Petitioner Type: Workers
Impact Date: 12/23/2002
Filed Date: 12/31/2003
Most Recent Update: 01/20/2004
Determination Date: 01/20/2004
Expiration Date: 12/13/2006
DEPARTMENT OF LABOR
Employment and Training Administration
TA-W-53,918
BMC SOFTWARE, INC.
HOUSTON, TEXAS
Notice of Revised Determination
On Remand
The United States Court of International Trade (USCIT) granted
the Secretary of Labor's motion for voluntary remand for further
investigation in Former Employees of BMC Software, Inc. v. U.S.
Secretary of Labor (Court No. 04-00229).
The Department's denial of the initial petition (filed on
December 23, 2003) was issued on January 20, 2004. The Notice of
determination was published in the Federal Register (69 FR 11888)
on March 12, 2004. The negative determination was based on the
finding that, while the subject company experienced significant
employment declines, the worker group did not produce an article
within the meaning of section 222 of the Trade Act of 1974 (TAA),
as amended. Workers at the subject facility develop software
solutions.
By letter dated February 9, 2004, the petitioner requested
administrative reconsideration, contending that the subject company
did, in fact, produce articles. During review of the request for
reconsideration, the Department asked the company to characterize
the work performed at the subject facility. The company responded
that workers of BMC Software, Inc., Houston, Texas, are software
developers. The official further stated that software developed at
the subject firm is not mass-produced on media devices and is not
sold in an “off-the-shelf” manner. The company official also
stated that due to significant restructuring actions to reduce
ongoing operational expenses, BMC Software, Inc., had implemented a
large reduction of its worldwide workforce, which included the
Houston, Texas location of the firm. Based on the information
provided by the company official, the Department confirmed its
initial finding and issued a Notice of Negative Determination
Regarding Application for Reconsideration on March 31, 2004 and
published the Notice in the Federal Register on April 16, 2004 (69
FR 20642).
By letter dated June 1, 2004, the petitioner filed an appeal
with the USCIT, alleging that the Department had erred in its
determination that the subject facility did not produce an article.
The appeal included photocopied pictures of packaged software
produced at the subject facility, which the Department had not seen
before. Having identified the need to resolve the apparent
conflict between information provided by the petitioners and that
provided by the employer, the Department filed a motion for
voluntary remand, on July 6, 2004. In an Order issued on August
11, 2004, the USCIT granted the Department’s uncontested motion for
voluntary remand and further investigation.
The Department conducted a remand investigation in order to
determine whether the subject worker group met the criteria set
forth in the Trade Act of 1974 for TAA certification as primarily-
affected workers. Section 222(a) of the Trade Act (19 U.S.C.
2272(a)) provides:
A group of workers (including workers in any agricultural firm or
subdivision of an agricultural firm) shall be certified by the
Secretary as eligible to apply for adjustment assistance under this
part pursuant to a petition filed under section 2271 of this title
if the Secretary determines that--
(1) a significant number or proportion of the workers in such
workers' firm, or an appropriate subdivision of the firm, have
become totally or partially separated, or are threatened to become
totally or partially separated; and
(2)(A)(i) the sales or production, or both, of such firm or
subdivision have decreased absolutely;
(ii) imports of articles like or directly competitive with articles
produced by such firm or subdivision have increased; and
(iii) the increase in imports described in clause (ii) contributed
importantly to such workers' separation or threat of separation and
to the decline in the sales or production of such firm or
subdivision; or
(B)(i) there has been a shift in production by such workers' firm
or subdivision to a foreign country of articles like or directly
competitive with articles which are produced by such firm or
subdivision; and
(ii)(I) the country to which the workers' firm has shifted
production of the articles is a party to a free trade agreement
with the United States;
(II) the country to which the workers' firm has shifted production
of the articles is a beneficiary country under the Andean Trade
Preference Act, African Growth and Opportunity Act, or the
Caribbean Basin Economic Recovery Act; or
(III) there has been or is likely to be an increase in imports of
articles that are like or directly competitive with articles which
are or were produced by such firm or subdivision.
During the remand investigation, the Department raised
additional questions and obtained detailed supplemental responses
from the company. In particular, the new information showed that,
in addition to software design and development, the firm does, in
fact, mass-replicate software at the subject facility. Further,
software produced by the firm at the subject facility includes not
only custom applications, but packaged “off-the-shelf” applications
which are mass-replicated on various media (CDs and tapes) at the
subject facility. Workers at the subject facility are not
separately identifiable by product line. Therefore, the subject
worker group did engage in activity related to the production of an
article.
The Department has consistently maintained that the design and
development of software is a service. In order to be treated as an
article, for TAA purposes, a software product must be tangible,
fungible, and widely marketed. The Department considers software
that is mass-replicated on physical media (such as CDs, tapes, or
diskettes) and widely marketed and commercially available (e.g.,
packaged “off-the-shelf” programs) and dutiable under the
Harmonized Tariff Schedule of the United States to be an article.
The workers designing and developing such products would be
considered to be engaged in services supporting the production of
an article.
On remand, the Department also investigated the petitioner’s
allegations that the firm shifted production. Based on the
information generated through that investigation, the Department
determined that there was no shift in production, for TAA purposes,
to a foreign country of articles like or directly competitive with
the packaged, mass-replicated software produced by BMC during the
relevant period.
The investigation also revealed that employment and production
of packaged, mass-replicated software at the subject facility had
declined significantly from 2002 to 2003, while company imports of
mass-replicated software increased during the same period. The
Department has found that the increase in company imports
represented a significant percentage of the decline in production
at the subject facility during the relevant period.
Conclusion
After careful review of the facts generated through the remand
investigation, I determine that increases of imports of articles
like or directly competitive with those produced at BMC Software,
Inc., Houston Texas, contributed importantly to the total or
partial separation of a significant number of workers and to the
decline in sales or production at that firm or subdivision. In
accordance with the provisions of the Act, I make the following
certification:
"All workers of BMC Software, Inc., Houston, Texas, who became
totally or partially separated from employment on or after
December 23, 2002, through two years from the issuance of this
revised determination, are eligible to apply for Trade
Adjustment Assistance under section 223 of the Trade Act of
1974."
Signed at Washington, D.C. this 13th day of December 2004.
/s/ Elliott S. Kushner
_______
ELLIOTT S. KUSHNER
Certifying Officer, Division of
Trade Adjustment Assistance
DEPARTMENT OF LABOR
Employment and Training Administration
TA-W-53,918
BMC SOFTWARE, INC.
HOUSTON, TEXAS
Negative Determination Regarding Eligibility
To Apply For Worker Adjustment Assistance
In accordance with Section 223 of the Trade Act of 1974, as
amended (19 USC 2273), the Department of Labor herein presents the
results of an investigation regarding certification of eligibility
to apply for worker adjustment assistance.
The investigation was initiated on October 9, 2003 in response
to a petition filed on behalf of workers of BMC Software, Inc.,
Houston, Texas. The workers develop software solutions.
The investigation revealed that the petitioning workers of
this firm or subdivision do not produce an article within the
meaning of Section 222 of the Act. The Department of Labor has
consistently determined that the performance of services does not
constitute production of an article, as required by Section 222 of
the Trade Act of 1974, and this determination has been upheld in
the U.S. Court of Appeals.
Workers at the firm or subdivision may be certified only if
their separation was caused importantly by a reduced demand for
their services from a parent firm, a firm otherwise related to
their firm by ownership, or a firm related by control. Addition-
ally, 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 have not been
met for workers at this firm.
Conclusion
After careful review, I determine that all workers of BMC
Software, Inc., Houston, Texas are denied eligibility to apply for
adjustment assistance under Section 223 of the Trade Act of 1974,
as amended.
Signed in Washington, D. C. this 20th day of January 2004.
/s/ Linda G. Poole
______________________________
LINDA G. POOLE
Certifying Officer, Division of
Trade Adjustment Assistance
Employment and Training Administration
TA-W-53,918
BMC SOFTWARE, INC.
HOUSTON, TEXAS
Notice of Revised Determination
On Remand
The United States Court of International Trade (USCIT) granted
the Secretary of Labor's motion for voluntary remand for further
investigation in Former Employees of BMC Software, Inc. v. U.S.
Secretary of Labor (Court No. 04-00229).
The Department's denial of the initial petition (filed on
December 23, 2003) was issued on January 20, 2004. The Notice of
determination was published in the Federal Register (69 FR 11888)
on March 12, 2004. The negative determination was based on the
finding that, while the subject company experienced significant
employment declines, the worker group did not produce an article
within the meaning of section 222 of the Trade Act of 1974 (TAA),
as amended. Workers at the subject facility develop software
solutions.
By letter dated February 9, 2004, the petitioner requested
administrative reconsideration, contending that the subject company
did, in fact, produce articles. During review of the request for
reconsideration, the Department asked the company to characterize
the work performed at the subject facility. The company responded
that workers of BMC Software, Inc., Houston, Texas, are software
developers. The official further stated that software developed at
the subject firm is not mass-produced on media devices and is not
sold in an “off-the-shelf” manner. The company official also
stated that due to significant restructuring actions to reduce
ongoing operational expenses, BMC Software, Inc., had implemented a
large reduction of its worldwide workforce, which included the
Houston, Texas location of the firm. Based on the information
provided by the company official, the Department confirmed its
initial finding and issued a Notice of Negative Determination
Regarding Application for Reconsideration on March 31, 2004 and
published the Notice in the Federal Register on April 16, 2004 (69
FR 20642).
By letter dated June 1, 2004, the petitioner filed an appeal
with the USCIT, alleging that the Department had erred in its
determination that the subject facility did not produce an article.
The appeal included photocopied pictures of packaged software
produced at the subject facility, which the Department had not seen
before. Having identified the need to resolve the apparent
conflict between information provided by the petitioners and that
provided by the employer, the Department filed a motion for
voluntary remand, on July 6, 2004. In an Order issued on August
11, 2004, the USCIT granted the Department’s uncontested motion for
voluntary remand and further investigation.
The Department conducted a remand investigation in order to
determine whether the subject worker group met the criteria set
forth in the Trade Act of 1974 for TAA certification as primarily-
affected workers. Section 222(a) of the Trade Act (19 U.S.C.
2272(a)) provides:
A group of workers (including workers in any agricultural firm or
subdivision of an agricultural firm) shall be certified by the
Secretary as eligible to apply for adjustment assistance under this
part pursuant to a petition filed under section 2271 of this title
if the Secretary determines that--
(1) a significant number or proportion of the workers in such
workers' firm, or an appropriate subdivision of the firm, have
become totally or partially separated, or are threatened to become
totally or partially separated; and
(2)(A)(i) the sales or production, or both, of such firm or
subdivision have decreased absolutely;
(ii) imports of articles like or directly competitive with articles
produced by such firm or subdivision have increased; and
(iii) the increase in imports described in clause (ii) contributed
importantly to such workers' separation or threat of separation and
to the decline in the sales or production of such firm or
subdivision; or
(B)(i) there has been a shift in production by such workers' firm
or subdivision to a foreign country of articles like or directly
competitive with articles which are produced by such firm or
subdivision; and
(ii)(I) the country to which the workers' firm has shifted
production of the articles is a party to a free trade agreement
with the United States;
(II) the country to which the workers' firm has shifted production
of the articles is a beneficiary country under the Andean Trade
Preference Act, African Growth and Opportunity Act, or the
Caribbean Basin Economic Recovery Act; or
(III) there has been or is likely to be an increase in imports of
articles that are like or directly competitive with articles which
are or were produced by such firm or subdivision.
During the remand investigation, the Department raised
additional questions and obtained detailed supplemental responses
from the company. In particular, the new information showed that,
in addition to software design and development, the firm does, in
fact, mass-replicate software at the subject facility. Further,
software produced by the firm at the subject facility includes not
only custom applications, but packaged “off-the-shelf” applications
which are mass-replicated on various media (CDs and tapes) at the
subject facility. Workers at the subject facility are not
separately identifiable by product line. Therefore, the subject
worker group did engage in activity related to the production of an
article.
The Department has consistently maintained that the design and
development of software is a service. In order to be treated as an
article, for TAA purposes, a software product must be tangible,
fungible, and widely marketed. The Department considers software
that is mass-replicated on physical media (such as CDs, tapes, or
diskettes) and widely marketed and commercially available (e.g.,
packaged “off-the-shelf” programs) and dutiable under the
Harmonized Tariff Schedule of the United States to be an article.
The workers designing and developing such products would be
considered to be engaged in services supporting the production of
an article.
On remand, the Department also investigated the petitioner’s
allegations that the firm shifted production. Based on the
information generated through that investigation, the Department
determined that there was no shift in production, for TAA purposes,
to a foreign country of articles like or directly competitive with
the packaged, mass-replicated software produced by BMC during the
relevant period.
The investigation also revealed that employment and production
of packaged, mass-replicated software at the subject facility had
declined significantly from 2002 to 2003, while company imports of
mass-replicated software increased during the same period. The
Department has found that the increase in company imports
represented a significant percentage of the decline in production
at the subject facility during the relevant period.
Conclusion
After careful review of the facts generated through the remand
investigation, I determine that increases of imports of articles
like or directly competitive with those produced at BMC Software,
Inc., Houston Texas, contributed importantly to the total or
partial separation of a significant number of workers and to the
decline in sales or production at that firm or subdivision. In
accordance with the provisions of the Act, I make the following
certification:
"All workers of BMC Software, Inc., Houston, Texas, who became
totally or partially separated from employment on or after
December 23, 2002, through two years from the issuance of this
revised determination, are eligible to apply for Trade
Adjustment Assistance under section 223 of the Trade Act of
1974."
Signed at Washington, D.C. this 13th day of December 2004.
/s/ Elliott S. Kushner
_______
ELLIOTT S. KUSHNER
Certifying Officer, Division of
Trade Adjustment Assistance
DEPARTMENT OF LABOR
Employment and Training Administration
TA-W-53,918
BMC SOFTWARE, INC.
HOUSTON, TEXAS
Negative Determination Regarding Eligibility
To Apply For Worker Adjustment Assistance
In accordance with Section 223 of the Trade Act of 1974, as
amended (19 USC 2273), the Department of Labor herein presents the
results of an investigation regarding certification of eligibility
to apply for worker adjustment assistance.
The investigation was initiated on October 9, 2003 in response
to a petition filed on behalf of workers of BMC Software, Inc.,
Houston, Texas. The workers develop software solutions.
The investigation revealed that the petitioning workers of
this firm or subdivision do not produce an article within the
meaning of Section 222 of the Act. The Department of Labor has
consistently determined that the performance of services does not
constitute production of an article, as required by Section 222 of
the Trade Act of 1974, and this determination has been upheld in
the U.S. Court of Appeals.
Workers at the firm or subdivision may be certified only if
their separation was caused importantly by a reduced demand for
their services from a parent firm, a firm otherwise related to
their firm by ownership, or a firm related by control. Addition-
ally, 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 have not been
met for workers at this firm.
Conclusion
After careful review, I determine that all workers of BMC
Software, Inc., Houston, Texas are denied eligibility to apply for
adjustment assistance under Section 223 of the Trade Act of 1974,
as amended.
Signed in Washington, D. C. this 20th day of January 2004.
/s/ Linda G. Poole
______________________________
LINDA G. POOLE
Certifying Officer, Division of
Trade Adjustment Assistance