[Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012)]
[Notices]
[Pages 8284-8287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3324]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-72,949]


Western Digital Technologies, Inc., Hard Drive Development 
Engineering Group Irvine (Formerly at Lake Forest), CA; Notice of 
Negative Determination on Remand

    On November 22, 2011, the U. S. Court of International Trade 
(USCIT) granted the Department of Labor's second request for voluntary 
remand to conduct further investigation in Former Employees of Western 
Digital Technologies, Inc. v. United States Secretary of Labor (Court 
No. 11-00085).
    On November 25, 2009, former workers of Western Digital 
Technologies, Inc., Hard Drive Development Engineering Group, Lake 
Forest, California (subject firm) filed a petition for Trade Adjustment 
Assistance (TAA) on behalf of workers at the subject firm. AR 1. The 
worker group covered under this petition (subject worker group) 
consists of workers engaged in the supply of engineering functions for 
the development of hard disk drives.
    The initial investigation revealed that the subject firm had not 
shifted abroad the supply of services like or directly competitive with 
those provided by the subject worker group, that the subject firm had 
not acquired such services from abroad, and there had not been an 
increase in imports of articles or services like or directly 
competitive with those produced or supplied by the subject firm. AR 72-
77. Further, the initial investigation revealed that the subject firm 
could not be considered a Supplier or Downstream Producer to a firm 
that employed a worker group eligible to apply for TAA. AR 72-77. On 
August 5, 2010, the Department of Labor (Department) issued a Negative 
Determination regarding eligibility to apply for TAA applicable to 
workers and former workers of the subject firm. The Department's Notice 
of Negative Determination was published in the Federal Register on 
August 23, 2010 (75 FR 51849). AR 82.
    The group eligibility requirements for workers of a Firm under 
Section 222(a) of the Act, 19 U.S.C. 2272(a), can be satisfied if the 
following criteria are met:

    (1) A significant number or proportion of the workers in such 
workers' firm have become totally or partially separated, or are 
threatened to become totally or partially separated; and
    (2)(A)(i) The sales or production, or both, of such firm have 
decreased absolutely;
    (ii)(I) Imports of articles or services like or directly 
competitive with articles produced or services supplied by such firm 
have increased;
    (II) Imports of articles like or directly competitive with 
articles--
    (aa) Into which one or more component parts produced by such 
firm are directly incorporated, or
    (bb) Which are produced directly using services supplied by such 
firm, have increased; or
    (III) Imports of articles directly incorporating one or more 
component parts produced outside the United States that are like or 
directly competitive with imports of articles incorporating one or 
more component parts produced by such firm have increased; and
    (iii) The increase in imports described in clause (ii) 
contributed importantly to such workers' separation or threat of 
separation and to the decline in the sales or production of such 
firm; or
    (B)(i)(I) There has been a shift by such workers' firm to a 
foreign country in the production of articles or the supply of 
services like or directly competitive with articles which are 
produced or services which are supplied by such firm; or
    (II) Such workers' firm has acquired from a foreign country 
articles or services that are like or directly competitive with 
articles which are produced or services which are supplied by such 
firm; and
    (ii) The shift described in clause (i)(I) or the acquisition of 
articles or services described in clause (i)(II) contributed 
importantly to such workers' separation or threat of separation.

    By application dated September 14, 2010, the petitioning workers 
requested administrative reconsideration of the Department's negative 
determination. AR 83. In the request, the petitioners alleged that 
increased imports of articles that were produced using the services 
supplied by the subject worker group contributed importantly to worker 
separations at the subject firm. AR 83.
    To investigate the petitioners' claim, the Department issued a 
Notice of Affirmative Determination Regarding Application for 
Reconsideration on October 7, 2010. AR 84. The Department's Notice of 
Affirmative Determination was published in the Federal Register on 
October 25, 2010 (75 FR 65517). AR 286.
    During the reconsideration investigation, the Department obtained 
information from the subject firm regarding the petitioners' claims and 
collected data from the U.S. International Trade Commission regarding 
imports of articles like or directly competitive with those produced 
using the services supplied by the subject worker group. AR 89-125, 
126, 127.
    Based on the findings of the reconsideration investigation, the 
Department concluded that worker separations at the subject firm were 
not caused by a shift in services abroad or increased imports of 
services like or directly competitive with those provided by the 
subject worker group. AR 89-125. Further, the reconsideration 
investigation revealed that the subject firm did not import articles 
like or directly competitive with those produced directly using 
services supplied by the subject worker group, AR 89-125, and U.S. 
aggregate imports of articles like or directly competitive with hard 
disk drives declined in the relevant time period. AR 126, 134-136, 137, 
141-142, 143-145. Consequently, the Department issued a Notice of 
Negative Determination on Reconsideration on February 4, 2011. AR 129-
130. The Department's Notice of determination was published in the 
Federal Register, on February 24, 2011 (75 FR 10403). AR 287.

First Remand Investigation

    On April 11, 2011, Plaintiffs filed a complaint with the USCIT in 
which they claimed that their separations were directly caused by the 
subject firm's foreign operations and increased imports of hard disk 
drives, and provided information in support of these claims. The 
Plaintiffs stated that the subject firm trained foreign engineers at 
the Lake Forest, California facility, who then returned to their 
respective countries to perform the same services as the Plaintiffs, 
and provided a list of job announcements for engineers posted by the 
subject firm in Malaysia at the same time as the domestic layoffs. 
Further, the Plaintiffs provided import statistics pertaining to hard 
disk drives, specifically pointing to increased imports of these 
articles from Malaysia.
    In a letter submitted to the Department on June 13, 2011, 
Plaintiffs provided additional information

[[Page 8285]]

surrounding the layoffs of the workers, including supporting 
information relating to the allegations made in the complaint to the 
USCIT. AR 154-182. Plaintiffs provided a list of several engineering 
positions and functions that allegedly shifted to Asia from the Lake 
Forest, California facility and included statements on how engineering 
functions were transferred abroad, presenting details regarding the 
training of foreign workers who returned overseas to perform the same 
functions as Plaintiffs. AR 154-182.
    The Department requested voluntary remand to address the 
allegations made by the Plaintiffs, to determine whether the subject 
worker group is eligible to apply for TAA under the Trade Act of 1974, 
as amended (hereafter referred to as the Act), and to issue an 
appropriate determination.
    At the time of the first remand investigation, the subject firm was 
in the process of transferring the corporate headquarters facility from 
Lake Forest, California to Irvine, California. AR 213. During the first 
remand investigation, the Department confirmed all previously collected 
information, obtained additional information from the subject firm 
regarding domestic and foreign operations, solicited input from the 
Plaintiffs, and addressed all of Plaintiffs' allegations.
    The information the Department received during the first remand 
investigation contained more detail regarding the operations of the 
subject firm domestically and abroad. In order to determine whether 
there was a shift abroad of the engineering services provided by the 
subject worker group, the Department had to first determine whether the 
subject firm employs engineers at its facilities in Asia who supply 
engineering services like or directly competitive with those supplied 
by the subject worker group.
    The first remand investigation revealed that the business model of 
the subject firm is to develop new products domestically and carry out 
the manufacturing at its facilities overseas. AR 152, 212-218, 228-231, 
244, 245-246, 271-279. After the design and development of the products 
is provided by the subject worker group, the production takes place at 
the foreign facilities--a process that the subject firm asserted did 
not change during the relevant time period for the investigation of 
this petition. AR 152, 212-218, 228-231, 244, 245-246, 271-279.
    Although Plaintiffs declared that the subject firm shifted abroad 
the supply of engineering services which are like or directly 
competitive with those provided by the subject worker group (AR 154-
182), based upon the data collected during the first remand 
investigation, the Department determined that the engineers employed at 
foreign facilities of the subject firm and the engineers employed at 
domestic facilities of the subject firm do not perform like or directly 
competitive functions. AR 152, 212-218, 228-231, 244, 245-246, 271-279. 
Because of the stage of production at which the workers' functions are 
performed, the work performed by the engineers domestically and the 
engineers abroad is not interchangeable; hence, the activities of the 
subject firm at the manufacturing facilities overseas could not have 
impacted the subject worker group. AR 152, 212-218, 228-231, 244, 245-
246, 271-279.
    According to the subject firm, the engineering work performed 
abroad not only requires the engineers to be present at the 
manufacturing location, but is also different and less complex than the 
development work performed by the domestic engineers. AR 152, 212-218, 
228-231, 244, 245-246, 271-279. Therefore, the Department determined 
that the work performed overseas did not contribute importantly to 
worker separations domestically because the services are not like or 
directly competitive.
    Regarding Plaintiffs' allegation that the subject firm brought 
foreign workers to be trained at the Lake Forest, California facility, 
the subject firm asserted that the firm's business model calls for the 
development of products domestically and for manufacturing at foreign 
facilities. AR 152, 212-218, 228-231, 244, 245-246, 271-279. The 
subject firm also stated that the foreign engineers must be 
knowledgeable about the new products in order to carry out their work; 
hence, they visit the domestic facilities of the subject firm in order 
to train on the new products to oversee the production at the 
manufacturing facilities. Given the nature of these visits, the 
training of foreign workers in the U.S. does not show that the roles of 
the domestic and foreign engineers are interchangeable. AR 152, 212-
218, 228-231, 244, 245-246, 271-279.
    Plaintiffs submitted a list of job announcements posted by the 
subject firm in Malaysia. AR 154-182. The subject firm maintained that 
at the time of the domestic reduction in force (RIF) in late 2008 and 
early 2009, hiring efforts on a global level were suspended. AR 208-
218. The Department collected employment numbers of engineers at Lake 
Forest, California, Malaysia, and Thailand. AR 271-285. The numbers 
revealed that employment of engineers decreased from December 2008 to 
June 2009, but started to increase at all three locations in late 2009. 
AR 241, 242, 243, 271-285. Based on the findings pertaining to the work 
performed by the domestic and foreign engineers, the Department did not 
consider the services of the domestic engineers like or directly 
competitive with those provided by the engineers at the production 
facilities overseas. Therefore, the employment levels in these groups 
were not pertinent to the outcome of the investigation.
    Plaintiffs also alleged that increased imports of hard disk drives 
contributed to worker separations. AR 154-182. Aggregate U.S. import 
data of hard disk drives or articles like or directly competitive 
showed a decline in the period under investigation. Nonetheless, the 
Department determined that increased imports of articles could not have 
contributed to worker separations because the subject firm develops 
hard disk drives domestically and manufactures them at the facilities 
in Asia. Therefore, an increase in imports of articles could not have 
contributed to a decline in the engineering services supplied by the 
subject worker group.
    For Section 222(a)(A)(ii)(II)(bb) of the Act to be met, imports of 
articles like or directly competitive with articles which are produced 
directly using services supplied by such firm, must have increased. 
Because the subject firm does not produce articles like or directly 
competitive with hard disk drives domestically, this criterion was not 
met.
    Based on careful consideration of all previously submitted 
information and new facts obtained during the first remand 
investigation, the Department determined that the subject worker group 
did not meet the eligibility criteria of the Act and issued a Negative 
Determination on Remand on September 23, 2011. AR 301. The Notice of 
Determination was published in the Federal Register on October 5, 2011 
(76 FR 61746). SAR 1.

Second Remand Investigation

    On October 25, 2011, one of the Plaintiffs filed comments with the 
USCIT regarding the negative remand determination. In the comments, the 
Plaintiff made new allegations, stating that the Department's 
determination was erroneous because engineers at the subject firm's 
foreign facilities provide engineering services like or directly 
competitive with those of the domestic engineers and that the subject 
firm manufactures hard disk drives domestically. In particular, the 
Plaintiffs alleged that the subject worker group

[[Page 8286]]

was engaged in activity related to the production of hard disk drives--
``white label'' pilot products--and attached seven exhibits.
    In response to the Plaintiffs' comments, the Department requested a 
second voluntary remand to review previously collected information and 
conduct further investigation to address the new allegations raised by 
the Plaintiff.
    The comments contained statements intended to support the 
Plaintiff's claim that engineers at the foreign facilities engage in 
design work and domestic engineers engage in production. The comments 
included a list of job vacancies at the subject firm's facilities in 
Asia for engineering positions involving production, design, and 
development work. In addition, the Plaintiff stated that during his 
employment with the subject firm, he provided services related to the 
domestic production of hard disk drives. Further, the Plaintiff claimed 
that he trained foreign engineers to perform design and development 
work, and asserted that the employment data collected by the Department 
during the first remand investigation demonstrated a shift of 
engineering services abroad. AR 241, 242, 243, 271-285. The comments 
highlighted that the subject firm manufactures hard disk drives 
domestically through a pilot, or prototype, hard disk drive production 
line, which produces hard disk drives for sale to customers and that 
the hard disk drives imported from Malaysia are like or directly 
competitive with the ones produced by Western Digital domestically. 
Lastly, the Plaintiff commented that the Department failed to collect 
import data of disk drives during the first remand investigation.
    In support of the allegations, the Plaintiff provided seven 
exhibits. The first exhibit was a statement, which included the 
Plaintiff's position description at the subject firm and information 
intended to establish that the Department had based its negative 
determinations on erroneous findings that (1) the work of the subject 
firm's foreign and domestic engineers was not interchangeable and that 
(2) the subject firm did not produce hard disk drives, domestically.
    In the first exhibit, the Plaintiff pointed to the list of 
positions, submitted with the initial complaint to the USCIT, of 
engineering services that appear to relate to production and design 
work and one position advertised by Western Digital in Malaysia that 
called for co-development of new product ``with U.S. counterpart''. The 
Plaintiff compared his job duties to those advertised in Malaysia in an 
effort to show that the duties overlapped. The Plaintiff added that he 
was engaged in New Product Integration (NPI) work, which was considered 
production work. The Plaintiff also stated that he trained foreign 
engineers to perform the same development functions that he performed 
during his employment with the subject firm, noting that he worked 
directly with a foreign engineer who returned to the subject firm's 
Malaysian facility to perform the same work. In addition, the Plaintiff 
claimed that the subject firm produces hard disk drives domestically 
for sale to customers and that much of its pilot hard disk drive 
production was transferred to Asia, along with the associated 
engineering services.
    In addition, the Plaintiff stated that the majority of the job 
vacancies identified in the complaint to the USCIT involved production 
and development work. However, according to the position descriptions, 
none of the vacant positions involved the design or development of hard 
disk drives. Further, careful examination of the duties listed for each 
position establishes that the work of these engineers relates to 
manufacturing. For example, positions include duties such as ``Willing 
to travel to Asia QC Manufacturing-Drive'' and ``Communicate with US 
counterpart to resolve factory issues.'' The subject firm confirmed 
that the engineering teams in Asia have never performed new product 
design and their duties extend to sustaining production. AR 152, 212-
218, 228-231, 244, 245-246, 271-279.
    Exhibit 1 also contained additional Asian job postings. However, 
those vacancies were posted in October 2011, which is almost three 
years after the reduction in force from which this proceeding arose. 
Since that time, employment at the subject firm has increased, both 
domestically and abroad. AR 241, 242, 243, 271-285. Therefore, the 
posting of these positions, almost three years after worker separations 
occurred, could not have contributed to the layoffs.
    The Plaintiff stated that during his employment with Western 
Digital he engaged in work related to domestic production of hard disk 
drives. Based on the Plaintiff's position description in Exhibit 1, the 
Plaintiff had no work duties related to production, other than program 
management support, which did not specify location. Additionally, the 
Plaintiff was employed at the headquarters facility of the subject 
firm, where no production lines are operated. (Domestic manufacturing 
and the role of the subject worker group in that production are 
discussed below.)
    The Plaintiff also stated that the Department had ignored 
employment data which demonstrated a shift in engineering services 
abroad. Because, as determined during the initial remand investigation, 
the functions of the subject worker group were not like or directly 
competitive with those of the engineers at Western Digital's foreign 
facilities, the employment data in question could not demonstrate that 
a relative increase in employment abroad contributed to layoffs at the 
subject facility. AR 292-300. During the second remand investigation, 
the subject firm provided information which confirmed that domestic 
engineers are solely responsible for the development and design of hard 
disk drives. SAR 20.
    The Plaintiff also claimed that the Department failed to collect 
import data of hard disk drives. As explained in the first remand 
determination, above, because there is no domestic production of these 
products (see below for more information on domestic production), any 
increases in imports of hard disk drives would not have contributed to 
layoffs in the subject worker group. As such, import statistics of hard 
disk drives were irrelevant to the determination.
    During the second remand investigation, the Department contacted 
the subject firm to obtain more information regarding the Plaintiff's 
involvement in any domestic pilot hard disk drive production. SAR 6. In 
response to the claim that the Plaintiff was part of the New Product 
Integration team (NPI) and provided work related to domestic 
production, the subject firm responded that the NPI team handles the 
initial design work before mass production takes place in Asia. SAR 8, 
20, 26. The NPI team also administers the pilot hard disk drive 
production at the San Jose, California facility of the subject firm 
(see below for more information on domestic production). As this team 
plays a role in validating the design of a product before production, 
this part of the process is considered part of the design and 
development work. SAR 8, 20, 26. Therefore, the Department has 
concluded that Exhibit 1 does not support a finding that the plaintiffs 
have met the criteria for TAA eligibility.
    The second exhibit consisted of a list of 17 positions posted by 
Western Digital in Malaysia. The listings are dated October 19, 2011, 
which is almost three years after the separations in the subject worker 
group were announced in December 2008. Close examination of the 
listings showed that only one

[[Page 8287]]

position called for ``co-develop new product and channel feature with 
U.S. counterpart''. In any event, the position description does not 
specify that the ``co-development'' refers to hard disk drives. None of 
the other positions listed call for development work of hard disk 
drives or any other products. Also, out of the 17 listings, only three 
contain the words ``develop'' or ``design'' and these three positions 
call for the development and design of software and code applications, 
not hard disk drives, which the subject firm has ascertained is the 
function of the domestic engineers. AR 152, 212-218, 228-231, 244, 245-
246, 271-279 and SAR 8, 20, 26. Also, none of the positions provided by 
the Plaintiffs with the complaint contained the words ``develop'' or 
``design''.
    The third exhibit consisted of a job announcement and position 
description of ``Western Digital Senior Engineer/Staff Engineer--Asia 
R&D--Advance Read Channel Engineering''. The description of this 
position does not mention new product design or any related duties. The 
description, however, mentions ``failure analysis'', which is a duty 
that the subject firm has explained that occurs both domestically and 
in Asia, depending on the life stage of a product. AR 208, 292 and SAR 
8, 20, 26. Additionally, this position was posted in August 2011, more 
than two and a half years after the RIF was announced at the subject 
firm.
    The fourth exhibit consisted of a position description of a Product 
Engineer. This position announcement mentions that the position may 
include failure analysis and research and development but it does not 
include a specific description of duties. The work duties listed in 
this announcement are consistent with those described by the subject 
firm. In particular, the subject firm has stated that the work of the 
engineers overseas is designed to carry out the manufacturing process 
and sustain the work performed on existing hard disk drives. AR 152, 
212-218, 228-231, 244, 245-246, 271-279.
    The fifth exhibit consisted of the profile, as listed on an online 
social network, of an engineer employed at one of the subject firm's 
facilities in Asia. Although the profile shows that the engineer was 
employed at the Lake Forest, California facility and then transferred 
to Malaysia, the profile does not include a description of job duties 
performed at either location.
    The sixth exhibit consisted of Western Digital's career 
opportunities page from the subject firm's Web site which shows that 
there are manufacturing facilities in California. As the findings of 
the first remand investigation showed, the subject firm operates two 
domestic manufacturing sites in California. The articles produced at 
the domestic locations are component parts used for internal purposes. 
The second remand investigation found that one of the domestic 
facilities also manufactures pilot hard disk drives (see below).
    The last exhibit consisted of the subject firm's company profile 
from an employment Web site. The profile does not list any specifics 
related to positions domestically or abroad but mentions that the 
subject firm operates manufacturing facilities in California. The 
domestic manufacturing operations of the subject firm are addressed 
above.
    The second remand investigation produced further explanation of the 
process by which the subject firm produces hard disk drives. As 
discussed above, the subject worker group designs the hard disk drives 
domestically. Before the design is sent overseas for mass production, 
the subject firm manufactures prototype hard disk drives to ensure that 
the new designs are functional. SAR 8, 20, 26. The subject firm stated 
that prototype creation is part of the design of hard drives because a 
prototype must be created, tested, and validated before sending the 
product for mass production. SAR 8, 20, 26.
    Although the pilot hard disk drives produced are used mainly for 
development purposes, the subject firm operates a White Label program 
via which it sells a portion of the pilot hard disk drives externally. 
SAR 8, 20, 26. The subject firm has three prototype production lines 
located in San Jose, California, Malaysia, and Thailand. SAR 20, 26. In 
response to Plaintiff's allegation that prototype production has 
shifted abroad, the subject firm substantiated that no domestic 
production of the pilot drives has shifted overseas in the period under 
investigation. SAR 20, 26.
    The Department collected information from the subject firm related 
to the size of each operation and the number of prototypes that are 
sold. The numbers revealed that the domestic production of the pilot 
drives constitutes a small number of the prototypes sold under the 
White Label program and a negligible portion of overall hard disk drive 
production. SAR 8, 20, 26.
    It is well-established that a negligible shift of production to a 
foreign country cannot be a basis for TAA certification. In Barry 
Callebaut USA, Inc., Van Leer Division, Jersey City, New Jersey (TA-W-
37,000; USCIT No. 03-1113; February 10, 2004), the Department 
determined that a three percent shift of production was not sufficient 
basis to satisfy the criteria for certification. Appling the same 
analysis in the present case, the Department has determined that 
because the pilot hard disk drive production at the subject firm is not 
significant relative to overall hard disk drive production, any trade 
impact on the pilot hard disk drive production line could not have 
contributed to separations in the subject worker group.
    Upon review of the facts collected during the earlier 
investigations and the additional information procured through the 
second remand investigation, the Department has determined that the 
services provided by engineers at the subject firm's Asian facilities 
are not like or directly competitive with the services of the engineers 
located at the subject facility. Additionally, the domestic production 
of hard disk drives is de minimus relative to the subject firm's 
overall operations, such that any trade impact could not have 
contributed to worker separations at the subject firm. Accordingly, the 
Department reaffirms that the petitioning workers have not met the 
eligibility criteria of section 222(a) of the Act.

Conclusion

    After careful consideration of the record, I affirm the original 
notice of negative determination of eligibility to apply for worker 
adjustment assistance applicable to workers and former workers of 
Western Digital Technologies, Inc., Hard Drive Development Engineering 
Group, Irvine (formerly at Lake Forest) California.

    Signed at Washington, DC, this 23rd day of January, 2012.
Del Min Amy Chen,
Certifying Officer, Office of Trade Adjustment Assistance.
[FR Doc. 2012-3324 Filed 2-13-12; 8:45 am]
BILLING CODE 4510-FN-P