DEPARTMENT OF LABOR

Employment and Training Administration

TA-W-55,495

TESCO TECHNOLOGIES, LLC
HEADQUARTERS OFFICE
AUBURN HILLS, MICHIGAN

Notice of Negative Determination
On Remand

On May 25, 2005, the United States Court of International
Trade (USCIT) granted the Department of Labor’s motion for
voluntary remand in Former Employees of Tesco Technologies, LLC
v. United States (Court No. 05-00264).
In the August 19, 2004 petition, three workers identified
the subject company as Tesco Engineering, Headquarters, Auburn
Hills, Michigan and the article produced as “designs for tooling
and production lines for General Motors automotive assembly
plants.” The petitioners alleged that Tesco Engineering was
shifting production to a foreign country (India).
During the investigation, it was revealed that Tesco
Engineering manufactured production and assembly line equipment,
while workers at Tesco Technologies, LLC (“Tesco Technologies”),
a subsidiary of Tesco Engineering, created mechanical design
drawings which are used to build machinery for the production of
automotive parts. Given that the petitioners created designs
and did not produce equipment, the Department identified Tesco
Technologies as the proper subject company.
Because the Department considered design work not to be
production work, the designers of Tesco Technologies could be
certified only if they supported an affiliated, TAA-certifiable,
domestic, production facility. Although Tesco Technologies’
designs accounted for an insignificant portion of the equipment
produced at Tesco Engineering, the Department nonetheless fully
investigated whether during the relevant period, there were
increased imports of production/assembly equipment or a shift of
production from Tesco Engineering to overseas.
The expanded investigation revealed that Tesco Engineering
neither shifted production to a foreign country nor imported any
equipment during the relevant period. Further, a survey of
Tesco Engineering’s major declining customers revealed that,
during the relevant period, none of the customers increased
their import purchases while decreasing their purchases from the
subject firm.
On September 27, 2004, the Department issued a negative
determination regarding workers’ eligibility to apply for TAA
and ATAA for those workers of Tesco Technologies, LLC,
Headquarters Office, Auburn Hills, Michigan. The negative
determination was based on the findings that there was neither
an increase in imports of equipment by Tesco Engineering or its
major declining customers, nor a shift of production overseas by
Tesco Engineering. The Department published the Notice of
determination in the Federal Register on October 26, 2004
(69 FR 62460).
By application dated October 22, 2004, the petitioner
requested administrative reconsideration of the Department’s
negative determination. Because factual discrepancies were
identified during the careful review of the request for
reconsideration and the previously-submitted documents, the
Department issued a Notice of Affirmative Determination
Regarding Application for Reconsideration for workers of the
subject company on December 7, 2004. The Notice was published
in the Federal Register on December 20, 2004 (69 FR 76017).
In the request for reconsideration, the petitioner
identified the subject company as “Tesco Technologies, LLC,
Auburn Hills, Michigan” and asserted that “we the petitioners
are connected to General Motors tooling only,” reiterated that
designs are a product (“the physical drawings themselves should
apply as a downline manufactured product required to build the
tooling” and designers are “directly connected to the
manufacturing process”) and inferred that designers are de facto
production workers producing automobile parts for General
Motors. The petitioner also inferred that the subject company’s
major customer, General Motors, had outsourced work to India.
During the reconsideration investigation, the Department
contacted a Tesco Technologies official, the General Motors
officials identified by the petitioner, and the General Motors
official who supervised the design contract at issue.
As a result of the reconsideration investigation, the
Department confirmed that the petitioners use application
software, such as Unigraphics, to develop tooling designs which
are used to build equipment for the production of automobile
parts for General Motors. The design drawings are developed at
Tesco Technologies, Auburn Hills, Michigan and sent to the
customer via electronic means (such as the Internet) and
tangible means (such as CD-Rom and paper), with the mode of
delivery to be determined by the customer.
According to one General Motors official identified by the
petitioner, General Motors did not outsource design work to any
foreign source. Another General Motors official contacted by
the Department stated that design work was awarded to another
domestic company and that some design work was moved in-house.
On January 11, 2005, the Department issued a Notice of
Negative Determination Regarding Application for Reconsideration
which provided that there was neither a shift of production
abroad by Tesco Technologies nor any outsourcing of design work
overseas by General Motors. On January 21, 2005, the Notice was
published in the Federal Register (70 FR 3228).
By letter dated February 8, 2005, the petitioners appealed
to the USCIT for judicial review. On May 25, 2005, the USCIT
granted the Department’s motion for voluntary remand to clarify
the Department’s basis for the negative determination on
reconsideration and to request additional information in the
Department’s efforts to clarify the reasons for the previous
determinations.
In the request for judicial review, the petitioners allege
that at least as early as October 2002, engineers were brought
in from India to train at Tesco Technologies. After about six
months, the engineers were sent back to India to a General
Motors facility and that “work is sent over to India via
satellite in the evening and sent back for check and inspection
in the morning” (inferring that designs were being imported).
Even if petitioners’ allegation of work shifting to India
is correct, in order to meet the statutory criteria for TAA
certification as primarily-affected workers, (1) a significant
portion or number of workers at the subject company must be
separated or threatened with separation, and (2) there must be
either (i) an increase in imports of articles like or directly
competitive with those produced by the subject worker group
(Section 222 (a)(2)(A)) or (ii) a shift in production of
articles like or directly competitive with those produced by the
subject worker group (Section 222(a)(2)(B)).
With regards to the immediate case, it has been shown that
at least five percent of workers at Tesco Technologies were
separated during the relevant period. Thus, the first criterion
for TAA certification has been met.
The only issues at hand, therefore, are whether there was a
shift of production abroad of articles like or directly
competitive with those produced by Tesco Technologies during the
relevant period and whether there were increased imports of
articles like or directly competitive with those created at
Tesco Technologies during the relevant period.
Under the Department’s interpretation of “like or directly
competitive,” (29 CFR 90.2) “like” articles are those articles
which are substantially identical in inherent or intrinsic
characteristics and “directly competitive” articles are those
articles which are substantially equivalent for commercial
purposes (essentially interchangeable and adapted to the same
uses), even though the articles may not be substantially
identical in their inherent or intrinsic characteristics.
During the remand investigation, the Department confirmed
that the designs created by the subject workers are not mass-
produced but rather adhere to the customer’s specifications and
accommodate the specialized processes or program needs dictated
by the customer. Accordingly, there are no articles which are
“like” or “directly competitive” to those designs created by
Tesco Technologies because each design is a unique engineering
solution which is created for the sole purpose of satisfying a
specific customer’s particular need. Thus, there are no
articles which, for commercial purposes, are essentially
interchangeable or can be adapted to the same use as a Tesco
Technologies design.
It is obvious that a design for a drill is not
interchangeable with a design for newspaper-folding machine, and
a design for a taffy-pulling machine can not be adapted to the
same use a bomb-defusing robot. In the same manner, a design of
a drill with a speed of 7 inches/second, a weight of 55 pounds,
and a torque rating of 120 inches/pound could not be substituted
for a design of a drill with a speed of 20 inches/second, a
weight of 60 pounds, and a torque rating of 125 inches/pound.
If a customer requested a design for a drill with the former
specifications, the design with latter specifications would
clearly not suffice for the customer’s purpose. As the Court
recently found in Former Employees of Murray Engineering, Inc.
v. Elaine L. Chao, United States Secretary of Labor, articles
that are “neither interchangeable with nor substitutable” for
the petitioner’s designs are not considered directly competitive.
2005 WL 1527642 (CIT 2005) (citing Machine Printers & Engravers
Ass’n v. Marshall, 595 F.2d 860, 862 (D.C. Cir. 1979).
Because each Tesco design is custom made to satisfy a
customer’s specific requirements and is an inherently unique
product, it cannot be considered “like” or “directly
competitive” with any other designs; and therefore, neither
Section 222 (a)(2)(A) nor Section 222(a)(2)(B) of the Trade Act,
as amended, can been satisfied.
The Department has determined that the criteria set forth
in the Trade Act of 1974, as amended, for TAA certification has
not been met. Further, since the workers are denied eligibility
to apply for TAA, the workers cannot be certified for ATAA,
pursuant to Section 246 of the Trade Act of 1974, as amended.
Conclusion
After reconsideration on remand, I affirm the original
notice of negative determination of eligibility to apply for
adjustment assistance for workers and former workers of Tesco
Technologies, LLC, Headquarters Office, Auburn Hills, Michigan.
Signed at Washington, D.C. this 25th day of July 2005.
/s/ Elliott S. Kushner
_______________________________
ELLIOTT S. KUSHNER
Certifying Officer, Division of
of Trade Adjustment Assistance