Reference no: EM132292373

The Fiberboard Paper Products Case and Nonmandatory Subjects of Bargaining The Ace Electronics Company has determined that it is at a competitive disadvantage based on its costs of production in the northeastern United States and needs to move its production facilities over time to a lower cost location. Thus, it announced to its union, which represents its production employees, that it will relocate its production facilities and close its Northeast facility over a period of one year. During that year the company will build a new plant in the southern United States to produce product together with two other plants the company operates in the South. The company’s two other plants are non-union organized. During the year, production employees who voluntarily leave their job will not be replaced. The existing labor agreement will last for two more years. The union demands that the company begin negotiations concerning the “effects” of the pending plant foreclosure, citing the ruling in Fiberboard Paper Products Corporation v. NLRB, 379 U.S. 203 (1964), requiring that an employer bargain about the nonmandatory subject of the effects of a plant closing on the bargaining unit employees. The company refuses to enter into negotiations, stating that because the employees have been notified of the impending closing a year in advance, they will have the opportunity to find another job within the year period provided and/or apply for a job at the new plant or at one of the two other plants presently operating in the South. Thus, the company need only negotiate at the end of the year with those employees, if any, who have not voluntarily left the employment of the company.

1. How do you think the NLRB will rule based on the legal precedent and the facts as described in this situation?

2. Do you believe that the company should agree to bargain with the union so as to ascertain the union’s positions on the effects of the plant closing? If so, might the company bargain to an impasse and then institute its plant closing under the legal philosophy expressed in NLRB v. Katz, 369 U.S. 736 (1962)?