The Bangs Manufacturing Company made heavy equipment used primarily for rock crushing and asphalt paving. Although this business was seasonal and cyclical, the company normally employed approximately 850 production and maintenance employees (on two shifts) at its production facility. These production and maintenance employees were represented by the International Association of Machinists and Aerospace Workers Lodge 138. Due to the cyclical and seasonal nature of the industry and the fear of job loss, the union fought hard to win contract provisions pertaining to subcontracting. All of the heavy equipment the company manufactured used belt conveyors, which were supported by a wide variety of wing pulleys. The company had made these pulleys itself for many years. In fact, making and painting these pulleys were the primary jobs of several employees. The pulleys were traditionally painted orange. During the fall a salesman from The Pulley Place made an unsolicited visit to the company’s director of procurement, Harold Hill. The Pulley Place made nothing but pulleys. The salesman showed Hill a variety of pulleys in The Pulley Place catalog that could be used directly on the machinery made by the Bangs Manufacturing Company without any necessary alterations. Intrigued by the idea, Hill had some others in the company verify that the pulleys in The Pulley Place catalog could be used in the manufacturing process without any alterations or modifications. Although the pulleys were a slightly different size, the results showed that the pulleys could be used without modification at an estimated savings of 30–60 percent. Thus, the company subsequently ordered pulleys directly from The Pulley Place catalog. No specifications were given to The Pulley Place, and the pulleys were ordered by catalog number. To help avoid confusion, the traditional (Bangs Manufacturing Company) part numbers were affixed to the pulleys by The Pulley Place. The ordered pulleys were gray. Earlier in the year 295 bargaining unit employees had been laid off due to economic conditions. Several months later a substantial number had been recalled, but there were still many employees on layoff. At that time the workers started noticing that the pulleys they were using to assemble the heavy equipment were gray, not orange. Upon further investigation, the union discovered that the pulleys were being shipped in. The union subsequently filed the following grievance: By utilizing pulleys made elsewhere, the company is in violation of the collective bargaining agreement because work customarily performed by bargaining unit employees is being performed by outside sources while bargaining unit employees are laid off. Further, the work is to be returned to the bargaining unit employees and all affected employees are to be fully reimbursed for lost rewards stemming from this violation. POTENTIALLY RELEVANT CONTRACT PROVISIONS Article XVII. Grievance Procedure. Step 6. . . . The arbitrator shall conduct a hearing on the grievance within a reasonable time and shall be empowered to rule on all disputes concerning the effect, interpretation, and application of this agreement. However, he shall have no power to add to, subtract from, or modify any of the terms of this agreement or any other agreement made supplementary hereto. Article XXVII. Subcontract. During the periods of layoff the company will not have any work that is normally done by Bangs Manufacturing performed by any outside source, either in or outside the plant except: 1. There is no machine or plant capacity at Bangs Manufacturing. 2. Where we do have machine or plant capacity and the provisions of the contract have been followed and additional employees are needed, the company will ask the laid-off employees senioritywise if they would return to work on said jobs, which would be voluntary. If they accepted, the regular provision of the contract would apply. This would apply only when subcontracting is involved. 3. No employees laid off from development are involved. 4. Any work farmed out will be returned to the company within 48 hours from the date the layoff notice goes out, except per paragraph 5 below. 5. The following items are made at Bangs Steel and Iron Works at any time—truck frames, elevating wheels, bins, columns, hoppers, feed chutes, drier drums, bolsters, lifting flights, dust collectors, elevator housings, cyclones, smoke boxes, exhaust washers, feeder frames. POTENTIALLY RELEVANT UNITED STATES LEGAL DEFINITION “A contract for the sale of articles then existing, or such as the seller in the ordinary course of his business manufactures or procures for the general market, whether on hand at the time or not, is a contract for the sale of goods to which the statute applies; but if the goods are to be manufactured for the buyer on his special order, and not for the general market, it is not a contract of sale” [but rather a contract for work, labor, and materials] (American Jurisprudence, Section 250). Note: The arbitrator’s authority is derived from the collective bargaining agreement, and his or her job is to interpret the agreement. The arbitrator’s job is not to enforce legal statutes, but often an arbitrator looks to statutes, and their interpretation, to aid in the interpretation of a collective bargaining agreement.
1. Develop an argument supporting the company’s right to use pulleys from The Pulley Place.
2. Assume the role of Lodge 138’s grievance committee chairperson. How would you try to convince an arbitrator that the company’s action violated the collective bargaining agreement?
3. As an arbitrator, how would you rule? Why?