[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Notices]
[Pages 45438-45439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4211]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-55,495]


Tesco Technologies, LLC, Headquarters Office, Auburn Hills, 
Michigan; Notice of Negative Determination on Remand

    On May 25, 2005, the United States Court of International Trade 
(USCIT) granted the Department of Labor's motion for voluntary remand 
in Former Employees of Tesco Technologies, LLC v. United States (Court 
No. 05-00264).
    In the August 19, 2004 petition, three workers identified the 
subject company as Tesco Engineering, Headquarters, Auburn Hills, 
Michigan and the article produced as ``designs for tooling and 
production lines for General Motors automotive assembly plants.'' The 
petitioners alleged that Tesco Engineering was shifting production to a 
foreign country (India).
    During the investigation, it was revealed that Tesco Engineering 
manufactured production and assembly line equipment, while workers at 
Tesco Technologies, LLC (``Tesco Technologies''), a subsidiary of Tesco 
Engineering, created mechanical design drawings which are used to build 
machinery for the production of automotive parts. Given that the 
petitioners created designs and did not produce equipment, the 
Department identified Tesco Technologies as the proper subject company.
    Because the Department considered design work not to be production 
work, the designers of Tesco Technologies could be certified only if 
they supported an affiliated, TAA-certifiable, domestic, production 
facility. Although Tesco Technologies' designs accounted for an 
insignificant portion of the equipment produced at Tesco Engineering, 
the Department nonetheless fully investigated whether during the 
relevant period, there were increased imports of production/assembly 
equipment or a shift of production from Tesco Engineering to overseas.
    The expanded investigation revealed that Tesco Engineering neither 
shifted production to a foreign country nor imported any equipment 
during the relevant period. Further, a survey of Tesco Engineering's 
major declining customers revealed that, during the relevant period, 
none of the customers increased their import purchases while decreasing 
their purchases from the subject firm.
    On September 27, 2004, the Department issued a negative 
determination regarding workers' eligibility to apply for TAA and ATAA 
for those workers of Tesco Technologies, LLC, Headquarters Office, 
Auburn Hills, Michigan. The negative determination was based on the 
findings that there was neither an increase in imports of equipment by 
Tesco Engineering or its major declining customers, nor a shift of 
production overseas by Tesco Engineering. The Department published the 
Notice of determination in the Federal Register on October 26, 2004 (69 
FR 62460).
    By application dated October 22, 2004, the petitioner requested 
administrative reconsideration of the Department's negative 
determination. Because factual discrepancies were identified during the 
careful review of the request for reconsideration and the previously-
submitted documents, the Department issued a Notice of Affirmative 
Determination Regarding Application for Reconsideration for workers of 
the subject company on December 7, 2004. The notice was published in 
the Federal Register on December 20, 2004 (69 FR 76017).
    In the request for reconsideration, the petitioner identified the 
subject company as ``Tesco Technologies, LLC, Auburn Hills, Michigan'' 
and asserted that ``we the petitioners are connected to General Motors 
tooling only,'' reiterated that designs are a product (``the physical 
drawings themselves should apply as a downline manufactured product 
required to build the tooling'' and designers are ``directly connected 
to the manufacturing process'') and inferred that designers are de 
facto production workers producing automobile parts for General Motors. 
The petitioner also inferred that the subject company's major customer, 
General Motors, had outsourced work to India.
    During the reconsideration investigation, the Department contacted 
a Tesco Technologies official, the General Motors officials identified 
by the petitioner, and the General Motors official who supervised the 
design contract at issue.
    As a result of the reconsideration investigation, the Department 
confirmed that the petitioners use application software, such as 
Unigraphics, to develop tooling designs which are used to build 
equipment for the production of automobile parts for General Motors. 
The design drawings are developed at Tesco Technologies, Auburn Hills, 
Michigan and sent to the customer via electronic means (such as the 
Internet) and tangible means (such as CD-Rom and paper), with the mode 
of delivery to be determined by the customer.
    According to one General Motors official identified by the 
petitioner, General Motors did not outsource design work to any foreign 
source. Another General Motors official contacted by the Department 
stated that design work was awarded to another domestic company and 
that some design work was moved in-house.
    On January 11, 2005, the Department issued a Notice of Negative 
Determination Regarding Application for Reconsideration which provided 
that there was neither a shift of production abroad by Tesco 
Technologies nor any outsourcing of design work overseas by General 
Motors. On January 21, 2005, the notice was published in the Federal 
Register (70 FR 3228).
    By letter dated February 8, 2005, the petitioners appealed to the 
USCIT for judicial review. On May 25, 2005, the USCIT granted the 
Department's motion for voluntary remand to clarify the Department's 
basis for the negative determination on reconsideration and to request 
additional information in the

[[Page 45439]]

Department's efforts to clarify the reasons for the previous 
determinations.
    In the request for judicial review, the petitioners allege that at 
least as early as October 2002, engineers were brought in from India to 
train at Tesco Technologies. After about six months, the engineers were 
sent back to India to a General Motors facility and that ``work is sent 
over to India via satellite in the evening and sent back for check and 
inspection in the morning'' (inferring that designs were being 
imported).
    Even if petitioners' allegation of work shifting to India is 
correct, in order to meet the statutory criteria for TAA certification 
as primarily-affected workers, (1) a significant portion or number of 
workers at the subject company must be separated or threatened with 
separation, and (2) there must be either (i) an increase in imports of 
articles like or directly competitive with those produced by the 
subject worker group (section 222(a)(2)(A)) or (ii) a shift in 
production of articles like or directly competitive with those produced 
by the subject worker group (section 222(a)(2)(B)).
    With regards to the immediate case, it has been shown that at least 
five percent of workers at Tesco Technologies were separated during the 
relevant period. Thus, the first criterion for TAA certification has 
been met.
    The only issues at hand, therefore, are whether there was a shift 
of production abroad of articles like or directly competitive with 
those produced by Tesco Technologies during the relevant period and 
whether there were increased imports of articles like or directly 
competitive with those created at Tesco Technologies during the 
relevant period.
    Under the Department's interpretation of ``like or directly 
competitive,'' (29 CFR 90.2) ``like'' articles are those articles which 
are substantially identical in inherent or intrinsic characteristics 
and ``directly competitive'' articles are those articles which are 
substantially equivalent for commercial purposes (essentially 
interchangeable and adapted to the same uses), even though the articles 
may not be substantially identical in their inherent or intrinsic 
characteristics.
    During the remand investigation, the Department confirmed that the 
designs created by the subject workers are not mass-produced but rather 
adhere to the customer's specifications and accommodate the specialized 
processes or program needs dictated by the customer. Accordingly, there 
are no articles which are ``like'' or ``directly competitive'' to those 
designs created by Tesco Technologies because each design is a unique 
engineering solution which is created for the sole purpose of 
satisfying a specific customer's particular need. Thus, there are no 
articles which, for commercial purposes, are essentially 
interchangeable or can be adapted to the same use as a Tesco 
Technologies design.
    It is obvious that a design for a drill is not interchangeable with 
a design for newspaper-folding machine, and a design for a taffy-
pulling machine can not be adapted to the same use a bomb-defusing 
robot. In the same manner, a design of a drill with a speed of 7 
inches/second, a weight of 55 pounds, and a torque rating of 120 
inches/pound could not be substituted for a design of a drill with a 
speed of 20 inches/second, a weight of 60 pounds, and a torque rating 
of 125 inches/pound. If a customer requested a design for a drill with 
the former specifications, the design with latter specifications would 
clearly not suffice for the customer's purpose. As the Court recently 
found in Former Employees of Murray Engineering, Inc. v. Elaine L. 
Chao, United States Secretary of Labor, articles that are ``neither 
interchangeable with nor substitutable'' for the petitioner's designs 
are not considered directly competitive. 2005 WL 1527642 (CIT 2005) 
(citing Machine Printers & Engravers Ass'n v. Marshall, 595 F.2d 860, 
862 (D.C. Cir. 1979).
    Because each Tesco design is custom made to satisfy a customer's 
specific requirements and is an inherently unique product, it cannot be 
considered ``like'' or ``directly competitive'' with any other designs; 
and therefore, neither section 222(a)(2)(A) nor section 222(a)(2)(B) of 
the Trade Act, as amended, can been satisfied.
    The Department has determined that the criteria set forth in the 
Trade Act of 1974, as amended, for TAA certification has not been met. 
Further, since the workers are denied eligibility to apply for TAA, the 
workers cannot be certified for ATAA, pursuant to section 246 of the 
Trade Act of 1974, as amended.

Conclusion

    After reconsideration on remand, I affirm the original notice of 
negative determination of eligibility to apply for adjustment 
assistance for workers and former workers of Tesco Technologies, LLC, 
Headquarters Office, Auburn Hills, Michigan.

    Signed in Washington, DC this 25th day of July 2005.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E5-4211 Filed 8-4-05; 8:45 am]
BILLING CODE 4510-30-P