[Federal Register Volume 70, Number 123 (Tuesday, June 28, 2005)]
[Notices]
[Pages 37114-37115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3352]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-55,333]


Gateway Country Store, Whitehall Mall, Whitehall, PA; Notice of 
Negative Determination on Remand

    The United States Court of International Trade (USCIT) granted the 
Department of Labor's motion for voluntary remand for further 
investigation in Former Employees of Gateway Country Stores, LLC. v. 
Elaine L. Chao, United States Secretary of Labor (Court No. 04-00588) 
on January 3, 2005.
    On August 5, 2004, the Department of Labor (Department) issued a 
negative determination regarding eligibility to apply for Trade 
Adjustment Assistance (TAA) for the workers of Gateway Country Stores, 
LLC, Whitehall Mall, Whitehall, Pennsylvania (hereafter ``the subject 
facility''). The negative determination was based on the 
investigation's finding that the workers at the subject facility were 
engaged in retail sales of computers and providing technical support to 
buyers, and thus, did not produce an article in accordance with Section 
222 of the Trade Act of 1974. On August 20, 2004, the Notice of 
Negative Determination Regarding Eligibility to Apply for Worker 
Adjustment Assistance for the subject facility was published in the 
Federal Register (69 FR 51715).
    In a letter dated September 9, 2004, the petitioner requested 
administrative reconsideration of the Department's negative 
determination. The Department affirmed its finding that the workers of 
the subject firm were not eligible to apply for TAA on the basis that 
they did not produce an article within the meaning of Section 222 of 
the Trade Act. In a letter dated September 16, 2004, the Department 
dismissed the petitioner's request for reconsideration. A Dismissal of 
Application for Reconsideration was issued on September 17, 2004. The 
Notice of Dismissal of Application for Reconsideration was published in 
the Federal Register on September 23, 2004, (69 FR 57091).
    By letter dated November 18, 2004, the petitioner requested 
judicial review by the USCIT. In that letter, the petitioner asserts 
that the workers produce an article since retail sales should be 
``recognized as an intrinsic service, bundled and inseparable from the 
Gateway computer'' and alleges that the workers' separations are due to 
a shift of production abroad.
    On January 3, 2005, the USCIT remanded the matter to the Department 
for further investigation of the subject workers' eligibility to apply 
for worker adjustment assistance benefits.
    During the remand investigation, the Department carefully reviewed 
previously submitted information, contacted Gateway officials to obtain 
new and additional information regarding the work done by the subject 
worker group and solicited information from the petitioners.
    The remand investigation revealed that the Gateway Country Stores 
(``Stores'') operated as a showroom and retail outlet for Gateway 
computers and related products, such as monitors, and as a service 
shop. (Supp. AR 93, 105) The Stores, which opened in the United States 
during the late 1990s, operated on the basis of a European marketing 
strategy. (Supp. AR 105) By April 9, 2004, Gateway had closed all the 
Stores. (Supp. AR 1, 100, 105)
    Customers would enter the Store and view/test-try the floor models. 
(Supp. AR 105) Customers could purchase prepackaged computers (``cash 
and carry'') or place an order with the Store's personnel. (Supp. AR 2, 
93) Prepackaged computers were shipped from an off-site manufacturing 
plant to a Store's inventory room, then sold ``as is'' to the customer. 
(Supp. AR 91, 93) Aside from display models, the prepackaged computers 
were not removed from their boxes by Store personnel. Orders placed by 
the customer are assembled and packaged by off-site Gateway 
manufacturing plants, then shipped directly from the plant to the 
customer's mailing address. (Supp. AR 8, 93) Customers who sought 
service or repair for their units brought them to the Stores after 
receiving it at the pre-selected mailing addresses. (Supp. AR 91, 93, 
96)
    In the January 31, 2005 submission, the petitioner asserts that 
workers at the subject facility ``were involved in the rework, upgrade, 
and final assembly of the pc solution * * * Most sales were customized 
orders with some piece of extra software, hardware, peripherals, or 
additional component as part of the solution'' and infers that the 
extra components transform the computer into something different and 
improved and, therefore, the workers are producing an article--the pc 
solution.
    In the February 22, 2005 submission, the petitioner asserts that 
the pc solution included ``continued customer service, and manufacture/
rework/upgrade tasks that are bundled with the sale.'' The petitioner 
also asserts that in many occasions, ``the service and sale then 
concluded with assembly of hardware and external components to 
construct the system desired, and the installation of a customer 
selected software systems * * * performed by store personnel.''
    According to Gateway company officials, workers at the subject 
facility did not install programs or devices unless it was post-sale 
and the customer brought the unit into a Store for service. (Supp. AR 
91) Further, a careful review of the position descriptions of the 
workers at the subject facility show that the workers were not engaged 
in production work but performed sales and marketing, sales/product 
training, store opening/closing, human resources, budgeting, customer 
service, inventory control, and management functions. (Supp. AR 8-41)
    The Department has consistently held that the performance of 
installation, repair and customer service is not production for the 
purposes of the Trade Act. Thus, the Department determines that 
petitioners do not produce an article within the meaning of the Trade 
Act of 1974.
    The petitioner also asserts that Gateway used the Stores to 
distinguish itself from its competitors in the personal computer market 
and that the Stores' closures were caused by the shift of computer 
production abroad.
    Contrary to the petitioner's allegations, Gateway's creation of the 
Stores was not to distinguish itself from its competitors as an effort 
to secure and/or maintain its market. Rather, the Stores were based on 
a revenue channel

[[Page 37115]]

that Gateway was already using in Europe and Gateway had hopes that its 
domestic Stores would also be profitable. (Supp. AR 105)
    Like other companies facing strained economic conditions, Gateway 
undertook a large-scale business plan to change its direction. 
Information obtained from Gateway show that the business plan started 
several years before the investigatory period (July 2003 through July 
2004), that the change of revenue sources was part of its dynamic 
business revolution, and that the Store closures were but one form of 
corporate cost-reduction, as was the independent decision to shift some 
manufacturing to foreign countries. The Stores were closed because they 
were unprofitable. (Supp. AR 3, 100, 101, 105, 106) Further, those 
functions which took place in the Stores were revised over several 
years and shifted to other domestic venues. For example, sales and 
customer service are handled via telephone (Supp. AR 1) and the 
Internet (Supp. AR 3); Gateway products are sold and serviced in 
national retail outlets. (Supp. AR 3, 101)

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 
Gateway Country Stores, LLC, Whitehall Mall, Whitehall, Pennsylvania.

    Signed at Washington, DC this 17th day of June 2005.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E5-3352 Filed 6-27-05; 8:45 am]
BILLING CODE 4510-30-P