E8-1826. Hutchinson Technology, Eau Claire, WI; Notice of Negative Determination on Remand

On November 6, 2007, the U.S. Court of International Trade (USCIT) granted the U.S. Department of Labor's motion for a voluntary remand in Former Employees of Hutchinson Technology v. U.S. Secretary of Labor, Court No. 07-335.

On June 21, 2007, a TAA Coordinator for the State of Wisconsin filed a petition for Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) on behalf of workers and former workers at Hutchinson Technology, Eau Claire, Wisconsin (the subject facility) producing suspension assemblies for disc drives(the subject worker group). Administrative Record (AR) 1-3.

The Department's negative determination, issued on July 10, 2007 (72 41088, July 26, 2007), was based on findings that worker separations at the subject facility were caused by declining sales due to decreased exports and that the subject firm did not import suspension assemblies for disc drives. AR 19.

On August 22, 2007, a former employee of the subject firm (the petitioner) requested administrative reconsideration of the negative determination. Supplemental Administrative Record (SAR) 28-30. In that request, the petitioner asserted that “the decision made on July 10, 2007 was made in error because the U.S. Department of Labor did not have all of the facts relevant to the application.” SAR 28. On September 28, 2007, the Department issued an Affirmative Determination Regarding Application for Reconsideration for the workers and former workers of the subject firm, because the Department determined that additional information received from the petitioner concerning the subject firm's customers merited investigation. The Department's Notice of determination was published in the Federal Register on October 5, 2007 (72 FR 57070). SAR 34.

On September 7, 2007, while the request for reconsideration was pending before the Department, the petitioner appealed the denial of its petition to the USCIT. The appeal was based on the same information that appeared in the request for reconsideration. On November 6, 2007 the Department obtained a voluntary remand of the USCIT proceeding so that the Department could investigate the allegations and information provided by the Plaintiff in the request for reconsideration.

In the request for reconsideration the petitioner acknowledged that “currently the majority of hard drive suspensions are exported overseas”. AR 29. However, the requester also stated that the subject firm separated a significant number of workers and that sales and production have decreased during the relevant time period, and that this negative impact was a direct result of the loss of the Argon product line at the subject firm to a foreign competitor based in Singapore.

The Department contacted the petitioner to obtain additional information regarding the Argon product line and the imports impacting the subject firm. The petitioner did not have any additional information and requested the Department to verify all the information with the officials of the subject firm. SAR 64.

The Department contacted a company official to address this allegation. The company official clarified that Argon is the name of a specific suspension assembly product that was manufactured for a major customer headquartered in the United States. The company official further confirmed that Argon product line was lost to a foreign competitor, which resulted in declines in total sales, production and employment at the subject firm. SAR 36. The decline in sales to this customer represented nearly the entire subject firm's total domestic sales decline. The official also stated that Argon product line was specifically sold and shipped to a customer's foreign subsidiary and was not sold on the domestic market. SAR 39, 45. Therefore, the losses in sales and production of Argon line and consequent decline in employment at the subject firm are the direct result of the decrease in exports.

The Department contacted the major domestic customer who purchased the Argon-line products to confirm this information. It was confirmed that this customer purchased these products for export to a foreign subsidiary and no suspension assembly products have been imported into the United States by this customer. SAR 45,46,67.

The request for reconsideration further alleged that “the majority of hard drive suspensions are exported overseas to be assembled into computer hard drives and imported back into the United States.” SAR 29. The petitioner concluded that imported finished products which contain foreign manufactured components are like or directly competitive with imported finished products containing components manufactured by the subject firm and therefore, the subject firm should be considered import impacted.

In order to establish import impact, the Department must consider imports that are like or directly competitive with the products manufactured by the petitioning worker group. Suspension assemblies are components of computer hard drives, which incorporate multiple components. Therefore, suspension assemblies are not like or directly competitive with the computer hard drives produced abroad and imported by the subject firm or its customers. Accordingly, imports of computer hard drives are not relevant in this investigation and increased imports of computer hard drives cannot be the basis for certification of the subject worker group. International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW, Local 834 v. Donovan, 592 F. Supp. 673, 677-679 (C.I.T. 1984).

In the request for reconsideration the petitioner further alleged that Hutchinson Technology, Inc. shifted functions of the microscope inspection labor to either Singapore, Thailand and/or China via sub-contracting. SAR 29, 30.

The Department contacted the petitioner to obtain additional information regarding the sorting functions. The petitioner stated that sorting was not a part of the production process, but is integrated into the production cost and that workers performing these functions should be considered in support of production. While uncertain, the petitioner conjectured that the sorting functions had been shifted to Singapore but that the Department should rely on information received from the officials of the subject firm. SAR 64.

The Department contacted a company official to address this allegation. The company official stated that the subject firm used its service center in Thailand to undertake inspection and sorting and that some sorting functions have been shifted from the subject firm to Thailand in the relevant time period. The official also stated that workers performing sorting and inspection functions do not produce suspension assemblies for disk drives, but rather support production of all suspension assemblies for disk drives. SAR 47, 66. The subject firm did not shift production of suspension assemblies for disk drives abroad. SAR 36.

Furthermore, Thailand is not a country that is a party to a free trade agreement with the United States or a country that is named as a beneficiary under the Andean Trade Preference Act, the African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act. Any shift to Thailand cannot be the basis for certification of the subject worker group.

During the initial phase of the reconsideration/remand investigation, the Department contacted Plaintiff for additional information and clarification of his allegations. Once Plaintiff had retained Counsel, the parties filed a consent motion for a 30-day extension of the remand period so that Plaintiff's Counsel had an opportunity to review the record and provide the Department with comments and other pertinent information. That motion was granted on December 12, 2007. The Counsel was provided with the business confidential information from the initial administrative record as well as with the material generated in the reconsideration/remand investigation. While the investigator contacted Plaintiff's Counsel to remind him of his opportunity, the Department received no substantive input. SAR 68-70.

In addition, in accordance with section 246 of the Trade Act of 1974, as amended, the Department herein presents the results of its remand investigation regarding certification of eligibility to apply for ATAA.

In order for the Department to issue a certification of eligibility to apply for ATAA, the subject worker group must be certified as eligible to apply for TAA. Since the workers have been denied certification for TAA, they cannot be certified for ATAA.

Conclusion

After careful review of the findings of the remand investigation, I affirm the original notice of negative determination of eligibility to apply for trade adjustment assistance for workers and former workers of Hutchinson Technology, Eau Claire, Wisconsin.

Signed in Washington, DC, this 18th day of January 2008.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.