
administrative activities related to warehousing and distribution. SAR 
209, 211. Because warehousing and repair do not constitute production, 
both the Sun Warehouse and the Goodyear Distribution facilities had no 
sales, production, imports, and shift figures to report in their BCDRs. 
SAR 222, 227. Again, it is irrelevant that repair work was occasionally 
performed at the warehouses (See SAR 210) or outsourced to another 
local company (See SAR 274) because repair work is a service. Sun 
Warehouse Facility closed on March 31, 2003 and the Goodyear 
Distribution facility closed on August 18, 2003. SAR 196.
    During the remand investigation, the Department repeatedly 
requested information from the petitioners. In response, the 
petitioners made two substantive submissions. First, in an October 1, 
2004 letter, the petitioners stated that workers traveled to Mexico to 
provide training to the workers there; that repair work shifted to 
Mexico; and that marker and sample production are shifting to Mexico. 
SAR 247. Second, in

[[Page 3737]]

an affidavit dated November 24, 2004, a petitioner stated that she was 
separated from the subject company on February 3, 2002; that she worked 
in the sample and trim departments; that workers were sent to train 
workers in Mexico; that workers came from Mexico for training from 2000 
through 2002; and that production equipment moved to Mexico. SAR 280.
    Although the October 1, 2004 letter did not provide dates of the 
alleged activities and the November 24, 2004 affidavit was provided by 
a worker who is not, in fact, a member of the subject worker group (she 
was separated prior to February 11, 2002), the Department nonetheless 
inquired into whether any of the alleged actions took place during the 
relevant period in case they could constitute a basis for TAA 
certification.
    According to the company's submissions, workers in Mexico were 
trained in preparation for the shift of the ``Print Shop'' label 
production, trained to use the new ABS computer system to improve 
production operations, and trained to design patterns and markers. SAR 
212, 232. As previously stated, the Department considers the design of 
patterns and markers to be service work, not the production of an 
article, so any shift of such design work would be irrelevant. Further, 
a marker design facility was not created in Mexico until March 2004, 
well after the relevant period. SAR 242.
    As directed, the Department also investigated whether the subject 
workers could be certified as either service workers or secondarily-
impacted workers and determined that there was no activity at the 
subject facilities that could constitute a basis for certification 
under either category.
    A careful review of the company's submissions shows that, during 
the relevant period, the El Paso, Texas facilities did not support a 
domestic production facility negatively-impacted by increased imports 
or a shift of production abroad and, therefore, do not qualify as a 
service company. Further, since none of the three El Paso, Texas 
facilities supplied components to or assemble and/or finish products 
for an affiliated domestic production facility negatively-impacted by 
increased imports or a shift of production abroad during the relevant 
period, the petitioners do not qualify as a secondarily-affected worker 
group. Rather, the three El Paso, Texas facilities supported a 
production facility located in Mexico. SAR 237, 274.
    In summary, the remand investigation has enabled the Department to 
determine comprehensively that (1) patterns and markers were generated 
and transmitted electronically; (2) production of samples was shifted 
from the Armour Facility to California, not to Mexico; (3) there has 
been no importation of samples; (4) samples have been produced for 
internal use only and have no impact on imports; and (5) there has been 
no production of jeans by the subject facilities since 2000 (prior to 
the relevant period).

Conclusion

    As the result of the findings of the investigation on remand, I 
affirm the original notice of negative determination of eligibility to 
apply for adjustment assistance for workers and former workers of Sun 
Apparel of Texas, Inc., Armour Facility, El Paso, Texas (TA-W-51,120), 
Sun Warehouse Facility, El Paso, Texas (TA-W-51,120A), and Goodyear 
Distribution, El Paso, Texas (TA-W-51,120B).

    Signed at Washington, DC this 16th day of December 2004.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
 [FR Doc. E5-258 Filed 1-25-05; 8:45 am]
BILLING CODE 4510-30-P