FEDERAL MEDIATION AND CONCILIATION SERVICE

In the Matter of the Arbitration between FMCS No. 01-00891

SOUTHERN COUNCIL OF INDUSTRIAL Grievance No. 00-03

WORKERS, LOCAL UNION NO. 2394,
Union,

and

MOHON INTERNATIONAL, INC.,

Company.
______________________________________/

OPINION OF THE ARBITRATOR

August 28, 2001

After a Hearing Held July 10, 2001

At the Hampton Inn in Paris, Tennessee

For the Union: For the Company:

Jones R. Fitzhugh Philip J. Lawson

Assistant to Executive Secretary Senior Counsel
SCIW, AFL-CIO Wimberly Lawson et al, PLLC
169 Matt Lee Road PO Box 2231
Pinola, MS 39149 Knoxville, TN 37901-2231
 Technological Changes

This grievance arose as a result of technological changes in the

hardware department at the Paris, Tennessee plant of Mohon International,

Inc. (“Company”), where workers are represented by the Southern Council

of Industrial Workers and its affiliated Local Union No. 2394, United

Brotherhood of Carpenters and Joiners of America, AFL-CIO (“Union”).

The Company manufactures custom-made casework furniture used to equip

academic laboratories for scientific experimentation and research.

Approximately 254 employees are in the bargaining unit. Relations between

the parties are governed by a collective bargaining agreement, which was

received into evidence as JX 2 (“CBA”).

Early in the year 2000, the Union learned that the Company planned

to introduce a bar-coding system for purposes of warehousing parts and

controlling inventory. After hearing descriptions of upcoming changes but

before those changes were made, the Union filed a “class action” grievance1

dated February 17, 2000 (JX 1A), on behalf of its members in the hardware

department, seeking “To be re-classified, because the total responsibility and

nature of our jobs have changed. (More computer work, more difficulty in

1
Unlike the contract in US Steel Corp, 89 LA 300 (Dybeck Arb 1987), the CBA under consideration
expressly provides for class action grievances. Article 10, Section 3 states in pertinent part, “If any dispute
of a general nature within the definition of a grievance as set forth herein should arise between the Union

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operation of equipment etc, etc.) Art. 32.” The remedy sought was “To be

reclassified in a higher class and to otherwise be made whole.”

A third-step meeting was held on Wednesday, March 29, 2000, at

which the Company promised to conduct a Continuous Improvement (“CI”)

Event after the bar-coding system was installed, in order to evaluate “new or

substantially changed classifications” which might result from its

installation. The Company’s position was embodied in a memorandum

signed by the human resource manager (JX 1B). The Union responded with

a demand for arbitration, dated April 17, 2000 (JX 1C).

The Company conducted a CI Event in June of 2000 and delivered its

final answer in an undated memorandum signed by the HR manager (JX

1D), which stated in pertinent part:

The company has conducted an evaluation on the task of Hardware.

The task has changed in very few aspects. The most apparent and
primary change is the use of bar code reading software and hand held
scanners. This process which is used in many other tasks in the plant
will now be in the process for receiving and picking/packing
hardware.

An arbitration hearing was held on July 10, 2001, at a neutral site in

Paris, Tennessee, after which the parties gave the arbitrator a tour of the

plant’s hardware department. The matter has been researched and briefed

and the Company, … the provisions of Step 1 and Step 2 shall be waived and the matter taken up between
the parties under the provisions of Step 3 ….”

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and is ripe for decision.

The Paucity Of Recent Reported Decisions On Technological Change

Given the pace and pervasiveness of technological change in the

workplace today, it has spawned surprisingly few reported arbitral decisions

in recent years. Cf. the remark in Mead Products, 104 LA 730, 735 (Borland

Arb 1994), about the dearth of recent relevant computer-related cases.

Among the technology cases that the arbitrator has found are CSX

Transportation Inc, 101 LA 535 (Suntrap Arb 1993) (installation of new

centralized traffic control system); Bethlehem Steel Corp, 96 LA 873 (Valtin

Arb 1991) (modernization of tin mill); and Times Publishing Co, 66 LA

1035 (Altrock Arb 1976) (installation of computerized composing room

equipment). See also opinions cited in Elkouri & Elkouri, How Arbitration

Works (BNA 5th ed 1997), and Supplements, under “Technological

changes”. It appears that many disputes over technological change are

resolved through negotiation rather than grievance.

Provisions For Technological Change In The CBA Itself

In the instant case, the parties have provided for technological change

in the CBA itself. Article 21, entitled “New Equipment and Technological

Progress”, states:

The parties recognize and acknowledge that increases in wages

and other benefits granted to the employees depends, to a great extent,

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 upon technological progress, better tools, methods, processes, and
equipment, and a cooperative attitude between the employer,
employees and the Union.
The Union agrees that it will not resist such progress and that it
will not assert any demand for increased wages for a particular
classification by reason of changes in the task. If such changes result
in a substantial, material, and significant increase in the skill or labor
required for the job, the matter may be negotiated as provided for in
Article 32, Classifications and Wages, Addendum B, respecting the
rates established by the Company for new or substantial changed
classifications.
The Company shall have the right to make such changes in
methods of production, including the use of the most up-to-date
automated equipment, as are consistent with competitive conditions in
the industry. There shall be no restriction upon the use of any
materials, machinery, or tools that management deems fit for this
purpose.

Article 32 in turn states in pertinent part:

New classifications/tasks may be added during the term of the

agreement. The Company may initially set the wage rate for the new
classification/task. The Company will immediately notify the union of
the new classification and the established rate. Should the union
disagree with the established rate, a grievance may be filed. The
grievance will be referred to the third step of the grievance procedure.

The Company’s Motivation For Technological Change

The Company’s motivation for making changes in the hardware

department was explained by the vice president of administration, himself a

former hardware department employee. The volume of sales had increased

ten-fold in the past twenty years, to the point where the Company had to

contend with over 2,000 parts in its operations; prospective growth likely

would increase that number.

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 Virtually every shipment was going out short of parts. Late and

incomplete shipments were costing the Company as much as $500,000

annually in extra shipping costs and liquidated damages, an intolerable

waste. The Company’s inventory and warehousing problems demanded

solutions, which the bar-coding system and other changes were designed to

provide.

The Technological Changes In The Hardware Department

The Union made its presentation on technological changes in the

hardware department through three exhibits, UX 1-3. UX 1 is entitled

“Hardware Handling Job Description”. From UX 1, the aspects of the

hardware handling job alleged to have been changed are the following:

• Read and interpret all documents related to this function; barcode

labels, picking tickets, et al.

• Operate the Receiving/Shipping computer program, including

Barcode scanners, to track both incoming and outgoing material.

• Complete requirements of Package Service vendor’s shipping

program.

• Pick items/parts required, see attached `Parts Picking Barcode

Procedures´.

• Scan Barcode to relieve from inventory, print hardware barcode

tickets and packing list, load onto cart or pallet, and place in
designated areas: Shipping/UPS/Production.

• Responsible for the monitoring of the operation of tow motor

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 equipment, specifically the timely charging of batteries in the
Maintenance Area.

From UX 2, “Material Receiving Job Description”, the aspects of the

material receiving job alleged to have been changed are the following:

• Operate the Receiving/Shipping computer program, including

Barcode scanners, to track both incoming and outgoing material.

• Complete requirements of Package Service vendor’s shipping

program.

• Responsible for the monitoring of the operation of tow motor

equipment, specifically the timely charging of batteries in the
Maintenance Area.

From UX 3, “Receiving Procedures”, the aspects of the receiving job

alleged to have been changed are the following:

• Enter quantities received against PO # in Receiving program on

Shipping computer. Print as many Barcode labels needed and attach to
each item or box, mark with red felt pen.

• Place items in rack, scan rack location.

• Prioritize incoming Overnight/Next Day packages, notify recipient.

The evidence is convincing that the look and feel of the hardware

department job have changed. The arbitrator heard the testimony of

department employees, reviewed UX 1-3, and took a plant tour. As part of

the changeover to a bar-coding system, the space occupied by the hardware

department was expanded vastly. New, high shelves were installed.

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Additional outside storage trailers were brought in.

The simple system of serially numbered parts bins was replaced by a

system of bar-coded shelves, to which parts are assigned on a space-

availability basis and tracked by bar codes. The whole layout is quite

different than before. A Union witness likened the changes “to going from a

mom-and-pop hardware store to a Home Depot.”

Mere change is, of course, insufficient to trigger job reclassification.

Under the plain language of the CBA, to require reclassification, the changes

must “result in a substantial, material, and significant increase in the skill or

labor required for the job.” The issue, then, is whether the changes effected

in the hardware department job were sufficiently extensive to meet this

standard.

The Threshold Issue Of Arbitrability

Initially, the Company asserted that this dispute is not arbitrable and

timely raised that defense in both its initial (JX 1B) and final (JX 1D) third-

step answers. The Company pointed to the language of Article 21 (“The

Union agrees … that it will not assert any demand for increased wages for a

particular classification by reason of changes in the task.”), to various

management rights provisions of Article 4 (Section 2 and its paragraphs i, j,

l, m, q, t, u), and to Article 4, Section 3, which reads as follows:

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 The Company’s action on any matter within its rights of management
or on any matters stated in the Agreement to be in its judgement and
discretion shall not be subject to arbitration unless management’s
action violates some other provision of this Agreement.

Having taken that hard line early on, in its brief, the Company seems

to have tempered its position to insist only that, if the arbitrator disagrees

with the Company’s handling of the grievance, then the only remedy is

negotiation under Article 32. Because of the arbitrator’s disposition of the

grievance, it is unnecessary to reach that issue. Cf. Mead Products, 104 LA

@ 732, 737 (arbitrator may not reach merits absent threshold showing by

union of “significant” change).

In its brief, the Union advances the following argument in favor of

arbitrability, with which the arbitrator agrees:

[T]he Union or employees did not resist the change and even waited
until after the C.I. Event to proceed with the grievance. The language
the Union thinks is important is “If such changes result in a
substantial, material, significant increase in the skill or labor required
for the job” then it tells us to go to Article 32. Article 32 states the
Union file a grievance and that is what the Union did. Article 21 states
the Union will not resist change and make demand for wages
increases for task changes. This was negotiated so you would not have
a grievance for every little minor change. The next sentence explained
what would happen for major changes.

The very cases cited by the Company in its brief all support the

arbitrability of this type of dispute, although concededly the language of

those other labor contracts was far more explicit than that in the present

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CBA. Morton Salt, 112 LA 110, 112 (Caraway Arb 1999); Southwestern

Bell, 110 LA 78, 79 (Heinsz Arb 1998); Menasha Corp, 108 LA 308

(Ellmann Arb 1997); Mead Products, 104 LA @ 731; Gates Rubber Co, 104

LA 1147, 1148 (Kindig Arb 1995).

Any interpretation of the CBA which afforded the Company the

absolute discretion to determine whether technological changes are

sufficiently extensive to meet contractual requirements would vitiate much

of the language of Articles 21 and 32, including their arbitration provisions,

and render illusory many of the protections for which the Union thought it

was bargaining. Such interpretations are not favored. See generally Elkouri

& Elkouri, supra, @ 492-497.

The CBA must be read as a whole (including the Purpose of

Agreement provisions in Article 3), and such a reading compels the

conclusion that, once the Union makes out a prima facie case of major

changes in a task, then any disagreement as to whether those changes “result

in a substantial, material, and significant increase in the skill or labor

required for the job,” is arbitrable. In the instant matter, the Union has

presented such a prima facie case.

The Burden And Standard Of Proof

Because the grievance does not involve disciplinary action, the burden

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of proof is on the Union. Hill & Sinicropi, Evidence in Arbitration (BNA 2nd

ed 1987) @ 39-47. See also cases placing the burden on the union under

circumstances similar to this case, Southwestern Bell, 110 LA @ 83;

Menasha Corp. Although there is no uniform rule as to the standard of

proof, Hill & Sinicropi @ 32-39, in this case of contract interpretation, the

Company offers no argument that the common preponderance of evidence

standard should not apply.

Pleading A Grievance

In both its initial (JX 1B) and final (JX 1D) third-step answers, as

grounds for denying the grievance, the Company asserted that there is no

provision in the CBA which references “More computer work, more

difficulty in operation of equipment etc, etc.” Strict rules of pleading long

have been out of favor in the courts. A fortiori there is no requirement in

arbitration that a grievance be spelled out in minute detail.

Although only Article 32 was cited in the grievance, the Company

was well aware of the interplay with Article 21, as demonstrated by its

express references to the latter provision in both of its third-step answers. A

reasonable reading of the grievance put the Company on notice of the

Union’s contention that changes implemented in the hardware department

were so extensive as to require reclassification of the job. No further notice

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was required.

Substantial, Material, And Significant

In describing the changes to the hardware department, only one

witness described them in these contractual terms, when he testified that his

job “substantially” increased. Another described the changes as amounting

to a “new job”. Yet another said only that he has “more” work and

responsibility following the changes. Although there is no requirement that

witnesses use the magic words, they must give testimony which reasonably

can be characterized in those terms. The witnesses for the most part did not,

and an evaluation of the changes reveals that, although they represented

distinct technological advances, they did not have the effect of substantially,

materially, and significantly increasing the skill or labor required to perform

the hardware department job.

Consider, for example, the introduction of tow motor equipment,

otherwise known as forklift trucks. The distinction, if any, appears to be that

tow motor equipment is smaller and battery-powered, whereas forklift trucks

are powered by compressed gas. Both before and after the changes at issue,

forklift trucks were used in the hardware department, and employees were

and are required to replace the fuel canisters on them whenever they run out

of gas.

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 The only change was the introduction of additional battery-powered

equipment to perform the same function as gas-powered lifting devices. The

fact that batteries now have to be charged hardly changes the job of

hardware department employees, who would be required to reenergize their

lift equipment regardless of its motive power.

Similarly with respect to changes such as new automated procedures

and software for shipping, including the handling of hazardous materials.

These changes were required by the shipper and undoubtedly were

introduced so that the shipper could provide an acceptable level of service

and remain competitive. Whichever shipper is utilized to transport supplies

and products will have procedures which Company employees must follow,

and the fact that these procedures are automated and computerized is hardly

surprising in today’s business world.

The transformation of the hardware department from a mom-and-pop

style operation into a veritable Home Depot does not make it any less of a

hardware department. The physical expansion of the department was

consistent with the Company’s growth and need to keep better track of parts

and inventory. Concededly some additional training was required of

employees, but it appears to have been minimal, and no higher level of skill

is now required for the hardware department job.

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 Changes to the hardware department seem to have been designed to

reduce rather increase labor. To the extent that employees seem busier, their

increased activity can be attributed to the Company’s growth, not to

technological changes (see discussion below). A position in the mailroom

was eliminated and some functions were taken on by hardware employees,

but the number of hardware employees was increased. No witness

complained of being required to skip breaks or to work overtime.

In its brief, the Union focuses on the testimony of the Company’s vice

president of administration:

[The] arbitrator … heard the witnesses for the Union explain the
duties of their job before and now. … Mr. James L. Arthurs, Vice
President, was the best witness to prove the Union’s case. [He
testified that t]he Company went from a 3 to 4 million to 40 to 42
million per year. The 3 to 4 million took 4 employees, now they have
5 employees. 50% app. 21 million is items purchased and shipped to
customers not made by Mohon International. Inventory is now
maintained by information put in computer by bargaining unit
employees. …

The attorney for the Company kept asking the question about the task,
has it changed. The head of General Motors and the head of Mohon
International tasks are the same, run the company. This does not mean
that their job contents are the same and that they should make the
same money.

The difficulty for the Union in pressing its argument, and for the

arbitrator in evaluating the evidence, is separating the growth which resulted

from technological change from that which resulted from other factors. The

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grievance and the arbitrator’s authority are restricted to the former. Although

the VP administration did testify as the Union suggests, he went on to

explain that the Company’s 10-fold growth took place over a period of

almost 20 years, and he did not testify that it resulted from technological

changes. He acknowledged that these changes should enable the Company to

increase its sales, especially of accessory items manufactured by others.

In Menasha Corp, the arbitrator, confronted with a similar difficulty

in determining the relationship between increased productivity and increased

workload, reached the following conclusion:

Output significantly increased within the normal workday and

workweek. The history of the industry does not demonstrate that with
increased production there is a corresponding increase in “workload.”
The development of “labor-saving” equipment attests the direct
contrary. The 30% increase in output must be primarily attributed to
the improvements in the machine.

The Union offers the arbitrator little assistance in separating out the

growth due to various factors. However, the record as a whole does not

support the conclusion that all or even a substantial portion of the

Company’s 10-fold growth is the result of technological changes which have

taken place since early 2000, the time frame covered by the instant

grievance. As a result, notwithstanding the admitted solution to inventory

and shipping problems and some increase in Company sales, the arbitrator is

unable to conclude that the changes at issue “result in a substantial, material,

15
and significant increase in the skill or labor required for the job” in the

hardware department.

Failure To Call Union Members Who Participated In The CI Event

Of particular significance to the arbitrator was the fact that, although

six Union employees participated in the CI Event evaluating the hardware

department, not a single one was called to testify that the evaluation was

unfair, or to disagree with the conclusion drawn from that study, namely,

that “the classification of Hardware Class D, is not a new task or a

substantially changed task as far as the skill level required …” (JX 1D).

Although the CBA does not appear to call for a CI Event or any comparable

study, much less to create a presumption of the correctness of conclusions

drawn from such a study, the arbitrator cannot help but believe that, if the

study were biased or otherwise flawed in any way, the Union would have

presented direct evidence through its members who participated in it.

Instead, the Union presented only evidence of an unofficial boycott of

the CI Event by hardware department employees, and their subjective

opinions that the evaluation process was controlled by the Company. Two

department employees complained that they were not even consulted by the

CI team, but their own negative attitudes toward the Event may have put off

team members.

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 It appears to the arbitrator that, by declining to participate in the CI

Event, hardware department employees may have forgone their best

opportunity to influence the level of their compensation. In any event, the

Union’s failure to call members of a committee on which it was well

represented merits a negative inference. Hill & Sinicropi, supra, @ 102.

Cases Cited By The Company

The Company in its brief cites a number of cases which tend to

support the arbitrator’s decision, some of which could be said to involve

technological change, although perhaps not explicitly so classified by the

reporters in which they appear. Supporting cases may have little precedential

value, Mead Products, 104 LA @ 735, but consideration of them serves to

constrain arbitral decisions within a broad range of reasonableness.

In Morton Salt, the arbitrator concluded that bulk loaders’ job duties

had not “substantially” changed, and hence their wages need not be

increased, where the only two changes to duties were using a computer to

complete packing lists and weekly railcar logs, and these additional tasks did

not “substantially” change the position’s job duties.

In similarly concluding that the duties of the Clerk position had not

“substantially” changed, the arbitrator in Beth Israel Medical Center, 24

LAIS ¶ 3947 (Townley Arb 1997), opined:

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 The introduction of the computer system essentially substituted a
machine to enhance the work that had been manually performed by
the Clerks, which is the type of technological change being
undertaken in virtually every segment of the workplace. Moreover,
the computer system has apparently resulted in additional economies
and efficiencies which had not been in place before the change and
have clearly resulted in a job that is easier to perform.

Both Mead Products and Gates Rubber Co involved changes affecting

warehouse personnel in ways analogous to the disputed effects on Mohon’s

hardware department employees. In the former, the arbitrator held that

warehouse employees were not entitled to wage increases because of

implementation of a warehouse control system that required employees to be

able to access computer terminals for information about the location of

products, where the employer did not change job duties and functions, but

changed only the method by which those same duties and functions could be

completed in a more efficient manner. The contested change was not

considered “significant”.

Finally, Gates Rubber Co is about as closely on point as cases come,

even as to the identity of the shipper used:

There has been an increased use of the computer in many parts of the
plant by an evolutionary process to perform work that was done
manually in the past. Instances cited concerning the Warehouseman
job are an increased use of the computer in U.P.S. shipments locally
and internationally, the scanning of shipments, the use of a bar code
machine, and the use of a stencil machine. As a result, the Union
considered such to be substantial changes in the job, the subject

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 grievance was filed, and this has led to the instant arbitration. 104 LA
@ 1149.

In finding that the job of Warehouseman had not “substantially”

changed, the arbitrator wrote:

The evidence is persuasive that the warehousemen, in performing

their basic functions, have always been responsible for the proper and
accurate transfer of information from one document to another in
order to track the movement of materials in and out of the warehouse.
Previously, the transfer of such information from one document to
another was accomplished by manually handwriting the information,
and now said information is put into the computer by key strokes or
“dumping” data by scanning gun, and then is automatically transferred
to other documents such as labels. However, the responsibility for the
accuracy of the information transferred by the warehouseman remains
the same whether performed by hand or through computer. 104 LA
@ 1151.

Gates Rubber Co in particular and the other cases cited by the Company in

general seem to support a decision for the Company.

Decision

For all the foregoing reasons, the grievance is DENIED.

____________________________ Dated August 28, 2001

E. Frank Cornelius, Arbitrator

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