Reference no: EM131706519

Question: Plymouth Stamping, an automotive parts company located in Michigan, decided to contract out its parts assembly operations in response to deteriorating sales and financial conditions. It notified the union on February 11, 2008, of its plans to subcontract. The notice stated that the operation would be discontinued as of February 15, that the assembly operation employees would be either laid off or transferred, and that the action was necessary "due to economic and business reasons." The union requested a meeting, which was held on February 14, 2008. At this meeting, the company explained that the action was the result of a number of factors, including declining sales, noncompetitive wage rates, burdensome state taxes, and high workers' compensation costs. The company, in response to a question concerning possible ways to retain the jobs, stated that the union would have to accept substantial wage cuts, a cost-of-living freeze, a reduction in some benefits, and a modification in work rules. The union requested that the company delay any action until at least the following week; the company, while stating that its decision was not final, requested a reply from the union by February 15 as to whether it would agree to concessions.

The union failed to respond by February 15, and over the weekend (February 16 and 17), the company moved its assembly equipment to a plant in Ohio. Meanwhile, unbeknownst to the company, the union, in a letter dated February 14, had requested information regarding the specifics of the decision. The company received the union's letter on February 20. The company responded to the union's letter on March 11; it stated that the decision was not irreversible and that it was prepared to discuss the matter with the union. The company repeated that the decision to subcontract was taken because "assembly operations are labor intensive and the costs (wages/benefits) associated with supporting this labor group have made the company noncompetitive." On March 1, the company entered into a formal leasing agreement with the subcontracting company; the lease allowed the company to terminate the lease and repossess the equipment and gave the subcontractor the option to purchase the equipment. The subcontractor purchased the equipment on July 1, 1980. The union filed an unfair labor practice complaint with the NLRB, charging the company with violations of Sections 8(a)(1) and 8(a)(5) for failing to bargain over a mandatory subject of bargaining and making a unilateral change in a mandatory subject without bargaining to impasse. How should the NLRB decide the union's complaint? What would have been the effect of the WARN law if it had applied to this case? See NLRB v. Plymouth Stamping Division, Eltec Corp. [870 F.2d 1112 (6th Cir. 1989)].