04-14919. American Suessen Corporation, Charlotte, NC; Notice of Negative Determination on Reconsideration 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 American Suessen Corporation v. U.S. Secretary of Labor, Court No. 03-00803.

The Department's initial negative determination for the former workers of American Suessen Corporation, Charlotte, North Carolina, a subsidiary of Spindelfabrik Suessen, Suessen, Germany (hereafter “American Suessen”) for Trade Adjustment Assistance (“TAA”) was issued on September 25, 2003. The Notice of determination was published in the Federal Register on November 6, 2003 (68 FR 62832). The determination was based on the findings that workers only serviced textile machinery parts and did not produce an article within the meaning of section 222(c)(3) of the Trade Act of 1974.

In a letter dated November 9, 2003, the Petitioner requested reconsideration of the Department's denial of certification. The Petitioner alleged that American Suessen produced modernization products through 2001 when the company returned to a component parts business. The Department denied the Petitioner's request for reconsideration on December 2, 2003 stating that the Department was unable to consider production that occurred in 2001 because it was outside the relevant one-year time period, August 28, 2002 to August 28, 2003. The Department also informed the Petitioner that reworking component parts of customer equipment did not qualify as production of an article under the Trade Act.

On December 18, 2003, the Department issued a Dismissal of Application for Reconsideration that was published in the Federal Register on December 29, 2003 (68 FR 74972).

The Petitioner appealed the Department's denial of his request for reconsideration to the USCIT on November 4, 2003 asserting that “[a]lthough [American Suessen] was originally established as a sales and service subsidiary of [its] parent company, [American Suessen] did engage in the production of products to more cost effectively serve a declining textile industry * * *.” The Department filed a motion requesting that the Court remand the case for further investigation, and the Court granted the motion.

On remand, the Department conducted an investigation to determine whether the subject worker group is eligible for certification for worker adjustment assistance benefits. The remand investigation consisted of requesting additional information from the company regarding the functions of the subject worker group, contacting members of the subject worker group, and surveying the customers that the Petitioner alleged had increased their imports of re-tooled machines and parts.

To better understand the nature of American Suessen's activities, the Department requested information from American Suessen in a letter dated February 4, 2004. From American Suessen's response to this letter and through discussions with company officials, the Department discovered that American Suessen distributes machinery and parts designed and manufactured by its parent corporation, Spindelfabrik Suessen, in Germany. American Suessen operates as a showroom/retail store for machinery and parts and as a service shop. When repairing machines, American Suessen workers disassemble, reassemble, and test machinery parts to determine the cause/scope of the machine malfunction or to ascertain if the part has been repaired successfully.

Because the Petitioner specifically mentioned GVA machines in a submission, the Department sought clarification from the subject company on that matter. In response to the Department's inquiry, a company official informed the Department that the GVA machines were manufactured in Germany and put into operation by American Suessen. The official also wrote that during the 1980s and 1990s, the company modified parts on the GVA machines. This was done as needed. However, the official also stated that no production had occurred at American Suessen's Charlotte, North Carolina Facility since 1998 and that refurbishing operations had ceased in 2001.

The Department also requested information from the former workers of American Suessen. Two workers sent a letter stating that American Suessen had the capability to produce products and machine components between August 2002 and August 2003. These two workers also wrote that American Suessen “re-work[ed]/refurbish[ed]/modif[ied] rotor spinning parts and component parts.” In a telephone call, one of these former workers explained this process. Customers sent broken textile machine parts to American Suessen, and then the workers cleaned, repaired, and returned the part to the customer. The former worker also explained that the customer was charged for labor and replacement parts but was not buying a new product; that no production took place on the premises; and that the subject facility was a parts warehouse, showroom, sales, and repair shop. Finally, the former worker stated that because customers wanted newer machines and did not want to repair the older machines, the repair work disappeared, thereby causing the workers to lose their jobs.

Another former worker stated that the workers “remanufacture” machinery and parts and that the “re-manufactured” items constitute an article. This former worker also communicated that customers sent malfunctioning machines and broken parts to the subject facility for repair. The machines were fixed, the broken parts were replaced, and then the parts were returned to the customer. According to this worker, the repaired machines were not resold, and the facility operated primarily as a repair service shop.

Finally, the Department contacted several customers identified by the Petitioner. The customers stated that they viewed the machines at American Suessen's showroom and placed purchase orders for machinery and parts with American Suessen. The purchase order included shipping the machines and parts from Germany, assembly of the machinery at the customer's facility, and installation of the machines per customer's instructions.

The customers also had service contracts with the subject company. If a customer's machine needed to be repaired or a part needed to be replaced, an employee from American Suessen would work on-site to satisfy the terms of the service contract. At times, workers disassembled part of the machinery and take the problem part(s) back to American Suessen for extensive repair work. The repair work could include replacing a broken component with a new one, per the terms of the service agreement. The fixed part would then be returned and installed into the customer's machinery by the American Suessen worker.

The TAA program helps primarily trade-affected workers who have lost their jobs as a result of increased imports or shifts in production abroad to specific countries. Workers employed by a company that is a supplier or downstream producer to a trade-affected company may also qualify for TAA assistance as secondarily trade-affected workers. The former workers of American Suessen do not quality for TAA assistance as primarily or secondarily trade-affected workers.

First, the subject facility did not produce an article within the relevant time period, August 28, 2002 to August 28, 2003. No production has occurred at the company since 2001.

Second, although the former workers assert that American Suessen re-works, refurbishes, and modifies component parts, these processes, as described by the former workers, company officials, and customers, do not qualify as production under the Trade Act because they do not result in a new article. The workers are simply repairing an old article that is used for the same purpose before and after the repair process. Accordingly, these activities fall into the category of service rather than production. The Department has consistently considered repair work as service and not production because the nature and purpose of the serviced goods are the same at the end of the repair process as at the beginning of the repair process.

Finally, the former workers of American Suessen do not qualify as secondarily trade-affected workers. To be certified as a secondarily trade-affected worker, per the Trade Act, a worker must be employed by a company that produces or supplies “component parts for articles that were the basis for a certification of eligibility” of a group of primarily trade-affected workers. 19 U.S.C. § 2272(c)(4). American Suessen's customers produce textiles. Because American Suessen supplies its customers with machinery and parts, which are not components of textiles, the former workers of America Suessen do not qualify as secondarily trade-affected workers.

For the reasons stated above, as well as the intent and historical application of the TAA program, the Department has determined that the subject worker group is not engaged in activity primarily or secondarily related to the production of an article within the meaning of section 222 of the Trade Act of 1974.

Conclusion

After reconsideration on remand, I affirm the original notice of negative determination of eligibility to apply for TAA for workers and former workers of American Suessen Corporation, Charlotte, North Carolina.

Signed at Washington, DC this 10th day of June 2004.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.