[Federal Register: September 10, 2003 (Volume 68, Number 175)]
[Notices]
[Page 53395-53397]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se03-93]
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DEPARTMENT OF LABOR
Employment and Training Administration
[TA-W-50,588]
Murray Engineering, Inc. Complete Design Service, Flint, MI;
Notice of Negative Determination On Remand
The United States Court of International Trade (USCIT) granted the
Secretary of Labor's motion for a voluntary remand for further
investigation in Former Employees of Murray Engineering, Inc. v. U.S.
Secretary of Labor, No. 03-00219.
On February 5, 2003, the Department of Labor (Department) issued a
negative determination regarding eligibility to apply for Trade
Adjustment Assistance (TAA) for the workers of Murray Engineering,
Inc., Complete Design Service, Flint, Michigan (hereafter referred to
as Murray Engineering). The determination was based on the
investigation's finding that the workers' firm provided industrial
design and engineering services and did not produce an article in
accordance with Section 222 of the Trade Act of 1974. On February 24,
2003, the Notice of Negative Determination Regarding Eligibility to
Apply for Worker Adjustment Assistance for Murray Engineering, Inc.,
Complete Design Service, Flint, Michigan was published in the Federal
Register (68 FR 8620).
The initial TAA investigation showed that workers at Murray
Engineering supplied design and engineering solutions for general
manufacturing industries. Workers of Murray Engineering drafted designs
and drawings, which were then sent to customers either copied on to a
computer disk or CD-Rom, printed out on paper, or electronically. The
investigation also revealed that workers of Murray Engineering did not
supply components to either a TAA-certified company or an affiliate of
a TAA-certified company.
In a letter dated February 19, 2003, the petitioner requested
administrative reconsideration of the Department's negative
determination. The Department
[[Page 53396]]
affirmed its finding that the workers of Murray Engineering were not
eligible to apply for TAA on the basis that they did not produce a
product within the meaning of Section 222 of the Trade Act.
Accordingly, the Department issued a Notice of Negative Determination
Regarding Application for Reconsideration on March 31, 2003. The Notice
was published in the Federal Register on April 15, 2003 (68 FR 18264).
In the request for reconsideration, the petitioner made three
assertions: (1) That the workers produced a product; (2) that the
Department may have been misled by part of the company's name,
``Complete Design Service,'' thinking that the company did not produce
a product; and (3) that the Department prematurely concluded the
workers were service workers because of the company's name.
In the reconsideration investigation, the Department reviewed the
description of the design services provided by the subject firm and
determined that, regardless of the mode of conveyance, engineering
drawings and schematics prepared by subject firm were services, and not
considered production within the meaning of the Trade Act. A review by
the Department of the initial investigation and the subsequent
reconsideration investigation revealed that no conclusion was drawn
based on the company's name. Further, the Department did not rely on
the company's name during this voluntary remand investigation.
On April 30, 2003, the petitioner filed a Notice of Appeal in the
Court of International Trade. The Department's motion for Voluntary
Remand was granted on June 25, 2003.
On August 1, 2003, plaintiff's counsel sent the Department a letter
containing arguments for certification. This letter makes two
assertions: (1) The Department wrongly determined that the workers of
Murray Engineering did not produce an article, and (2) even if the
Department was correct in its determination that designs are not an
article, the workers of Murray Engineering are adversely affected
secondary workers and, as such, are eligible to apply for trade
adjustment assistance.
The first issue is whether the workers of Murray Engineering
produce an article.
Plaintiff's August 1, 2003 letter relies on Nagy v. Donovan, 6 Ct.
Int'l Trade 141, 145, 571 F. Supp. 1261, 1264 (Ct. Int'l Trade 1983),
to support the position that the designs are articles. Nagy held, among
other things, that workers who either create or manufacture a tangible
commodity or transform a thing into a new or different thing produce an
article. The letter asserts that the designs can be reproduced on paper
and, therefore, are a tangible commodity. The letter further asserts
that without the designs, the customer could not produce the machines
that make the tools, and, therefore, the designs are ``part and
parcel'' of the machines and sometimes incorporated into the body of
the machines when the operating instructions are mounted into the
machine or fixture.
In its remand investigation, the Department contacted Murray
Engineering company officials and issued a detailed information request
seeking new information as well as clarification of previously
submitted information. The main purpose of this review was to ascertain
whether the work performed by the petitioning worker group should be
construed as production or service.
Information supplied by the company on remand indicates that
Complete Design Service does industrial design for general
manufacturing industries, applying design & engineering solutions
through AutoCAD and Unigraphics by designing intricate custom drawings
that are customized to customer specifications. These custom drawings
are delivered to the customer by any or all of the following: (a)
Printed drawing on paper, (b) CD or computer diskette, (c) electronic
mail.
The customer contacts Complete Design Service with the purchase
order and instructions of the job to be done. An employee is assigned
to the job and is given all of the pertinent information for the job.
The employee then begins the design, in AutoCAD or Unigraphics
(computer design programs). Periodically throughout the design process,
the customer reviews the design-in-progress to assess whether
modifications are necessary. When the design is 100% completed, it is
saved on the subject firm's network and given to the customer in their
required format (e.g., plotted on paper, on CD or diskette, or e-
mailed). The company further states that the customer could not build
their products without these designs. The customer pays for the custom
designs either by the design or on an hourly basis.
The Department traditionally has deemed designs of any type
generated by computer as a service. Electronically generated
engineering designs, drawings, and schematics are not tangible
commodities. This is supported by the fact that they are not marketable
products listed on the Harmonized Tariff Schedule of the United States
(HTS), published by the United States International Trade Commission
(USITC), Office of Tariff Affairs and Trade Agreements, which describes
all articles imported to or exported from the United States.
However, if workers draft designs by hand, the drawings they
produce are classified under HTS number 4906.00.00.00 (``Plans and
drawings for architectural, engineering, industrial, commercial,
topographical or similar purposes, being originals drawn by hand;
handwritten text; photographic reproduction on a sensitized paper and
carbon copies of the forgoing''). Workers of the subject firm clearly
do not fall into this classification, because they produced all designs
electronically. That the HTS referenced here is updated periodically
and was last published in 2003 supports that the USITC continues to
distinguish electronic designs from designs by hand.
Further support that Murray Engineering workers did not produce an
article is found in examining what items are subject to a duty.
Throughout the Trade Act, an article is often referenced as something
that can be subject to a duty. To be subject to a duty on a tariff
schedule, an article will have a value that makes it marketable,
fungible, and interchangeable for commercial purposes.
However, although a wide variety of tangible products are described
as articles and characterized as dutiable in the HTS, informational and
design products that historically could be sent in letter form and that
currently can be electronically transmitted are not listed in the HTS.
Such items are not the type of work products that customs officials
inspect and that the Trade Adjustment Assistance program was generally
designed to address. Further, informal discussions in the past with
several USITC analysts clarified those factors that were used to
classify design and drawing work as service instead of production. The
USITC industry analysts identified designs as services because the
value of the intellectual service is greater than the cost of the
materials used to store or transfer it. The analysts also stated that
tariffs are based on the cost of the media (such as paper, CD, or
computer disk) and not on the value of the service.
In addition, the 2002 edition of the North American Industrial
Classification System (NAICS), a standard used by the Department to
categorize products and services, designates ``establishments primarily
engaged in drawing detailed layouts,
[[Page 53397]]
plans, and illustrations of * * * components from engineering * * *
specifications'' as ``drafting services'' (NAICS 541340). Another code
that describes ``engineering in the design, development, and
utilization of machines'' (emphasis added) is classified within a code
that signifies services (specifically, NAICS 541330).
Workers of Murray Engineering neither make a product nor transform
an existing product into something new and different. The Department
thoroughly investigated and could not find any evidence that workers of
Murray Engineering produced any articles or that the petitioners
transformed anything into something new and different; to the contrary,
the evidence cited above supports a conclusion that the Murray workers
did not produce an article. Consequently, they are not eligible for
certification as production workers.
The second issue is whether the workers of Murray Engineering are
adversely-affected secondary workers.
In the August 1, 2003 letter to the Department, the plaintiff
asserts that: (1) Murray Engineering was a supplier of designs to a
TAA-certified company (Lamb Technicon, Machining Systems, Warren,
Michigan) and that such supply is related to the article that was the
basis for certification (automated metal removal equipment, transfer
lines, and dial transfers); and (2) Lamb Technicon accounted for at
least twenty percent of Murray Engineering's production or sales or
otherwise must have contributed importantly to the workers'
separations. These assertions appear to be provided in an attempt to
show that the subject firm workers should be certified as eligible to
apply for TAA on the basis of serving as secondary upstream suppliers.
In order to be eligible as secondary suppliers, the petitioning
worker group must have produced a component part of the product that is
the basis of the TAA certification. Because Murray Engineering did not
produce a component part of the automated metal removal equipment
produced by Lamb Technicon, they were not secondary suppliers of a TAA-
certified facility, as required by the relevant TAA legislation. Even
if, as plaintiff asserts, the subject firm workers' design
specifications were sometimes mounted or affixed on their customers'
manufacturing equipment, such mounting or affixment were not necessary
for the equipment to function properly and, thus, were not component
parts.
Further, the subject firm's business with Lamb Technicon ceased
prior to the beginning of the investigative period. The subject firm
workers' petition was dated January 15, 2003 and instituted on January
16, 2003. Therefore, the relevant investigative period is 2001 and
2002. However, according to the subject firm official, Murray
Engineering did no business with Lamb Technicon after 1999. Therefore,
Lamb Technicon did not account for at least twenty percent of Murray
Engineering's production or sales, nor did loss of business with this
customer contribute importantly to the subject firm, during the
relevant period.
Finally, the petitioner argues that Complete Design Service did the
same work as Lamb Technicon and, thus, should be certified for TAA. The
workers of Lamb Technicon were certified (TA-W-40,267 & TA-W-40,267A)
based on the fact that the workers were engaged in employment related
to the production of articles (automated metal removal equipment,
transfer lines, and dial transfers). Any workers who may have been
engaged in design and engineering solutions at Lamb Technicon were
included in the certification because their separation was caused
importantly by a reduced demand for their services due to a decline in
manufacturing by their subject firm, or a parent firm, or a firm
otherwise related to their firm by ownership or control. Additionally,
the reduction in demand for services must originate at a production
facility whose workers independently meet the statutory criteria for
certification, and the reduction must directly relate to the product
impacted by imports. These conditions in meeting the TAA eligibility
requirements were met for workers in support activities at Lamb
Technicon. However, workers at Murray Engineering, Inc., Complete
Design Center, Flint, Michigan do not meet these criteria and, thus,
may not be certified based on Lamb Technicon's workers' certification.
Conclusion
Under section 222 of the Act, what is relevant to determining
whether a worker group is eligible for TAA certification is whether the
workers' firm or an appropriate subdivision of the workers' firm
produced an article.
The workers' firm in this case is Murray Engineering, Complete
Design Service, Flint, Michigan. The evidence clearly establishes that
Murray Engineering does not produce, directly or through an appropriate
subdivision, an article within the meaning of the Trade Act. Once the
Department concludes that the workers' employer was not a firm that
produced an article, it must conclude that the workers are not eligible
for assistance. Because the petitioners are employees of a firm or
subdivision that does not produce an article within the meaning of the
Trade Act, they are not eligible for certification.
As the result of the findings of the investigation on voluntary
remand, I affirm the original notice of negative determination of
eligibility to apply for adjustment assistance for workers and former
workers of Murray Engineering, Complete Design Service, Flint,
Michigan.
Signed at Washington, DC this 20th day of August, 2003.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. 03-23000 Filed 9-9-03; 8:45 am]
BILLING CODE 4510-30-P