CitiSteel USA

National Labor Relations Board - Board Decisions

Sep 30, 1993

312 N.L.R.B. 815 (N.L.R.B. 1993)

815
312 NLRB No. 124
CITISTEEL USA
1 We deny the Respondent’s motion to strike the General Coun-
sel’s brief in support of the judge’s decision, although we will admit
the Respondent’s brief to the judge into the record.
2 The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an admin-
istrative law judge’s credibility resolutions unless the clear prepon-
derance of all the relevant evidence convinces us that they are incor-
rect. Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188
F.2d 362 (3d Cir. 1951). We have carefully examined the record and
find no basis for reversing the findings.
3 Fall River, supra, 482 U.S. at 44 (change from converting dyeing
to commission dyeing); Good N’ Fresh Foods, 287 NLRB 1231,
1235 (1988) (change from predominant production of fresh baked
products to predominant production of frozen baked products).
4 Phoenix Pipe & Tube Co., 302 NLRB 122 (1991), enfd. 955
F.2d 852 (3d Cir. 1991).
CitiSteel USA, Inc. and United Steelworkers of
America, AFL–CIO–CLC. Case 4–CA–17901
September 30, 1993
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND RAUDABAUGH
On October 13, 1992, Administrative Law Judge
William F. Jacobs issued the attached decision. The
Respondent filed exceptions and a supporting brief, the
General Counsel filed a brief in support of the admin-
istrative law judge’s decision, the Charging Party filed
cross-exceptions and an answering brief to the Re-
spondent’s exceptions and brief in support of its cross-
exceptions, the General Counsel filed cross-exceptions
and an answering brief to the Respondent’s exceptions
and brief, the Respondent filed a consolidated answer
and reply brief, and the Charging Party filed a reply
brief to the Respondent’s consolidated answer and
reply brief.
The National Labor Relations Board has considered
the decision and the record in light of the exceptions
and briefs1 and, for the reasons set forth below, has
decided to affirm the judge’s rulings, findings,2 and
conclusions and to adopt the recommended Order.
The complaint alleged, and the judge found, that the
Respondent, CitiSteel USA, Inc. (CitiSteel or Respond-
ent) is a successor to Phoenix Steel Corporation (Phoe-
nix), and that the Respondent violated Section 8(a)(5)
and (1) by refusing to recognize and bargain with the
United Steelworkers of America, AFL–CIO–CLC
(Union) the collective-bargaining representative of
Phoenix employees. For the following reasons, we
agree with the judge’s conclusion.
It has long been settled that an employer succeeds
to the collective-bargaining obligation of another em-
ployer if (1) a majority of its employees had been em-
ployed by the predecessor, and if (2) similarities be-
tween those two operations manifest a ‘‘substantial
continuity’’ between those enterprises. Fall River Dye-
ing Corp. v. NLRB, 482 U.S. 27, 41, 43 (1987), citing,
inter alia, NLRB v. Burns Security Services, 406 U.S.
272, 280 fn. 4 (1972). Here, the parties stipulated that
on the representative-complement dates, April 17,
1989, for the production and maintenance employees,
and June 13, 1989, for the clerical and technical em-
ployees, a majority of CitiSteel’s employees were
former employees of Phoenix. The issue in this case,
therefore, is whether the similarities between the Phoe-
nix operation and the CitiSteel operation manifest a
‘‘substantial continuity.’’ We find, in agreement with
the judge, that they do. The factors to look to in deter-
mining whether there is substantial continuity were
summarized by the Supreme Court in Fall River, supra
at 43, as follows:
[W]hether the business of both employers is es-
sentially the same; whether the employees of the
new company are doing the same jobs in the same
working conditions under the same supervisors;
and whether the new entity has the same produc-
tion process, produces the same products, and has
basically the same body of customers
These factors are to be assessed primarily from the
perspective of the employees. Thus, the question is
‘‘whether ‘those employees who have been retained
will . . . view their job situations as essentially
unaltered.’’’ Id., quoting Golden State Bottling Co. v.
NLRB, 414 U.S. 168, 184 (1973).
The plant under CitiSteel continues to make steel, as
it did under Phoenix, and as it has for over 70 years.
CitiSteel does not produce any new products. Eighty
percent of CitiSteel’s customers had been Phoenix cus-
tomers. Admittedly, CitiSteel has narrowed the product
line from the approximately 75 types of steel which
Phoenix produced to 19, and has ceased production of
specialty steel and finishing work. Such changes, how-
ever, will not preclude a finding of continuity if the
basic job skills remain the same.3 We find that the job
skills are substantially the same.
The production and maintenance employees at Phoe-
nix were divided into 134 job classifications. CitiSteel
has reduced the number of classifications to around 25.
It has combined some jobs and has eliminated others.
This change means that each employee now performs
several job functions which had been covered by sepa-
rate job classifications at Phoenix. While we find that
this consolidation of function may require employees
to perform some additional tasks, each one also contin-
ues mainly to perform work he had performed for
Phoenix. When employees continue to perform sub-
stantially the same work that they did for the prede-
cessor, the addition of some new job duties is not like-
ly to change the employees’ attitude towards their job
to such an extent that it will defeat a finding of con-
tinuity of the enterprise.4
816 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
5 Capitol Steel & Iron Co., 299 NLRB 484, 487 (1990).
6 Phoenix declared bankruptcy on April 20, 1987.
7 See Nephi Rubber Products Co., 303 NLRB 151, 152 (1991);
Phoenix Pipe & Tube Co., supra.
8 We also agree with the judge that this finding applies to the cler-
ical and technical unit as well. The Respondent argues in its excep-
tions that this unit is inapporopriate and, therefore, it did not violate
the Act by refusing to recognize and bargain with the Union with
respect to these unit employees. We disagree. The Board has long
held that it will not disturb the recognition of an established bargain-
ing unit unless required by the Act or compelling circumstances.
Great Atlantic & Pacific Tea Co., 153 NLRB 1549 (1965). The bur-
den of proving such circumstances lies clearly with the Respondent.
Indianapolis Mack Sales & Service, 288 NLRB 1123 fn. 5 (1988).
The Respondent has not offered, nor do we find, any evidence which
would require us now to set aside Phoenix’s recognition of this long-
standing unit.
Because CitiSteel no longer produces specialty steel
or performs special finishing work, the parts of the
plant and equipment associated with those tasks are no
longer in use. What is important, though, is that all of
the Respondent’s present facility was formerly a part
of Phoenix’s premises.5 Moreover, most of the depart-
ments occupy the same spaces and most employees
work in the same areas as they had under Phoenix.
When CitiSteel took over the plant, much of the
equipment was in need of repair. CitiSteel embarked
on a $25-million revamping of the plant. Some equip-
ment was overhauled and some was totally modernized
by adding technically advanced components. Nonethe-
less, even with these improvements, the individual
worker continued, in most instances, to do the same
job with the same tools as he had under Phoenix.
CitiSteel has made some changes in the management
structure, employing fewer layers in the chain of com-
mand and a more simplified hierarchical structure. We
note also that only 6 of the 22 managers at Phoenix
are employed by CitiSteel and only 2 of CitiSteel’s 10
supervisors had been supervisors at Phoenix. The Re-
spondent has also made several improvements in the
employees’ working conditions, including repairs to
the exhaust system in the melt shop, upgrading the
locker room facilities, removing the timeclocks, pro-
viding different color hardhats, allowing all employees
to use the parking lot once reserved for management,
and more vigorously enforcing safety regulations. The
changes must, however, be viewed from the perspec-
tive of the employees. We do not think that the
changes substantially altered what the employees
would consider to be their essential jobs. Thus, we find
that these changes are insufficient to defeat a finding
of successorship.
The Respondent relies heavily on the 23-month hia-
tus between the final shipment of steel by Phoenix and
the first shipment of steel by CitiSteel. The Supreme
Court in Fall River, held, however, that a hiatus is
only one factor to be considered and ‘‘is relevant only
when there are other indicia of discontinuity.’’ Fall
River, supra at 45. Here, the hiatus was marked by a
continuing effort to first sell the plant and then, after
its sale to the Respondent, to revamping and reopening
the plant. While the Local Union was deactivated dur-
ing the hiatus, representatives and lawyers for the
International Union, which was the certified collective-
bargaining representative of the employees, remained
active, meeting with potential buyers, responding to
former employees’ inquiries, representing employee
claims in bankruptcy proceedings,6 attempting to ob-
tain commitments from the Respondent to recognize
and bargain with the Union when it reopened, and en-
couraging employees to file applications with the Re-
spondent. We therefore find that this hiatus is insuffi-
cient to defeat a finding of successorship.7
Although each successorship factor must be ana-
lyzed separately, we are also required to consider the
totality of the circumstances. Fall River, supra. A ma-
jority of the Respondent’s employees had been em-
ployees of Phoenix; the Respondent’s business is the
production of steel as it had been under Phoenix; a
majority of the Respondent’s customers had been cus-
tomers of Phoenix; the unit employees’ job functions
are basically the same as they had been at Phoenix;
and the equipment used by the Respondent is substan-
tially the same as at Phoenix. The hiatus period was
marked by several attempts to sell the plant and then
to revamp the plant when finally sold. During this en-
tire period, the International Union remained active.
From the employees’ perspective, these facts would in-
dicate a substantial continuity between Phoenix and the
Respondent.
We find that the Respondent is a successor employer
to Phoenix Steel. Accordingly, we conclude, in agree-
ment with the judge, that the Respondent, as the suc-
cessor to Phoenix, violated Section 8(a)(5) and (1) of
the Act by refusing to recognize and bargain with the
Union as the representative of its unit employees.8
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, CitiSteel USA, Inc.,
Claymont, Delaware, its officers, agents, successors,
and assigns, shall take the action set forth in the Order.
William E. Slack Jr. and Richard Wainstein, Esqs., for the
General Counsel.
John S. Irving, Kenneth N. Bass, and James F. Basile, Esqs.,
(Kirkland & Ellis), of Washington, D.C., for the Respond-
ent.
Richard J. Brean, Esq., of Pittsburgh, Pennsylvania and Jo-
seph Lurie, Esq. (Galfand, Berger, Lurie & March), of
Philadelphia, Pennsylvania, for the Charging Party.
817CITISTEEL USA
1 Respondent’s motion to correct the record is hereby granted.
2 In its answer, Respondent concedes jurisdiction and the status of
the Union as a labor organization.
DECISION
STATEMENT OF THE CASE
WILLIAM F. JACOBS, Administrative Law Judge. This case
was tried before me on November 4 to 8, 12, 15, 19, and
20, 1991, in Philadelphia, Pennsylvania. The charge was
filed on February 16, 1989, by the United Steelworkers of
America, AFL–CIO–CLC (the Union). The complaint issued
May 9, 1991, and was amended on September 13, 1991, to
allege that CitiSteel USA, Inc. (the Respondent, Employer,
or Company), violated Section 8(a)(1), (3), and (5) of the
National Labor Relations Act. More particularly, the com-
plaint alleges that Respondent violated Section 8(a)(1) by
threatening and interrogating employees, 8(a)(1) and (3) by
refusing to hire employees who had previously been em-
ployed by Phoenix Steel Corporation (Phoenix), and 8(a)(1)
and (5) by refusing to recognize and bargain with the Union
and by unilaterally changing the terms and conditions of em-
ployment of its employees. In its answers to the complaint
and amended complaint, Respondent denies the commission
of any unfair labor practices.
Prior to the opening of the hearing, the Parties entered into
an informal settlement agreement which disposed of all of
the independent 8(a)(1) and (3) allegations as well as the
8(a)(5) allegation concerning unilateral changes. The only
issue remaining for hearing was the allegation that Respond-
ent failed and refused to recognize and bargain with the
Union as the exclusive collective-bargaining representative of
its employees.
All parties were represented at the hearing and were af-
forded full opportunity to be heard and to present evidence
and argument. All parties filed briefs. On the entire record,1
including my observation of the demeanor of the witnesses,
and after giving due consideration to the briefs, I make the
following
FINDINGS OF FACT2
The Claymont Plant—A History
Respondent’s steel mill was built by the Worth Steel Com-
pany in 1917 in Claymont, Delaware. Worth operated the
mill from 1917 to 1951. In 1943, the NLRB certified the
Union as the exclusive collective-bargaining representative of
Respondent’s production and maintenance employees em-
ployed at Claymont. Following certification, the Union char-
tered Steelworkers Local 3182 to assist in the administration
of the collective-bargaining agreements covering the produc-
tion and maintenance unit.
In March 1951, Colorado Fuel and Iron Company (CF&I)
purchased Worth Steel and its Claymont mill. It continued to
operate the mill as an integrated mill, converting ore into fin-
ished steel products.
In October 1960, Phoenix purchased the Claymont mill
from CF&I. It already owned plants in Phoenixville and
Chester, Pennsylvania. At the time Phoenix purchased the
Claymont plant, it was producing a variety of specialty steel
products including both carbon and alloy steel plate, welded
pipe, pressed and spun heads, bridge girders, and small
stampings from steel plate. In 1962, Phoenix added a new
heat treating and finishing plant at Claymont which enabled
it to produce additional types of specialty steel.
Throughout the 1960s, Phoenix continuously purchased ad-
ditional new equipment to modernize its facilities. The new
equipment permitted increased production of a still greater
variety of specialty steels. The modernization was extremely
expensive and was financed by a sale-leaseback arrangement
with the Northern Delaware Industrial Development Corpora-
tion (NDIDC) whereby Phoenix sold its Claymont plant to
NDIDC then immediately leased it back.
Despite placing itself in long-term debt, in its attempt to
modernize, Phoenix found, for whatever reason, that it con-
tinued to lose money. It reacted by modernizing even further
by purchasing additional equipment and modifying the equip-
ment just recently purchased. The result was that new vari-
eties of specialty steels were produced in the early 1970s but
the cost of the additional modernization drove Phoenix fur-
ther into debt.
In the late 1970s, the same scene was repeated. More cap-
ital was successfully obtained from a new purchaser of Phoe-
nix stock. More money was invested to update the equip-
ment, with emphasis again on increased production of spe-
cialty steel products. The result was that Phoenix continued
to lose money.
In the early 1980s, the entire steel industry was hit by a
recession. The Claymont plant was particularly hard hit and
Phoenix, in August 1983, filed a petition for bankruptcy
under chapter 11 of the bankruptcy code.
In July 1985, while Phoenix was still in bankruptcy,
Guardian Ventures, a partnership, bought all of its stock. At
the time, Phoenix’s chief executive officer was Eugene Hug.
In May 1986, he was replaced by Robert Garvey. Garvey in-
tended to make certain changes in the operation of the
Claymont plant. More specifically, he planned to cease all
specialty steel operations and concentrate on the production
of commodity carbon steel. Guardian Ventures, however, ve-
toed Garvey’s plan and in November 1986, he resigned, leav-
ing the Claymont plant to continue operating just as it had
for years. His resignation gave rise to rumors that the plant
would close. Failure to keep up inventory and to order spare
parts fueled these rumors.
A new management team replaced Garvey. It was made up
of people who were not experienced in steelmaking but, as
it turned out, that fact was of little moment, for their most
immediate projects were to close down the Claymont plant,
seek out a buyer and, at the same time, begin negotiations
with the Union whose collective-bargaining agreement was
due to expire on March 31, 1987.
On December 4, management announced that it was clos-
ing down the melt shop and laying off 220 employees. On
December 5, the Wilmington Morning News reported that
the rest of the plant could close within weeks unless a buyer
was found. The melt shop closed December 13, 1986, and
thereafter one department after another closed down, with the
employees concerned, laid off until only a skeleton crew re-
mained to perform maintenance and collect scrap for sale to
other steel producers.
Starting even before the actual closing of the Claymont
plant, a series of newspaper articles was published and a
number of events occurred during the next 2 years, which
sometimes raised and sometimes dashed the hopes and po-
818 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
3 Hereinafter all dates are in 1987 unless noted otherwise.
4 Lukens made it clear that any deal would depend upon the condi-
tion of the equipment which had been idle for several months. On
June 1, Lukens denied that any formal agreement had been reached.
tential expectations of the employees of the Claymont plant
that the plant would be sold and reopened and that they
would be rehired to their old jobs.
On January 22, 1987,3 the Philadelphia Inquirer carried a
story that five potential buyers were bidding for Claymont
and that it was expected that a sale would be completed in
the near future. On the same date, however, and in the days
that followed, interviews with employees and union officials
reflected little hope for the future of the Claymont plant.
On January 23, the rolling mill was closed down. Addi-
tional employees were laid off. Only a few workers were
kept temporarily to finish and ship the remaining slabs. De-
spite skepticism among some of the Claymont employees, ef-
forts to sell the plant continued. On January 31, Asset Man-
agement Associates, an investment partnership with steel mill
experience offered to purchase the Claymont plant for $6.5
million. No agreement was reached, however, and by April
1, the offer had been withdrawn and the deal declared dead.
After the plate mill closed down, the president of Local
3182, Walter Brodzinski, contacted Joseph Hicks, a coun-
selor for the Division of Employment and Training of the
Delaware Department of Labor and arranged for Hicks to
visit the union hall and conduct a series of job search work-
shops to provide skills and motivation for workers to find
new jobs. A representative of United Way also attended
these workshops to advise the 130 to 140 unemployed steel-
workers, who initially signed up for the course, what services
were available to them. The workshops were conducted be-
ginning in February and continued into April. By the end of
the workshop series an estimated 230 former Phoenix em-
ployees had attended. Respondent contends that the Union,
by arranging for these workshops, led the employees to be-
lieve that their relationships with the Claymont plant and the
USWA were permanently ended.
In February, the owners announced a potential offer had
been received to buy the plant for $8 million, dependent on
the buyer obtaining financing. The financing, however, did
not materialize and as the Daily Local News reported the
story, the buyer terminated interest.
In early March, a group of investors lead by financier
Robert Serlin offered to purchase the Claymont plant for $8
million, again dependent on their first obtaining financing.
Phoenix CEO Donald B. Lifton said that the offer was great
news for the employees and their families. Undoubtedly, this
news raised the hopes, if not the expectations, of the jobless.
While a number of employees had only their hopes, and
remained unemployed, others actively sought, and some suc-
cessfully, employment with other companies, some outside
the area. Sometime after the shutdown, Brodzinski resigned
and obtained employment outside the state. Certain employ-
ees concluded from Brodzinski’s exit that he would not have
left if there were a reasonable chance that the plant was
going to reopen in the near future.
On March 17, after Brodzinski had resigned, Lynn R. Wil-
liams, International President of the USWA, wrote to Willie
Walker, acting president of Local 3182, that since Phoenix
Steel Corporation had ceased operations in Claymont, Local
3182 was being placed under an administrator and all the of-
ficers were thereby relieved of their duties. About the same
time, the financial secretary of Local 6637 which represented
the office and technical employees, turned over her books to
the administrator. She testified that there was no longer any
work to do because there was no local union.
Subsequently, the International closed the local union hall
in Claymont. In late 1988, about November, the Union sold
the union hall. The International put the proceeds of the sale
in an escrow account for the locals. The closure of the union
hall had the effect, according to one of Respondent’s wit-
nesses, of convincing some union members that there was lit-
tle chance that the plant would reopen.
Despite its disestablishment of the locals, the International
remained active on the scene. On March 23, union represent-
atives met with Serlin to discuss his offer, the reemployment
of its members and its status as the representative of the
plant’s employees. Serlin was noncommittal, stating only that
he would get back to them.
On April 1, Lifton predicted that the sale of Claymont to
the Serlin group would be completed within 60 days. How-
ever, on April 20, Phoenix, unable to pay its debts, filed for
chapter 11 bankruptcy. The Serlin group, at this time, an-
nounced that it was continuing its efforts to raise financing
to purchase the Claymont plant.
Shortly after Phoenix filed for bankruptcy, the Union’s at-
torney, Lynne Gerber-Saionz, filed claims on behalf of unit
employees to obtain moneys owed to them by Phoenix—va-
cation pay and other benefits.
In May, she organized an Employee Creditors Committee
(Committee) and was appointed its attorney. Members of the
Committee included representatives of both the production
and maintenance and the clerical and technical units at the
Claymont plant. Gerber-Saionz represented the interests of
the employees by attending the bankruptcy court hearings as
well as negotiations with prospective purchasers. She held
regular meetings with committee members, also attended
sometimes by union officers. At these meetings, employee
claims against Phoenix were discussed as well as prospects
for the sale of the Claymont plant and the reemployment of
its employees. Gerber-Saionz periodically sent letters to com-
mittee members summarizing recent developments.
While Gerber-Saionz continued her efforts through the
Committee to obtain moneys for the employees, in the bank-
ruptcy proceedings, the International, through its treasurer,
James N. McGeehan, announced on May 4 that it was deny-
ing payment of strike benefits to Claymont employees. He
explained that, ‘‘in contrast to a normal work stoppage, the
current Claymont situation involves a plant that is virtually
shut down, where all but a handful of employees have per-
formed no work at all since the first of the year.’’
The denial of benefits plus the fact that there were no
meetings of the local membership nor correspondents, nor lit-
erature from the Union concerning the Claymont plant and
the possibilities of its reopening may have convinced some
employees that there was little chance of the plant reopening.
This, at least, is the position of Respondent.
About May 22, the Lukens Steel Corporation expressed an
interest in buying the steel production equipment at
Claymont to produce slabs for its rolling plants in
Coatesville and Conshohocken, Pennsylvania4 and to lease
819CITISTEEL USA
5 Serlin’s efforts were unsuccessful.
6 Phoenix was in a position to negotiate various agreements be-
cause none of them could be finalized without the approval of the
Bankruptcy Court Judge.
7 The China International Trust and Investment Corp. is an agency
which was established by the Chinese government to make both do-
mestic and overseas investments, to finance the purchase and oper-
ation of businesses and to manage them following their purchase.
8 On four or five occasions in the next several months, Gerber-
Saionz asked Chang’s attorney, Carl Fernandez, to arrange a meeting
between Chang and the Union. Fernandez promised to speak with
his client but indicated that a meeting was unlikely.
the rest of the property. Lukens continued to express interest
in the Claymont plant throughout the next several months but
nothing concrete was actually done at that time.
On May 29, Serlin announced that he had a plan to oper-
ate a minimill at Claymont that would employ 400 workers,
and that he would seek $9 million in loan guarantees from
the State of Delaware to finance the project.5 On July 19, not
to be outdone by Serlin, Lukens announced a plan to buy the
Claymont plant for $10 million and restart the melt shop
with a work force of 200 employees.
On August 19, Phoenix announced that Lukens and Serlin
had both been bidding to purchase the Claymont plant and
that negotiations were progressing with both. Lifton said that
Serlin now had obtained financing but that he would not
want to say which of the two bidders were in the lead. Lifton
added that several developers had offered to purchase a piece
of land along the Delaware River, then owned by Phoenix,
and that a number of their development plans were compat-
ible with Lukens’ and Serlin’s plans to reopen the Claymont
mill.
On September 2, Serlin announced that he had obtained fi-
nancing in support of his bid from three Wilmington inves-
tors and that his plan would provide employment for be-
tween 400 and 500 workers.
On September 18, John Vogel, an International representa-
tive for district 7 of the USWA met with the Lukens vice
president of human relations and other Lukens officials to
discuss Lukens’ plan to operate the Claymont steel produc-
tion facilities. The Lukens representatives told Vogel that
they intended to employ approximately 130 workers and that
they planned to hire former Phoenix employees. They ad-
vised Vogel that they were willing to recognize the Union
as the representative of the newly hired employees, and
terms of a collective-bargaining agreement were discussed.
On September 30, Lukens made a formal offer to purchase
the Claymont melt shop equipment for $6 million and lease
the melt shop building for $50,000 per month. This plan
would provide 150 jobs.
On November 10, union representatives again met with
Lukens officials. At this meeting, discussions took place
which were similar in content to those held at their previous
meeting. Lukens advised the Union that if things worked out
with the courts, they would schedule additional meetings in
the future.
On or about November 26, several important developments
occurred which were to affect the future of the Claymont fa-
cility. First, Lukens withdrew its offer to run the melt shop
and instead proposed to purchase the melt shop equipment
and move it to one of its other plants in Pennsylvania. Sec-
ond, Lifton announced that Hong Kong investor Chang of
Wai Hing & Co. had submitted a bid for the Claymont plant.
Though Chang’s bid was considered too low, he was ex-
pected to submit a higher bid. Finally, Serlin assured Phoe-
nix that his group was still interested, would study the bids
of the other parties, and would determine later how to re-
spond.
Phoenix tentatively agreed to accept Lukens’ offer to pur-
chase the melt shop equipment for $6.6 million subject to the
approval of the Delaware Bankruptcy Court. Announcement
of the deal in the newspapers must certainly have had an ad-
verse effect on the hopes for reemployment of the jobless
Claymont steelworkers. However, the almost simultaneous
appearance on the scene of Chang, as a new potential buyer,
must certainly have had the opposite effect. Although, by
this time, many of the Claymont workers had found new
jobs, others had not.
Also on November 26, it was learned that Phoenix planned
to sign a letter of intent, on or about November 28, with
Delle Donne & Associates of Wilmington, to purchase the
land on which the Claymont plant stood. Delle Donne, a de-
veloper, it was known, intended to build a shopping mall and
office buildings on the site. If this deal went through, that,
of course, would squelch any hopes of reemployment of the
Claymont steelworkers.
The offer of Lukens to purchase the melt shop equipment
was tentatively accepted.6 However, the other interested par-
ties were given until December 14 to submit competing bids.
The deadline for submitting bids was later extended to De-
cember 21 and then to December 31.
On December 22, Chang (Wai Hing) made a $13 million
offer to buy Claymont and announced that he would operate
the plant for at least 5 years and employ 500 employees.
On December 23, Phoenix announced that it would accept
Chang’s offer to purchase the Claymont plant, if it could be
certain that he had financial backing. Lifton commented that
he would prefer Chang’s offer to purchase and operate the
plant to Lukens’ offer to purchase and remove the equipment
because it would preserve the jobs of the steelworkers.
On or about December 30, it was revealed that Chang’s
potential financial backer was CITIC,7 an agency of the Peo-
ple’s Republic of China with great financial strength. On the
basis of Chang’s offer, Lukens’ bid to purchase the
Claymont equipment was rejected by the Bankruptcy Court
on December 31.
On the evening of December 31 Chang (Wai Hing)
reached agreement on the sale of the Claymont plant, subject
to bankruptcy court approval. Steelworkers attorney, Gerber-
Saionz, attended some of the sales negotiations between
Phoenix and Chang (Wai Hing) and took an active part in
the negotiations. Steelworkers representatives John Vogel and
Norman Hayman attended at least one bankruptcy hearing in
Wilmington during which they met briefly with Chang. They
advised Chang that the Union represented the Claymont plant
employees and was interested in negotiating a collective-bar-
gaining agreement if he should purchase the plant. Chang
promised to consider the matter.8
Though the sales agreement was signed on December 31,
it still had to be approved by the bankruptcy court and
Chang still had not yet completed arrangements for financ-
ing. The following day, the story in the newspapers an-
nounced that Phoenix had rejected the Lukens bid and had
820 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
9 Hereafter, all dates are in 1988 unless noted otherwise.
10 Certain documents which were considered sensitive had already
been purged from the Phoenix files and returned to the Electric Boat
Division of General Dynamics.
sold the mill to Chang (Wai Hing) who had potential finan-
cial backing from CITIC. The story went on to state that the
plant might reopen as early as April 1988, and employ up
to 500 people within a year.
Hayman and Vogel testified that throughout 1987,
Claymont employees contacted them on a regular basis, both
through visits and by telephone, to discuss the newspaper ar-
ticles dealing with the sale and possible reopening of the
plant, and to seek further information on these matters. The
union representatives would describe to the former Phoenix
employees the status of negotiations at the time. Neither
Vogel nor Hayman were specific with regard to these 1987
visits and telephone conversations and no witnesses were
called to testify concerning them. Nevertheless, their testi-
mony is credited.
Attorney Gerber-Saionz testified that she had received
similar inquiries from former Phoenix employees, three to
four phone calls per day, and more when stories appeared in
the newspapers concerning potential sales of the Claymont
plant. She also had discussions at bankruptcy court hearings
which laid off employees frequently attended to find out if
and when the plant was going to reopen. Gerber-Saizon’s
testimony was not supported by the testimony of other wit-
nesses but is fully credited.
On January 12, 1988,9 the Union sent a letter to Chang
stating that its members were available for work and request-
ing an opportunity to negotiate a collective-bargaining agree-
ment on their behalf. As news concerning the sale of the
Claymont plant reached the public, the former employees of
Phoenix increased their contacts with the Union. Their in-
quiries concerned whether and when they would return to
work. Union representatives advised them that they were not
sure when the plant would reopen but stated that former em-
ployees would probably have an advantage in filling the jobs
when production resumed. When some of the former em-
ployees expressed the expectation that they would be recalled
in order of seniority, they were told that recall would not be
automatic and that they would have to submit employment
applications to obtain employment with the new company.
On February 1, Phoenix filed an application in the bank-
ruptcy court for an order approving the sale of the Claymont
facilities to Chang. No action was taken by the court, how-
ever, because on February 6, the local press carried an article
which reported that the Defense Department had intervened
in the sale of the Claymont mill on security grounds because
Claymont had produced armor for tanks and hull plates for
submarines. The Justice Department, at the Defense Depart-
ment’s request, agreed to ask that the sale be delayed until
the security issue was resolved.
Shortly thereafter, Representatives James Florio of New
Jersey and John Bryant of Texas became involved in the
issue when they sent a letter to the Secretaries of Commerce,
Defense, and Treasury stating:
Our concern is that this foreign takeover of a U.S.
company, if approved, may give the government of the
People’s Republic of China . . . access to the tech-
nology Phoenix Steel uses to produce items used by the
Defense Department to an extent and in a manner that
may impair our national security.
On February 10, Senator John Heinz of Pennsylvania voiced
similar concerns.
The Commerce Department responded to these inquiries
by stating:
The Arms Export Control Act prohibits selling weap-
ons or materials with potential military applications to
a list of countries, including China . . . . That would
include military specifications for armor plate to be
used in tanks or submarines, which may be in Phoenix
Steel’s files.
In addition to governmental objections to the sale based on
security grounds, other objections to the sale were filed
based on creditor and environmental interests. Nevertheless,
on February 10, the bankruptcy court tentatively approved
the sale of the Claymont facility by Phoenix to Wai Hing
with the provision that the parties resolve the various out-
standing objections. The following day, February 11, the
newspapers reported the court’s approval of the tentative
sale. They reported that the sale would not become final be-
fore March 15, at which time the court was scheduled to re-
convene to consider the financial arrangements made by
Chang with CITIC which were expected to be in place by
that time. The extension of time, granted on February 10,
also gave Phoenix officials additional time to convince the
government that material security issues were not involved in
the sale.10 Meanwhile, on February 11, Senator Heinz, ad-
dressing a group of citizens, said that he would attempt to
block the sale if he learned that sensitive military technology
could fall into the hands of the People’s Republic of China.
In February, Chang continued his attempts at obtaining fi-
nancial backing for the purchase of the Claymont sale. He
contacted a number of potential investors around the world
while he awaited a decision by CITIC as to whether it would
finance the purchase. Chang was unable, in February, to ob-
tain backing elsewhere, so again came back to CITIC. In late
February, CITIC sent a delegation to Claymont to do a site
investigation and collect more information. The delegation
included a lawyer and several engineers. CITIC, at the same
time, engaged the firm of Morgan Grenfeld to determine
whether the Claymont plant could be operated profitably.
Morgan Grenfeld concluded that the plant could operate
profitably if it was nonunion and if certain changes were
made in the sales agreement.
On March 11, the Defense Department announced that the
sale of the Claymont plant by Phoenix to Wai Hing, did not
pose any security risk. It withdrew any objections which had
been voiced previously.
In March, CITIC assigned Lu Ming, the manager of its
metallurgical department, to evaluate the Morgan Grenfeld
feasibility study and review the findings of the delegation. In
the meantime, Chang continued to look elsewhere for finan-
cial backing while he awaited CITIC’s decision. As a result
of the delay, the bankruptcy court postponed the approval
hearing from March 15 to April 4. The March 16 headlines
read: ‘‘PHOENIX SALE OFF UNTIL AT LEAST APRIL
4.’’ The article advised that ‘‘the possible role in the deal
of the People’s Republic of China’’ remained ‘‘uncertain.’’
821CITISTEEL USA
11 The closing agreement was conditioned upon Phoenix accepting
certain changes. These were subsequently negotiated without dif-
ficulty.
12 On May 10, Chang, through his attorney, Fernandez, wrote a
letter to Senator Zimmermann opposing McDowell’s preferential hir-
ing amendment because it ‘‘muddies up the water.’’
As of April 4, CITIC had not yet made a decision, and
the approval hearing was again postponed. The following
day, the Wilmington News Journal’s headline read ‘‘SALE
OF PHOENIX DELAYED FOR 3RD TIME.’’ The story be-
neath the headline told readers:
Difficult negotiations between the prospective Hong
Kong buyer and his Chinese backers delayed the sale
Monday of the Phoenix Steel Corp. mill in Claymont
for the third time. . . . .
The court and Phoenix’s creditors . . . are being kept
in the dark about the progress of the deal.
The bankruptcy judge said that apparently there were some
disputes between Chang and CITIC which might require res-
olution in court. The approval hearing was, accordingly,
postponed until April 26. Chang’s lawyer said that the dif-
ferences between the two were not serious enough to kill the
deal.
After obtaining a report from Lu Ming, CITIC manage-
ment, on April 20, approved the negotiation of a closing
agreement.11 The following day, it was reported that Phoe-
nix, Chang and CITIC had entered into a final letter of un-
derstanding and that the last hurdle to finalizing the sale of
the Claymont plant had been cleared.
On April 26, Chang submitted his financing package to the
bankruptcy court. This reflected that CITIC would be the
majority partner in the operation of the Claymont plant. The
court approved the sale.
On April 27 the newspapers announced that the bank-
ruptcy court had given final approval to the sale of the plant.
Chang was quoted as stating that the plant would be employ-
ing 300–350 people within a year.
Though the sales agreement had been finalized, there still
remained several obstacles which stood in the way of the
new owners proceeding towards takeover and production.
One was Delaware’s Coastal Zone Act. This law precluded
certain types of industrial facilities from locating in coastal
areas but allowed existing facilities to continue to operate.
However, it provided further, that any existing facility which
closes must, in order to retain its exemption, reopen within
one year.
Chang was concerned that this provision might be inter-
preted in such a way as to prevent the Claymont plant from
reopening. Indeed, the plant had been closed for over a year
and would not be in shape to start production for another
several months. Therefore, even before the deal was com-
pleted, Wai Hing sought an amendment to the Act to treat
the Claymont mill as an exception to the Act, provided it re-
sumed operation within 2 years of its shutdown. On March
28, the amendment was passed by the Delaware House of
Representatives as House Bill 444.
In April, Bill 444 was introduced in the Senate. In early
May, Senator Jacob Zimmermann introduced an amendment
which would have limited the use of a port facility located
at the Claymont plant. About the same time, Senator Harris
McDowell12 introduced an amendment to the bill, at the be-
hest of the Union, which would require the purchaser of the
Claymont plant to give preference to former employees of
Phoenix in hiring its work force. The proposed amendments
complicated matters for Lu Ming because CITIC opposed
both amendments and probably would not close the deal if
either passed or if House Bill 444, in its original form, failed
to pass. CITIC would not risk investing in the Claymont pur-
chase unless there was assurance that the plant could be re-
opened.
On May 11, the Senate Natural Resources and Environ-
mental Control Committee held a hearing regarding Bill 444
and the proposed amendments. Union representative Norman
Hayman spoke in favor of the hiring preference amendment.
Grover Brown, another one of Chang’s attorneys, spoke in
opposition to both amendments. Brown stated that his client
intended to provide blue-collar jobs to those who once had
them at the plant and expected former employees to be fa-
vorably considered because of their experience.
On the day of the May 11 Senate hearing, the press re-
ported that ‘‘there have been no assurances the bill will pass
the Senate or be signed by Gov. Castle, even though pur-
chase plans are well on the road to completion.’’ The article
quoted Castle as saying that he was ‘‘unsure whether con-
tinuing the steel operation was the best use of the land.’’
At the time of the May 11 Senate hearing, a fairly strong
and active environmental movement made its opposition
known. It was opposed to any steel mill operating at
Claymont and therefore opposed passage of Bill 444. A rep-
resentative of Delaware Citizens for Clean Air was quoted as
stating that ‘‘his group has battled the various owners of the
mill for 28 years over air pollution problems.’’ A spokes-
person for the Delaware Audubon Society stated, ‘‘We want
to see the demise of heavy industry in the zone.’’
On May 12, attorneys for Phoenix told the Senate Com-
mittee that ‘‘if the state’s coastal zone law isn’t loosened
quickly, plans to reopen the idled Claymont steel mill ‘will
all go down the drain.’’’
Following the May 11 hearing, Brown and Fernandez ap-
proached Hayman. Brown told Hayman that he had no prob-
lem with what the Union was trying to do for the Phoenix
employees and asked what he could do to help. Hayman sug-
gested that CITIC representatives meet with the Union. On
May 17, Vogel, Gerber-Saionz and another union attorney
met with CITIC representatives at a hotel in Wilmington.
The CITIC representatives questioned the union people about
the structure of unions. The Union representatives sought as-
surances that the new owners would rehire former Claymont
employees, recognize the Union as their collective-bargaining
representative, and negotiate an agreement. The CITIC rep-
resentatives stated that they would take these suggestions
under advisement and get back to them.
On May 19, a newspaper story appeared that quoted attor-
neys for Chang as saying that without HB 444, long-term fi-
nancing would not be available for resuming steel produc-
tion. On May 20, the Delaware State News reported that,
‘‘the principals in the purchase made it clear that if the bill
was not passed by June 1 when the investors are scheduled
to settle, the whole deal may be off.’’ The Union too was
aware of this fact.
Also, on May 19 another story appeared which posed a
potential complication. It was a report that the governor’s of-
fice and the potential buyers’ lawyers were ‘‘working on an
822 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
arrangement that would allow the state the possibility of re-
covering $2.3 million it will have to pay holders of state-
backed bonds sold for a previous owner to buy equipment.’’
The article continued, ‘‘it isn’t clear whether the Senate will
be willing to pass a change in the Coastal Zone Act.’’ Sen-
ator Zimmerman had been quoted earlier as stating that the
bond issue was ‘‘part of the overall picture.’’
On May 20, local newspapers reported, ‘‘several senators
considered the bonds a significant issue in deciding the costal
zone question.’’ Also on May 20, the press reported that
Governor Castle had announced his support for the amend-
ment to the Delaware Coastal Zone Act permitting the con-
tinued use of Claymont as a steel plant. More specifically,
the article stated that the ‘‘Castle administration successfully
cut a deal’’ to solve the bond problem. However, the head-
line included the phrase ‘‘uncertainty abounds’’ because the
Senate had not yet made up its mind about the legislation as
a whole. Although Chang had agreed to a $2.3 million lien
on the property to satisfy the bondholders, the issue was not
definitely resolved. Governor Castle stated, ‘‘Everything is
somewhat uncertain.’’
On May 20, CITIC announced publicly that passage of the
port facility or hiring preference amendments ‘‘would kill the
sale.’’
On May 31, the Senate debated and voted on the bill and
its amendments. Brown, during the debate, repeated Chang’s
earlier promise to hire Claymont’s former employees because
their demonstrated skills would help in getting the plant
open.
That day, the bill passed with both the port facility and
hiring preference amendments defeated. The governor signed
the bill and CITIC was in a position to close the deal.
On June 1, the Wilmington News Journal reported that the
Senate had passed the amendment to the Delaware Coastal
Zone Act and that although the hiring preference amendment
had been defeated, Chang’s attorney had promised that the
new owner intended to hire as many former Claymont em-
ployees as he could.
On June 1, Chang (Wai Hing) assigned his interest in the
Claymont plant to CITIC. CITIC had already formed
CitiSteel, a Delaware corporation incorporated on May 27, to
operate the facility.
As part of the sale, CitiSteel agreed to assume a number
of Phoenix’s obligations. These included the lease agreement
which Phoenix had with the NDIDC and an agreement to ef-
fectuate an environmental cleanup plan approved by the
Delaware Department of Environmental Resources. With re-
gard to the latter obligation, Lu Ming had hired Environ-
mental Resources Management to conduct studies on the site
to identify all environmental problems. He then negotiated an
agreement with the local EPA office and entered a consent
decree on June 1. Pursuant to that agreement, CitiSteel
would eventually spend $2 million to clean up the site.
On June 4, the press announced that CitiSteel had acquired
the plant. On or about that day, it took possession of the
mill. It hired Hearn and the four former Phoenix supervisors
who had been working with him at the mill since it had shut
down. Hearn was named plant manager and the four super-
visors were given positions similar to those they had occu-
pied prior to the mill’s closing.
On June 5, CITIC officials toured the facility. On June 6,
the press, in covering the tour, reported: ‘‘CitiSteel expects
to make the same amount of steel with 300 people that ear-
lier owners employed 600 to 1000 to make.’’ The same arti-
cle stated that CitiSteel had announced that it intended to
spend $10 million modernizing the plant, reconditioning its
electric furnaces, continuous caster and rolling mills. It stated
that operations would resume by October 1. The press also
reported that Chang and CITIC officials had not decided
whether to oppose a union at the plant, but that many who
had come to know them while negotiating the deal, predicted
that they would not favor a union. The article emphasized
that CitiSteel would not produce specialty steels, as had the
previous owners, but would concentrate instead on the com-
modity steel market where steelmakers compete for price. Fi-
nally, the article described the plant as being in very bad
condition.
In late June, subcontractors began work on the refurbish-
ing of the plant, work which continued on into early 1989.
Hearn and the four former Phoenix supervisors supervised
the work of the subcontractors. One of the subcontractors,
Erectix, employed former Phoenix maintenance employees to
do refurbishing work at the plant. Erectix was owned by a
former Phoenix employee. Lu Ming initially felt that the re-
furbishing would take 4 to 6 months. As it turned out, condi-
tions were much worse than originally anticipated. Moreover,
some parts were not susceptible to repair and had to be re-
placed. The refurbishing took several months longer than ex-
pected.
Newspaper articles published in the Wilmington area cov-
ered the progress of the refurbishing project throughout the
summer and into the fall. One such article reported that
CitiSteel had ‘‘committed orally to rehiring qualified former
Phoenix workers,’’ and expected to employ 300 to 350 work-
ers initially.
During the summer, CitiSteel initiated a plan to hire a
managerial and supervisory staff. With regard to rank-and-
file employees, the lieutenant governor of Delaware, S.B.
Woo, aware of CitiSteel’s hiring intentions, wrote letters to
CitiSteel’s chairman on August 4 and 15, thanking him for
meeting with a representative of the Union and suggesting
that additional meetings be held with the Union. On August
30, Respondent replied noncommittally. On September 7, the
News Journal reported that the ‘‘rehiring of all former Phoe-
nix Corp. employees at the revitalized plant and immediate
recognition for their union was unlikely.’’
On September 9, Steelworker District Director John Reck
sent a letter to CitiSteel demanding recognition as the collec-
tive-bargaining representative of the production and mainte-
nance and clerical and technical units of Respondent’s em-
ployees. He also requested that negotiations begin toward
collective-bargaining agreements covering these units.
On September 28, Woo again wrote to CitiSteel urging
Respondent to meet with the Union. On October 4,
CitiSteel’s Chairman of the Board Lu Ming responded
terming the request for recognition ‘‘premature’’ but holding
open the possibility of ‘‘such a meeting in the near future.’’
Lu advised Woo that Respondent would contact him when
it ‘‘concluded that such a meeting would be appropriate.’’
During September, CitiSteel continued to publicly pro-
claim its intention of hiring an initial work force of between
300 and 350 employees. Subsequently, a story appeared in
the Sunday News Journal quoting CitiSteel president, Jim
Hasson, as stating that initially Respondent’s complement
823CITISTEEL USA
13 Hereinafter, all dates are in 1989 unless noted otherwise.
14 In 1986, Phoenix Steel had employed 557 production and main-
tenance employees on three shifts per day, in all departments except
the plate mill which operated two shifts.
15 Speciality steel accounted for between 30 and 35 percent of
sales in dollars.
would be only 100 workers and that the number would there-
after build slowly to a full work force of 350.
While these announcements were being made in Septem-
ber, 12 to 15 contractors employing between 75 and 150
workers, at different times, were involved in revamping the
plant. The equipment had deteriorated to the point where,
after 2 years of just sitting there, extensive repairs and re-
vamping had to be undertaken before the plant could run.
The refurbishing had to be continued into January 1989. Dur-
ing this period, entire machines had to be shipped out of
state to Michigan, Ohio, and elsewhere to be rebuilt and all
the electrical equipment had to be revamped.
In addition to equipment refurbishing, the plant itself re-
quired repair. There were holes in the roof and breakage
throughout the plant. The main office building’s boiler had
broken down, so that had to be renovated. All of these re-
pairs, 650 projects in all, required time during which no pro-
duction took place. There were 10 to 12 CitiSteel employees
engaged in cleanup. This extended the hiatus between the
end of production and its start up even further.
In early October, CitiSteel placed advertisements in the
newspapers for production and maintenance employees. That
month, it began to hire significant numbers of employees to
do cleanup work and to attend safety and job training class-
es.
On October 7, the Union sent a letter to all former Phoe-
nix unit employees. The letter advised them that Respondent
was accepting applications and urged them to apply. It stated
that the Union would represent the employees hired by
CitiSteel if a majority of people hired had previously worked
for Phoenix. It scheduled a meeting for all former Phoenix
employees for October 27.
Meanwhile, on October 9, Jim Hasson, CitiSteel’s new
president, was quoted as saying, ‘‘We are going to hire the
best people that we can possibly find. We are going to look
at everyone available, whether they have been a former em-
ployee or not.’’ He said that CitiSteel planned to make a few
grades of basic steel plate very well. The same article noted
that the Union had sold the local union hall and no longer
had an office in Delaware and that John Reck, director of
District 7, USWA, whose office was located in King of Prus-
sia, Pennsylvania, was not responding to repeated phone
calls.
At the October 27 union meeting, the Union urged those
present to apply for work at CitiSteel and many did. On No-
vember 14, the first production workers began working for
Respondent.
On December 1, Reck sent a letter to Lu Ming renewing
his demand for recognition and requesting a meeting to dis-
cuss CitiSteel’s hiring practices. On December 20, Jerry
Downie, CitiSteel’s director of human resources replied, de-
clining Reck’s request for a meeting and stating that
CitiSteel was not a successor to Phoenix. He advised Reck
that recognition of the Union as the exclusive collective-bar-
gaining representative of its employees would be unlawful.
On January 29, 1989,13 a newspaper article was published
which discussed CitiSteel’s commitment to operating the
Claymont plant as a minimill. It informed the general public,
including the former Phoenix employees, how the Claymont
plant would be operated once reopened.
Between mid-February and March, Respondent began
melting steel and producing rolled steel plates. As of April
17, it was operating the melt shop on two shifts and the plate
mill on one shift. Maintenance employees were working
three shifts and shipping employees two shifts. As of April
17, CitiSteel had hired enough employees to constitute a rep-
resentative complement of employees at the Claymont plant.
The plant employed 124 production and maintenance em-
ployees. A majority of these employees had previously
worked for Phoenix Steel in the equivalent unit.14
Respondent continued to hire employees and increase pro-
duction throughout 1989. It reached full production in March
1990 at which point it employed a full complement of em-
ployees. Respondent, by this time, was operating the melt
shop three shifts and the plate mill two shifts, per day.
The Phoenix and CitiSteel Operations a Comparison
Production and Maintenance
The Claymont mill under Phoenix Steel in 1986 produced
commodity grade carbon steel plate. This basic steel ac-
counted for 80 percent of the mill’s production. The mill also
produced alloy steel plate, heat-treated carbon plate and other
specialty steels.15 Phoenix sold about half of its output to
service centers and the other half to end users.
Phoenix Steel produced a broad line of construction, ma-
rine, pressure vessel and other steels of commodity and spe-
cialty types. The types of steel it produced numbered ap-
proximately 75. It also rolled and treated stainless steel prod-
ucts provided by outside customers and produced ingots at
the Claymont facility for use at the Phoenixville facility.
Phoenix not only produced a great variety of specialty
types of steel but also many grades, sizes, and specifications
of carbon steel plate.
Phoenix, with its emphasis on specialty products con-
centrated on quality at the expense of quantity in order to
raise its margin of profit per sale. This resulted in Phoenix
becoming a job shop for end users. This meant, according to
the testimony of Robert Garvey, that each order had to be
treated as a separate operation, with constant switching of the
operation to meet the requirements of the numerous and var-
ied orders. Each individual plate in a customer’s order had
an identity which had to be maintained throughout the entire
production cycle. The exact production status of each indi-
vidual plate had to be known, where it was, and where it was
going next. The special attention which had to be paid to the
production of specialty steel and end user orders often re-
quired the employment of additional white-collar workers
such as expediters and metallurgists, with the result that each
ton of steel produced cost almost twice what it would cost
the industry as a whole.
When CitiSteel purchased the Claymont mill, it narrowed
its product line from approximately 75 types of steel to about
19, all commodity grade carbon steel, no specialty types. It
produced no new types of steel but continued production of
824 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
16 This figure does not include Rich Van Leer, a general super-
visor-maintenance [worker] who had left Phoenix in 1976 to work
for another company.
19 types previously produced by Phoenix. It discontinued
rolling and treating stainless steel for outside customers and
no longer produced ingots for the Phoenixville plant.
CitiSteel produces only 10 to 15 percent of the carbon
plate specifications that Phoenix did. Nevertheless, as to
those carbon plate steel products that CitiSteel now sells,
which were sold by Phoenix Steel, CitiSteel sells much more
of them than Phoenix.
CitiSteel’s shift in product has caused some shift in the
customer base. In 1989, 80 to 85 percent of CitiSteel’s cus-
tomers were service centers. Similarly, 80 percent of
CitiSteel’s customers had been Phoenix customers but only
40 to 45 percent of Phoenix’s customers were later cus-
tomers of CitiSteel.
In 1986, Phoenix Steel’s management consisted of several
levels. Immediately above the rank-and-file employee was
his foreman. The foreman, in turn, were responsible to one
of several general foremen. Several of the general foremen
were responsible to superintendents. On the production side,
the superintendents reported to a layer of managers. On the
maintenance side, which had its own chain of command, the
superintendent and three of the general foremen reported di-
rectly to the director of maintenance. The director of mainte-
nance and the three production managers were directly under
the plant manager who was responsible to the executive vice
president.
At Phoenix, production and maintenance each had its own
chain of command which was not joined until it got to the
plant manager level. Thus, the director of maintenance, act-
ing independently, with his own set of priorities, might select
one project for his maintenance crew while the production
managers, with their own set of priorities might have pre-
ferred the maintenance crew to be assigned to a different
project. Such differences, when they occurred, would have to
be ironed out by the plant manager.
Phoenix’s chain of command included 35 foremen, 13
general foremen, 4 superintendents, 4 managers, the director
of maintenance, the plant manager, and the executive vice
president.
As of April 17, CitiSteel’s management was far more sim-
plified. Thus, immediately above the rank-and-file worker
was a line of supervisors. With a single exception, the super-
visors were responsible to general supervisors. These, in turn,
were responsible to managers who reported to the vice presi-
dent of operations.
CitiSteel’s chain of command, as of April 17, consisted of
10 supervisors, 6 general supervisors, 5 managers, and a vice
president of operations. The production and maintenance
chain of command was a single consolidated entity and was
smaller than Phoenix had had, just 22 management personnel
in all.
At CitiSteel, maintenance was integrated into the two main
operations sections, steel production and plate production.
The manager of each had his own general supervisor of
maintenance reporting to him.
As of April 17, 616 of the 22 managerial personnel em-
ployed by CitiSteel had been managerial employees at Phoe-
nix. Two of CitiSteel’s ten supervisors had been foremen at
Phoenix Steel. Respondent’s witnesses testified that CitiSteel
did not hire more of Phoenix Steel’s managerial personnel
because it did not want to repeat the same mistakes and
wanted to create a new face. Most of the Phoenix managerial
personnel who were hired ‘‘had some indispensable under-
standing’’ of the equipment at Claymont, which was crucial
during the revamping period. Lu Ming testified that CitiSteel
really needed some people who were familiar with the equip-
ment.
Respondent asserts that because there are fewer super-
visors at CitiSteel than at Phoenix there is less supervision
and consequently a necessity for workers to take greater re-
sponsibility. Philip Raczkowski, a former millwright at Phoe-
nix, working in mechanical maintenance at CitiSteel, testified
that there is a substantial difference between the way mainte-
nance personnel in the melt shop are now subervised at
CitiSteel and the way they had been supervised at Phoenix.
He noted that under CitiSteel, supervision consists of only a
‘‘daylight foreman and a superintendent.’’ He testified, ‘‘We
run the shop and if we have problems or if there are major
decisions that need to be made, we’ll go to a foreman and
have them made, but most of the time, we make the deci-
sions ourself.’’ At Phoenix, ‘‘you were pretty much told
what you had to do and you go do it.’’
Another CitiSteel employee, and former Phoenix steel-
worker, testified that his CitiSteel job is ‘‘a lot more exten-
sive. You have a lot more responsibilities.’’ At Phoenix, ‘‘we
used to have a turn foreman and he would assign you the
job for the night, and then whatever incidental repairs, he
would come and tell you . . . such and such a thing needs
to be fixed, go and get that.’’ At CitiSteel, ‘‘We don’t have
anybody [supervising]. We’ve got two electricians on a turn
and two mechanics.’’
Another rank-and-file employee of CitiSteel, Joseph Mar-
vel, appearing on behalf of Respondent, testified that on the
casting machine he operates at CitiSteel, he runs the control-
ling computer whereas the water channel controls, that did
the work of the computer at Phoenix, were run by foremen
rather than by production employees. He emphasized that the
crew has more responsibility for getting the machine ready
and casting the steel than they did under supervision at Phoe-
nix.
Another of Respondent’s witnesses, William Korpas, testi-
fied, in agreement with Marvel, that rank-and-file employees
at CitiSteel are performing duties that had been performed by
supervisors at Phoenix. He noted, in particular, ‘‘We have to
write in a log book all our jobs that we’ve done for the shift.
We also fill out a separate page on the jobs that are listed
under areas and how many hours, man hours, we took to
complete and that’s turned in at . . . . the end of every day.’’
All of this work was formerly done by a turn foreman.
Korpas also noted that at CitiSteel an employee will go to
the storeroom himself for any parts he might need, whereas
at Phoenix, the turn foreman would go to get the parts for
him.
CitiSteel’s dedication to the production of commodity steel
for sale primarily to service centers permits it to stay in pro-
duction and build up inventories from which to fill orders.
Unlike Phoenix, it is not necessary to close down production
to await specific orders to begin the production process.
Likewise, without specialty steel production, the extra white-
collar employees and paperwork necessary to track individual
825CITISTEEL USA
plates could be dispensed with and was, by CitiSteel, with
apparent savings to the Company.
When CitiSteel took over the Phoenix plant, the equipment
was in serious need of repair since it had not been used since
Phoenix shut it down. CitiSteel did not merely have repair-
men come in and put the equipment into running order but,
in certain cases, sent out entire pieces of machinery to be re-
vamped. It had some pieces of equipment totally modernized
by adding technically advanced components. Thus, it added
computerized controls to the continuous casting machine.
Whereas, at Phoenix Steel, the continuous casting machine
had been manually operated under the strict supervision of
the shift foreman, at CitiSteel, the production workers oper-
ate the computerized casting machine themselves.
CitiSteel installed a static var compensating system in its
electric arc furnace which increased the furnace’s power fac-
tor from 70 to 90 percent. This resulted in a reduction of tap
time by half an hour and a savings of $30,000 per month.
CitiSteel added a water-cooled roof to its furnace. This addi-
tion reduced the downtime required to repair the refractory
roof on the old furnace and also reduced the tap time by half
an hour per heat.
CitiSteel totally rebuilt the reheat furnace in the plate mill.
The furnace was thereby enabled to increase its full hearth
coverage from 60 to 100 tons per hour. The reheat furnace
was restructured in such a way as to permit one employee
to operate it whereas at Phoenix Steel it took two. CitiSteel
rebuilt or made major repairs to every piece of equipment in
the rolling mill including the cranes which were completely
renovated. The revamping and modernizing of the plant
eventually cost CitiSteel $25 million.
Though there were major improvements made in the larger
pieces of machinery and equipment, the individual worker
continued, in most cases, to do the same job with the same
tools.
In 1986, Phoenix’s production of steel began when it pur-
chased scrap from various vendors. The steel was delivered
to its scrap yard where it was stored outside the melt shop.
There, it was eventually inspected and sorted. The usable
scrap was then loaded on railcars by which it was delivered
to the scrap aisle of the melt shop. At the scrap aisle, cranes
scooped the scrap out of the railcars and dumped it into a
charging bucket. The bucket was transferred, again by rail-
car, to the furnace area where its contents was dumped into
one of two electric arc furnaces. The furnace melted the
scrap by means of electric charges. Varying amounts of dif-
ferent elements were added to the bath of liquid steel during
the melting process to obtain the grade of carbon or alloy
steel desired. Chemical analysis checks were made at this
time.
When the heat was molten, it was transferred by means of
a ladle and poured into either ingot molds or into a continu-
ous casting machine. The ingot molds were located in an
area of the plant known as the teeming aisle. The casting
machine was located next to the teeming aisle and had two
strands which produced 60- and 80-inch-wide slabs which
were 10 inches thick. Ingots were both narrower and thicker
than slabs. Some alloy steels were processed through a vacu-
um degassing machine to remove impurities before being
poured into the caster or ingot molds.
The ingots and slabs were transferred to the slab yard, by
means of a set of rollers, where they were inspected, condi-
tioned and cut into smaller pieces by acetylene torches. Next,
they were taken by railcars to the area of the plate mill
known as the steel yard. At the plate mill the ingots and
slabs were reheated, in either a soaking pit or a reheat fur-
nace. The reheat furnace handled only slabs whereas the
soaking pits could handle either slabs or ingots. Two em-
ployees operated the reheat furnace. After being reheated, the
slabs and ingots were passed through a 2-hi mill and a 4-
hi mill which rolled them into steel plates. The plates were
then flattened by a plate leveler and cooled in a cooling bed.
After cooling, the plates were indentified with customer
information. They were then cut into desired sizes by a series
of mechanical shears or by employees using acetylene torch-
es. The plates were then inspected. Any defects found were
removed by grinding or welding to produce the finished
product. In the special finishing department, certain plates
were heat-treated, pressed, pickled, or shotblasted. Some
were painted.
Finished plates were transported to the shipping depart-
ment where they were loaded by means of straddle hoists or
overhead cranes onto trucks or railroad cars and shipped to
customers.
CitiSteel’s production begins in the scrap yard where scrap
is received from its suppliers. There it is unloaded, sorted,
and stored. The usable scrap is divided into appropriately
sized loads and otherwise made ready for transport to the
melt shop. Unlike Phoenix, CitiSteel has contracted out the
running of the scrap yard to another company. CitiSteel em-
ployees are not employed in the scrap yard.
After a load of scrap arrives at the furnace area, it is proc-
essed through the one electric arc furnace in use. The one
furnace produces seven or eight heats per day, as many as
Phoenix produced using both furnaces. This was made pos-
sible by improvements built into the furnace by CitiSteel
when it was revamped. At the melting stage, CitiSteel does
not perform any metallurgy work on the heat at the furnace.
Rather, after the heat is poured from the furnace into the
ladle, it is transferred to a ‘‘stir station’’ located where the
old vacuum degassing station used to be. There, CitiSteel
employees balance the chemical composition of the heat in
the ladle. This saves time since by not taking time to balance
the chemical composition at the furnace, it makes the furnace
available for another heat sooner. Whereas, at Phoenix, the
heat could be sent to a number of places for continued proc-
essing, at CitiSteel, all heats proceed directly to the 80-inch
strand of the continuous caster. Because of the innovations
made, the caster receives one ladle of steel after another.
Downtime is held to a minimum.
After the slabs emerge from the caster, they are cut and
sent to the slab yard just as at Phoenix. There, since CitiSteel
has eliminated the soaking pits, all the slabs are processed
through the newly redesigned reheat furnace. After the slabs
are reheated, they are rolled through the 2-hi and 4-hi mills
just as was the case with Phoenix. However, since CitiSteel
does not roll ingots or alloy or stainless steels, which are
harder than carbon steel and are rougher on the rolling equip-
ment, there is less maintenance required and less downtime.
Also, since CitiSteel does not produce the variety of sizes of
steel plates that Phoenix did, it saves time by not having to
make as many adjustments as did Phoenix.
After rolling, CitiSteel does not heat-treat, shotblast, pick-
le, or paint any of its products. It does none of the special
826 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
finishing work that Phoenix did but ships it out as ‘‘plain va-
nilla,’’ i.e., commodity carbon steel.
The areas of the Claymont plant that had been devoted by
Phoenix to the production of specialty and alloy steel prod-
ucts have not been used by CitiSteel since it occupied the
plant and began its own production. It does not use the ma-
chinery located in the special finishing department nor the
vacuum degassing equipment. For the most part, it does not
use the area of the buildings housing this equipment. It does
not use the ingot pouring facilities nor the soaking pits since
it does not pour ingots. One-half of the soaking pit building
is not in use. It operates only one of the two strands of the
continuous caster and only one of the two electric arc fur-
naces. The CitiSteel shipping department operates only the
overhead cranes for loading purposes while the straddle
hoists remain idle.
Areas of buildings dedicated to special finishing by Phoe-
nix have been transformed into inside storage facilities by
CitiSteel. CitiSteel has also discontinued the use of the weld
and press shop, the pipe mill building, the annex building,
and the trailer, all located north of Philadelphia Pike.
Except for those areas no longer in use, CitiSteel unit
workers continue to work in the same general locations as
they had in the Claymont plant under Phoenix. CitiSteel con-
tinues to use most of the physical plant used by Phoenix, and
most of the departments occupy the same spaces. The plate
mill and melt shop employees work in the same areas. The
plant storerooms remain where they had been. Management
and office clerical employees occupy the same office build-
ing.
In 1986, Phoenix employed workers in the production and
maintenance unit in 134 job classifications, with job descrip-
tions for each classification. These job descriptions existed
pursuant to the United Steelworkers of America and Coordi-
nating Committee Steel Companies Agreement. Under the
collective-bargaining agreement with the Union, Phoenix
could not create or change job descriptions unless it first ne-
gotiated with the Local, the International and the Coordinat-
ing Committee.
According to Joseph Hearn, the job classifications in effect
at Phoenix were sacrosanct. If an employee performed work
which was covered by another employee’s job description,
but not his own, a grievance would probably result. Such
grievances were fairly common, numbering between 25–30
per year, despite efforts by supervisors to avoid questionable
assignments. Written job descriptions covering each classi-
fication defined, in precise terms, exactly what duties were
to be performed by an employee covered by a particular job
description. Each job description outlined the equipment or
machine to be used, the work procedure to be followed and
the supervision to be received by each employee in the clas-
sification which the job description covered. For the most
part, Phoenix employees performed only work covered by
their job description just as the rules required. Management
did not require them to do otherwise for fear that a grievance
would be filed.
The Claymont plant, as operated by CitiSteel, employs
workers in about 25 classifications. The object of reducing
the number of job classifications, according to Lu Ming, was
to enrich job content and broaden the responsibility of each
job position. The objective was accomplished by having each
CitiSteel employee perform several functions, each of which
had been covered by a separate job classification at Phoenix.
CitiSteel production workers can be assigned maintenance
jobs and can be told to operate equipment which is not nor-
mally assigned to them. CitiSteel’s job descriptions provide
that an employee may be required to perform other similar
or related duties, as assigned, in accordance with work load
priorities, and perform preventive and general maintenance
duties, as assigned and directed during scheduled and non-
scheduled mill downtime. They may be required to operate
mobile equipment and/or pendant controlled cranes to trans-
port and transfer material as required for operations assigned.
The 25 or so CitiSteel job descriptions thus cover everything
that has to be done out in the plant.
The record reflects that CitiSteel, in some cases, has com-
bined several Phoenix job classifications or repressibilities to
create one CitiSteel job classification. Thus, records indicate
that in the maintenance and refractory areas, whereas Phoe-
nix employed 172 employees in 32 job classifications,
CitiSteel has reduced those numbers to 47 employees in 7
job classifications. CitiSteel has totally eliminated only 2 of
the 32 job classifications. The remaining 30 Phoenix job
classifications have been consolidated into the 7 CitiSteel job
classifications now extant. Similar reductions in job classi-
fications have occurred in the various other areas at CitiSteel.
As noted, some jobs have not been combined with others
but have been totally eliminated such as all scrap yard work,
the in-plant railroad work, and certain maintenance functions.
Although certain jobs and classifications have been combined
and others eliminated, and although CitiSteel workers are re-
quired to perform additional duties, the work performed by
them is the same work that had been performed by Phoenix
employees in the production and maintenance unit, before the
plant closed.
The ability of the CitiSteel production and maintenance
employees to perform several functions is the result of cross-
training. Initially, there were formal training sessions con-
ducted with the help of the State of Delaware. Thereafter,
management encouraged each employee with a special skill
to learn other skills so that if he were faced with a problem
which is not strictly within the parameters of his expertise,
he would be able to solve the problem himself rather than
seek the aid of another employee. Thus, millwrights and
electricians are encouraged to learn each other’s trade and to
perform tasks which would have been forbidden under the
union contract in force at Phoenix. The flexibility achieved
through cross-training improves efficiency and saves time,
according to Respondent’s witnesses.
The cross-training of employees is also beneficial in that,
if a piece of equipment or machine breaks down, its operator,
cross-trained in other jobs, can be used to perform other
tasks, perhaps in another area of the plant. The actual cross-
training is sometimes under the tutelage of supervisors but
sometimes it is a matter of one rank-and-file employee train-
ing another.
Working conditions at CitiSteel differ in several respects
from those that were in effect at Phoenix, before it closed.
The fact that workers at CitiSteel perform numerous tasks
and are not constrained by contractually enforced rules limit-
ing their work only to jobs included within their classifica-
tion and job description, has already been discussed. How-
ever, the working conditions at CitiSteel differ from those
827CITISTEEL USA
17 At Phoenix, different colored hard hats served as departmental
identifications.
that were in effect at Phoenix, in a number of other ways.
For example, whereas at Phoenix, subervisors were generally
prohibited from performing unit work, at CitiSteel there are
no such restrictions and supervisors are encouraged to per-
form any work that will get the job done. There are also dif-
ferences in the grievance procedures. The grievance proce-
dure at Phoenix was contractual and formal, and provided for
binding arbitration. At CitiSteel, the grievance procedure is
informal and discretionary. At CitiSteel, there are no restric-
tions on subcontracting. At Phoenix, there were contractual
limitations. At CitiSteel, management can appoint any em-
ployee as a temporary supervisor. At Phoenix, there were
procedural restrictions under the contract. At CitiSteel, work
scheduling and the workweek are not subject to contractual
limitations as they were at Phoenix. The same is true with
regard to overtime, recall procedures, the filling of temporary
vacancies, and promotions. Finally, with regard to economic
terms of employment, at CitiSteel the wage range for rank-
and-file employees is $8.50 to $16 per hour and is not strati-
fied but dependent on the number of skills an employee is
capable of performing. At Phoenix, the wage range was
$9.40 to $14.10 per hour and was dependent on job classi-
fication. Retirement plans and other fringe benefits also dif-
fer.
CitiSteel has made a number of improvements at the
Claymont facility which Respondent claims has had the ef-
fect of its workers viewing management in a more favorable
light than Phoenix employees viewed their management. One
such improvement is in the exhaust system in the melt shop
which was operating inadequately under Phoenix, causing
problems of dust and smoke accumulating in the air.
CitiSteel made the necessary repairs. Other improvements in-
clude upgrading the locker room facilities, removing time-
clocks, removing different colored hard hats in favor of ev-
eryone wearing the same white hard hats,17 permitting rank-
and-file employees the use of the parking lot previously re-
served for supervisors, and enforcing safety regulations to a
greater degree.
The Clerical and Technical Unit
Phoenix recognized the unit of plant clericals, office
clericals, nurses, and technical employees at the Claymont
plant on July 24, 1964. Local 6627 was chartered to assist
in the administration of any collective-bargaining agreements
covering employees in that unit since that date. Recognition
was voluntary and the unit was never formally certified by
the Board.
The unit included ‘‘all clerical nonproduction employees
that were not very definitely and succinctly exempt.’’ Mem-
bers of the unit worked in the office building, plate mill,
steel production area, and metallurgy department. Originally,
the unit was referred to as the office and technical unit, later
as the clerical and technical unit.
The unit consisted of office clerical, plant clerical, and
technical employees. The office clericals were divided into
20 job classifications. These employees all worked in the
main office or in the annex located immediately behind it.
Eleven of the twenty job classifications were supervised by
accounting or finance supervisors. These were, as of 1986,
the cost statistical clerk, the senior accounts payable clerk,
payroll clerk, billing clerk, accounts payable approval clerk,
code clerk, accounts payable clerk A, (adding) machine oper-
ator, production record clerk (accounting), invoice typist, and
clerk typist. A few of the classifications were not filled at
the time. The accounting and finance supervisors were lo-
cated in the main office building. The computer operator,
keypunch operator, and senior keypunch operator were super-
vised by MIS supervisors who were located in the main of-
fice building. The multilith operator was supervised by pur-
chasing department supervisors located in the main office
building. The order pricing clerk, order checker, change
order clerk, and promise clerk were supervised by the sales
supervisors who were located in the main office building.
The EDP control clerk was supervised by production control
supervisors located in the main office building.
The office clerical employees performed their day-to-day
duties in the main office building rather than in production
areas of the mill or elsewhere. They were rarely expected to
visit the mill and therefore were not required to wear protec-
tive clothing—hard hats, boots, glasses, and ear plugs. They
punched the timeclock in the main office and performed du-
ties which were more concerned with the business end rather
than with plant operations. Breakdowns in the melt shop or
rolling mill which would directly affect the production and
maintenance employees would not ordinarily directly affect
the office clerical employees.
In 1986, there were 33 plant clerical classifications. Five
of the job classifications were located in the main office
building. These were the head provider-scheduler, clad pro-
vider, providers, specification examiner, and turn clerk. The
other 28 classifications were located at various operational
sections of the plant. The plant clericals working in the main
office building were so classified because their activities
were related to the operation of the plant. Thus, the providers
would translate orders into steelmaking requirements by tak-
ing cutting instructions to production employees at the con-
tinuous caster. They would then trace the slabs to the steel
yard side of the road and give instructions to employees
there on how to roll the slabs. The providers would be deal-
ing with the plant employees throughout the day and would
make frequent trips from the office building to the plant.
The 28 classifications not located in the main office build-
ing were located throughout the mill in the plate mill or melt
shop. Nine plant clerical classifications worked in the plant’s
storeroom. These were the buyer, follow clerk, posting clerk,
purchase order typist, department clerk, stores clerk, inven-
tory clerk, stores receiver, and inventory record clerk. The
freight clerk worked in one of the shipping departments in
the traffic area. The steel production expediter was located
in an office in steel production outside the melt shop. The
order detailer and production record clerk worked in the plate
mill in the special finishing area. The shipping clerks worked
in the ‘‘as rolled’’ shipping area, special finishing area, and
the special finishing shipping area. The clerk typist could
work in various areas. The status clerk worked in special fin-
ishing. The expediters worked in the plate mill and in special
finishing. The mill clerk worked in the steel yard. The scrap
clerks worked in the scrap aisle of the melt shop. The var-
ious test report clerks and QC posting clerks worked in the
physical test lab which was near special finishing. The ob-
servers worked in the melt shop and the maintenance clerks
828 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
18 Some classification were vacant at Phoenix in 1986.
and the scheduler worked in the maintenance office building
located outside the plate mill area.
The plant clericals were supervised by production control
people, purchasing people in the storeroom areas, and by op-
erating supervision. Supervision included the general fore-
men, plate mill superintendent, and shipping superintendent,
the same supervisors that supervised production and mainte-
nance personnel. The expediter testified that she considered
herself part of steel production. Her supervisor was the su-
pervisor of the materials department, steel production.
Unlike the office clerical employees, the plant clerical em-
ployees located in the plant wore hard hats and protective
glasses. The office and plant clerical jobs were not inter-
changeable. Any breakdown in production would affect the
work of the plant clericals because their work was associated
with production.
In 1986, there were 7 technical job classifications filled by
11 employees who performed various chemical and physical
tests on the steel products produced at Phoenix in the chemi-
cal lab or the physical testing lab. Chemical analysis was
conducted by a chemical technician or senior technician
whose work was performed when a heat of steel was still in
its molten stage. A test sample was taken from a heat in the
melt shop and taken to the chemical lab. There it was ana-
lyzed either by the use of a spectrometer or by a procedure
known as wet analysis. The purpose was to determine the
physical chemistry of the steel, the amount of carbon, man-
ganese, sulfur, etc., which it contained. These were compared
to the specifications and a report prepared.
The head technician and the senior technicians were re-
sponsible for conducting physical analyses. These were done
in the physical testing lab located in the special finishing
area. Their work involved testing the quality of the finished
plate steel products after they had been rolled in the plate
mill. The physical testing was of two types. In one, test
pieces were cut from a rolled plate, taken to the lab and test-
ed there for tensile strength and yields. In the other, the NDT
(nondestructive testing technicians) ultrasonically tested
plates without cutting them.
The technical employees were supervised by chemical lab
and physical lab supervisors rather than production super-
visors or supervisors from the main office building. The
technicians punched the timeclock in the plant located closest
to their work stations. Like the other employees who worked
in the plant, they were required to wear safety gear.
The technical employees had to be trained, tested, and
code certified before they could conduct ultrasonic examina-
tions. Use of the spectrometer had also to be taught.
The parties have stipulated that CitiSteel USA employed
a substantial and representative complement of clerical and
technical employees as of June 13, 1989. It was also stipu-
lated that a majority of the clerical and technical employees
employed by CitiSteel, as of June 13, 1989, had previously
been employed by Phoenix in the C&T unit.
CitiSteel employs 5 office clerical employees in 3 classi-
fications compared to 21 office clerical employees in 1718
classifications which existed at Phoenix. It employs 3 plant
clericals in 2 classifications whereas Phoenix employed 44
plant clericals in 24 classifications. As of June 13, CitiSteel
employed no employee who was classified as a technical em-
ployee whereas Phoenix had employed 11 employees in 6
technical classifications. In explanation, Daniel Brown,
CitiSteel’s manager of production planning and control, testi-
fied:
The philosophy at Citi was that the hourly people
were going to do more diversified job duties. Also, su-
pervisors and managers did a lot more work, particu-
larly clerical work. CitiSteel did not have all the prod-
uct lines that Phoenix had. And a lot of these technical
services . . . were contracted out to outside contractors.
At CitiSteel, one of the two accounts payable assistants
among the office clericals reviews invoices and incoming
bills from vendors, certifies that services or goods were actu-
ally received, and pays the bills after obtaining approval.
This employee also summarizes invoices and assigns them to
various cost centers for budgeting. He or she also adds up
any and all numbers from invoices. At Phoenix, these jobs
were performed by three senior accounts payable clerks, a
cost statistical clerk, and an adding machine operator. Now,
according to Respondent, one CitiSteel office clerical does
the work of five Phoenix employees in three classifications.
At CitiSteel, the other accounts payable assistant is respon-
sible for outgoing shipments. He or she must see that cus-
tomers are invoiced and that pricing and trucking information
appear on the invoices. At Phoenix, these duties were per-
formed by the billing clerk, two code clerks, the adding ma-
chine operator, and the invoice typist. Thus, the one CitiSteel
accounts payable assistant performs the work previously
done, in part, by five Phoenix employees in four job classi-
fications.
At CitiSteel, the financial clerk is responsible for the pay-
roll for both hourly and salaried employees. At Phoenix, two
payroll clerks did the hourly payroll and an exempt employee
did the salaried payroll.
Except for the two CitiSteel clerk typists, the remaining
Phoenix office clerical jobs were all eliminated at CitiSteel
due to automation or reassignment of duties to either super-
visors or salaried personnel. Thus, the classifications of key-
punch operator and EDP control operator were eliminated
when Respondent did away with the keypunch system. The
work of the order pricing clerk, the order checker, and the
change order clerk, all classifications within the Phoenix of-
fice clerical unit, has been assigned to customer service rep-
resentatives who are salaried personnel in the sales depart-
ment.
CitiSteel has two plant clerical job classifications: store-
keeper and clerk typist. The two storekeepers are responsible
for inbound shipments of supplies and materials that are used
throughout the plant. They issue parts and supplies to people
in the plant and maintain inventory records of what is com-
ing in and going out. They perform the functions of five dif-
ferent Phoenix plant clerical classifications, i.e., the stores
clerk, the inventory clerk, the stores receiver, the inventory
record clerk, and some of the posting clerk’s work.
At Phoenix, the stores clerk was responsible only for in-
coming shipments of office supplies. He distributed them to
whomever had ordered them and kept a supply in a separate
storeroom for that type of material. The inventory clerk
inventoried inbound shipments of nuts, bolts, and similar ma-
terials which were kept in bins in the storeroom. The stores
829CITISTEEL USA
19 In mid-July 1989, CitiSteel hired employees to perform tech-
nical functions. Some were sent for specialized training in Boston
to learn how to run the melt shop spectrometer. Others were trained
to inspect steel for defects.
20 Fall River Dyeing Corp. v. NLRB, 482 U.S. 27 (1987).
21 Id. at 43 (quoting Golden State Bottling Co. v. NLRB, 414 U.S.
168, 184 (1973)).
22 Ibid.
23 Ibid.
24 NLRB v. Rockwood Energy Corp., 942 F.2d 169 (3d Cir. 1991).
receiver ‘‘accepted inbound shipments of materials that were
to be kept in the storeroom or directed to other areas of the
plant. The inventory records clerk was responsible for all the
inventory records in the storeroom. The posting clerk was re-
sponsible for posting purchase orders and keeping track of
orders that were placed and, when those orders were re-
ceived, posting the proper documentation on them. The func-
tions of these five plant clericals were consolidated into one
job classification held by the two storekeepers.
The only other CitiSteel plant clerical position is the clerk
typist. The duties performed by CitiSteel’s clerk typist are
similar to those performed by Phoenix’s clerk typist. The
CitiSteel clerk typist can be assigned work anywhere in the
mill.
The remaining Phoenix plant clerical job classifications
were either eliminated due to product line reduction or had
their functions consolidated with those of supervisors, pro-
duction, or salaried personnel. Thus, CitiSteel’s production
control supervisors perform, in a limited way, the work pre-
viously done by the providers and handle paperwork that turn
clerks did at Phoenix. CitiSteel’s salaried production, control,
finance, and accounting personnel now perform the duties
formerly performed by Phoenix’s production record clerks.
CitiSteel loader-checkers now do the work of Phoenix’s ship-
ping clerk. Phoenix’s order detailer and expediter jobs were
eliminated when CitiSteel ceased the production of specialty
products.
As of the representative complement date, CitiSteel did not
employ any employees in the technical job classifications
that had existed at Phoenix.19 Outside testing facilities con-
ducted CitiSteel’s physical testing while Chinese engineers,
temporarily at CitiSteel, and an outside consultant, Greg
Clouser, performed the chemical testing. These persons were
not paid as hourly employees.
Conclusion
In accordance with the stipulations of the parties, I find
that on the representative complement dates, April 17, 1989,
for production and maintenance employees, and June 13,
1989, for clerical and technical employees, a majority of
CitiSteel’s employees were former employees of Phoenix.
The principal issue remaining is whether similarities between
the Phoenix operation and the CitiSteel operation manifest
substantial continuity between the two enterprises.20 If the
existence of substantial continuity is found, then CitiSteel
will have been found to be the successor to Phoenix.
Succesorship bears with it a concomitant duty to bargain.
Failure to do so requires a finding of violation of Section
8(a)(5) and (1) of the Act. A finding of substantial continuity
depends, in turn, on whether CitiSteel has acquired substan-
tial assets of Phoenix and has continued, without interruption
or substantial change, Phoenix’s business operations.21 In de-
termining whether there is substantial continuity, the factors
being considered must be viewed from the perspective of the
former employees of Phoenix after they were employed at
CitiSteel.22 Factors to be considered, the Supreme Court
noted in Fall River,23 include:
[W]hether the business of both employers is essentially
the same; whether the employees of the new company
are doing the same jobs in the same working conditions
under the same supervisors; and whether the the new
entity has the same production process, produces the
same products, and basically has the same body of cus-
tomers.
Respondent, in its brief, urges that the trier of fact give
consideration to the nature and extent of the interruption in
the business caused by the hiatus in operations in the transfer
of the Claymont plant from Phoenix to CitiSteel as well as
to the ‘‘substantial changes’’ in CitiSteel’s business com-
pared to that of Phoenix. It argues that both issues should
be viewed from the point of view of the former employees
of Phoenix: ‘‘how the hiatus impacts employee expectations
toward reemployment and how the business changes affect
employee attitudes toward representation.’’
Hiatus
Phoenix ceased the shipment of steel from its Claymont
plant in March 1987. CitiSteel shipped its first regularly
scheduled order of plate steel in February 1989. Thus, there
would appear to be a hiatus of about 2 years, a relatively
long period of time, but not a record for cases where
successorship was eventually established.24
The length of the hiatus and what happens during this pe-
riod has long been held to be an important factor in deter-
mining what the expectations of the involved employees
might be toward substantial continuity. The Supreme Court,
in Fall River, supra, stated (482 U.S. at 45):
Yet such a hiatus in only one factor in the ‘‘substan-
tial continuity’’ calculus and thus is relevant only when
there are other indicia of discontinuity. . . . Con-
versely, if other factors indicate a continuity between
the enterprises and the hiatus is a normal start-up pe-
riod, the ‘‘totality of the circumstances’’ will suggest
that these circumstances present a successorship situa-
tion.
In the instant case, the hiatus was no mere vacuum. On
the day the shutdown was announced, it was accompanied by
a statement to the effect that Phoenix was seeking out a
buyer for the Claymont plant. In the months that followed,
a steady stream of articles appeared in the local press con-
cerning interested potential buyers. I find that this flow of in-
formation to the public, in general, and to the former Phoe-
nix employees, in particular, served to bridge the void which
would have existed during the period of the hiatus between
the cessation of production at Phoenix and its startup at
CitiSteel. It is not that the various articles on the subject
warrant a finding that they gave rise to any expectations on
the part of the former Phoenix employees, particularly during
the early months of the hiatus. The stories were too factually
830 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
25 Phoenix Pipe & Tube, 302 NLRB 122 (1991).
inadequate to reflect any probabilities, and a probability must
be evident before an expectation is warranted. The articles
reflected mere possibilities which kept hopes alive. Those
hopes were potential expectations at that time, for if the in-
terested buyers negotiated a purchase with the announced in-
tention of going into production, those hopes, those potential
expectations, would ripen into actual expectations and the
jobless could, because of their experience, expect to regain
their jobs with substantial continuity, and that’s what hap-
pened.
The hopes of the former Phoenix employees most certainly
must have risen each time the newspapers carried a story in-
dicating that a new buyer had been found or that negotiations
had progressed toward a purchase. Similarly, when news-
paper articles reported that a potential deal had fallen through
or that new impediments to an impending purchase had been
discovered, the hopes of these individuals would necessarily
fall. It is clear from actual history, however, that the former
Phoenix employees never totally gave up hope and eventu-
ally returned to work in numbers sufficient to become the
majority of the workforce at CitiSteel.
In early June, when CitiSteel actually occupied the
Claymont plant, Hearn and 4 other members of Phoenix
management were hired and it was announced that 300 em-
ployees would be hired to make steel, the hopes of the
former Phoenix employees, were converted to expectations,
particularly in light of statements made by CitiSteel officials
that their company would hire as many former Phoenix em-
ployees as possible.
In late June, and thereafter, newspaper reports of the ex-
tensive refurbishing of the plant and equipment at Claymont
together with stories concerning CitiSteel’s expectation of
hiring 300 to 350 employees and its commitment to hiring
qualified former Phoenix employees could not but reinforce
the expectations of those employees.
In addition to the reports of continued negotiations be-
tween Phoenix and various prospective buyers which kept
hope alive among former Phoenix employees and helped
bridge the period of hiatus, I find that the continued activity
of the Union on behalf of its members had a similar effect.
Thus, when Local 3182’s president, Walter Brodzinski,
took the initiative and invited Joseph Hicks to the union hall
to conduct the job workshops and a United Way representa-
tive to advise the members what services were available for
the unemployed, it was not meant to lead the membership
into believing that the relationship between them and the
Union and between them and the Claymont plant was perma-
nently over, as Respondent contends. Rather, it was a show
of concern on the part of the Local’s officers for the welfare
of the membership during uncertain times, an attempt to en-
able the former Phoenix employees to find a way to feed
themselves and their families during their layoff from the
Claymont plant, whether the layoff was temporary or perma-
nent. If this were a kiss-off, as Respondent contends, the job
could have been done with a word. Instead the Union per-
mitted the Delaware Department of Labor to conduct peri-
odic meetings at the union hall, over a period of 3 months,
for an estimated 230 members to help them survive. One of
them who did, Brodzinski himself, succeeded in finding em-
ployment outside the area. I do not read into his success, an
abandonment of the membership but merely a case of a
working man fulfilling his duty to support himself and his
family.
Respondent contends that when the International placed
the two Claymont locals under an administrator, this indi-
cated that it had abandoned all hope that Claymont would re-
open. Subsequent actions by the Union, however, belie that
contention. Moreover, the International was the certified col-
lective-bargaining representative of the units of employees at
the Claymont plant. The two locals were charted solely to
administer the contracts under which the two units of em-
ployees worked. When the plant closed and all of the em-
ployees in the units were laid off, including the local offi-
cers, there was no one to protect, no one to file grievances,
and no duties for the local officers to perform. The logical
thing for the International to do under such circumstances
was to place the locals under an administrator and to relieve
the local officers of their duties so as to permit the Inter-
national to run the affairs of the locals, pending their rein-
statement. The fact that the locals were placed under
administratorship is not significant.25
When the International relieved the local’s officers of their
duties there was no one to hold meetings, so the International
closed the union hall. Although one witness testified that the
closure of the union hall convinced him that the plant would
not reopen, when the union hall was sold, in November
1988, after the plant had already reopened, the sale obviously
could not have had any effect on the employees expectations.
When the proceeds of the sale were placed in an escrow ac-
count for the locals, it clearly indicated an intention to reac-
tivate the locals if the Union were successful in obtaining
representative status.
Aside from the steps taken by the Union to deactivate the
locals, which Respondent contends reflects an abandonment
of its Claymont membership during the period of the hiatus,
the record indicates that the Union remained active on behalf
of those employees. Thus, its representatives met with all of
the serious potential purchasers of the Claymont plant as the
exclusive collective-bargaining representative of the employ-
ees in the Claymont units. They met at various times with
Serlin, the Lukens group, Chang, CITIC, and their attorneys,
attempting to obtain commitments to recognize and bargain
with the Union.
Gerber-Saionz, as the Union’s attorney, filed claims on be-
half of the unit employees in bankruptcy court and rep-
resented them in the proceedings. Other union representatives
also attended these proceedings. She organized the Employee
Creditors Committee which represented employees in both
Claymont units and met with them regularly. She also at-
tended negotiations for the purchase of the plant and met
several times with Chang’s attorney in an effort to schedule
a meeting between the Union and Chang. Both she and union
representatives met with and spoke over the telephone to unit
employees concerning the prospects of the plant reopening
and the status of sales negotiations.
Following the actual purchase of the Claymont plant by
CitiSteel, the Union wrote formal letters demanding recogni-
tion and bargaining. It apparently lobbied the Lieutenant
Governor to intercede on its behalf to get CitiSteel to meet
with it for this purpose.
831CITISTEEL USA
26 Citing Golden State Bottling Co. v. NLRB, supra.
27 Phoenix Pipe & Tube, supra.
28 This finding applies to the clerical and technical unit as well as
the production and maintenance unit. Although the clerical and tech-
nical unit may not be the most appropriate unit, it need not be. I
find no reason to disturb a successful collective-bargaining relation-
ship which has existed for over 25 years. Great Atlantic & Pacific
Tea Co., 153 NLRB 1549 (1965).
29 If no exceptions are filed as provided by Sec. l02.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. l02.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
Finally, the Union made its presence known during the pe-
riod of the hiatus by lobbying the Delaware State Senate to
obtain legislation to give preference to former Phoenix em-
ployees who applied for employment at CitiSteel.
In early October, when it came to the attention of the
Union that CitiSteel was hiring, it wrote letters to all former
Phoenix employees urging them to apply. It scheduled a
meeting of these employees where it did the same. A suffi-
cient number of them did so, and as of April 17, they rep-
resented a majority of CitiSteel’s production and mainte-
nance complement. As of June 13, they represented a major-
ity of its clerical and technical complement.
Respondent, in its brief, contends that certain obstacles
arose during the hiatus which had the effect of destroying
any expectations that former Phoenix employees might have
had that they would one day be recalled to their jobs at the
Claymont plant. In addition to those already discussed, Re-
spondent cited as such obstacles, the secrecy issue and the
Defense Department’s initial objections to the sale, the effect
of the Coastal Zone Act, the objections of the environmental-
ists and the bond issue. With respect to these issues, I find
that they were merely glitches which, like the fits and starts
of the purchase process, only resulted in a temporary lessen-
ing in the hope for purchase of the Claymont plant and even-
tual employment of the former Phoenix employees.
In summary, I conclude that the specific facts, as reflected
by the record in this case, do not warrant the conclusion that
either the hiatus or its length are controlling. I find it to be
only one of the factors to be considered in determining
whether or not there was substantial continuity and whether
or not a successorhip situation is present in this case.
Substantial Continuity
In Fall River, the Supreme Court stated that to determine
whether a new company is a successor to the old, the Board
is required to focus on whether the new company has ac-
quired substantial assets of its predecessor and continued,
without interruption or substantial change, the predecessor’s
business operations.26
In Fall River, the Supreme Court said that certain factors
should be considered in determining whether or not there is
substantial continuity from the point of view of the employ-
ees. As applied to the instant case these factors include
whether the business of Phoenix and CitiSteel are essentially
the same; whether the employees of CitiSteel are doing the
same jobs in the same working conditions under the same su-
pervisors as employees of Phoenix; and whether CitiSteel has
the same production process, produces the same products,
and has basically the same body of customers as Phoenix.
The factual section of this decision has exhaustively treat-
ed the numerous changes made by CitiSteel, in its operation
of the Claymont plant, compared to that of Phoenix Steel. I
see no reason to repeat those changes and cite relevant case
law to each change, as General Counsel and Charging party
have most helpfully done, in order to show that
successorship has been found in earlier cases, despite the fact
that one or more of the changes present in the instant case
were present in the earlier cases. Rather, as suggested by Re-
spondent, and in keeping with the dictates of existing law,
I shall base my decision on the congeries of changes reflect-
ing the situation extant at CitiSteel, as of the relevant dates.
I find that, despite the numerous and thoroughly docu-
mented changes instituted by CitiSteel, after its purchase of
the Claymont plant, substantial continuity remained intact,27
that CitiSteel was and is the successor to Phoenix, that the
former employees of Phoenix were entitled to continued rep-
resentation by the Union, and that Respondent’s failure to
recognize and bargain with the collective-bargaining rep-
resentative of its employees was in violation of Section
8(a)(5) and (1) of the Act.28
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in commerce within
the meaning of Section 2(6) and (7) of the Act.
2. The Union is a labor organization with the meaning of
Section 2(5) of the Act.
3. (a) All production and maintenance employees em-
ployed at the Claymont facility; excluding executives, fore-
men, supervisors, technical, office and clerical employees,
plant protection, first-aid men, nurses, draftsmen,
yardmasters, listing clerks, and mill providers constitute a
unit appropriate for the purpose of collective bargaining
within the meaning of the Act.
(b) All office and plant clerical employees and technical
employees employed at the Claymont facility; excluding pro-
duction and maintenance employees, professional employees,
confidential employees, guards and supervisors constitutes a
unit appropriate for the purpose of collective bargaining
within the meaning of the Act.
4. By refusing to bargain with the Union as the exclusive
collective-bargaining representative of employees in appro-
priate units, Respondent has engaged in unfair labor practices
within the meaning of Section 8(a)(5) and (1) of the Act.
REMEDY
Having found that the Respondent has engaged in certain
unfair labor practices in violation of Section 8(a)(5) and (1)
of the Act, I shall recommend that it cease and desist there-
from and from infringing in any like or related manner upon
its employees’ Section 7 rights and that it take certain affirm-
ative action designed to effectuate the policies of the Act.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended29
ORDER
The Respondent, CitiSteel USA, Inc., Claymont, Delaware,
its officers, agents, successors, and assigns, shall
1. Cease and desist from
832 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
30 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
(a) Refusing to bargain with United Steelworkers of Amer-
ica, AFL–CIO–CLC as the exclusive bargaining representa-
tive of the employees in the appropriate bargaining units.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the rights guaranteed them by
Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) On request, bargain with the Union as the exclusive
representative of the employees in the following appropriate
units on terms and conditions of employment and, if an un-
derstanding is reached, embody the understanding in a signed
agreement:
All production and maintenance employees employed
at the Claymont facility; excluding executives, foremen,
supervisors, technical, office and clerical employees,
plant protection, first-aid men, nurses, draftsmen,
yardmasters, listing clerks, and mill providers.
All office and plant clerical employees and technical
employees employed at the Claymont facility; exclud-
ing production and maintenance employees, profes-
sional employees, confidential employees, guards, and
supervisors.
(b) Post at its Claymont Delaware facility copies of the at-
tached notice marked ‘‘Appendix.’’30 Copies of the notice,
on forms provided by the Regional Director for Region 4,
after being signed by Respondent’s authorized representative,
shall be posted by the Respondent immediately upon receipt
and maintained for 60 consecutive days in conspicuous
places including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by Re-
spondent to insure that the notices are not altered, defaced,
or covered by any other material.
(c) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondent has
taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
WE WILL NOT refuse to bargain with United Steelworkers
of America, AFL–CIO–CLC as the exclusive collective-bar-
gaining representative of the employees in the appropriate
bargaining units.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce you in the exercise of the rights guaran-
teed you by Section 7 of the Act.
WE WILL, on request, bargain with the Union as the exclu-
sive collective-bargaining representative of the employees in
the following appropriate units on terms and conditions of
employment and, if an understanding is reached, embody the
understanding in a signed agreement.
All production and maintenance employees employed
at the Claymont facility; excluding executives, foremen,
supervisors, technical, office and clerical employees,
plant protection, first-aid men, nurses, draftsmen,
yardmasters, listing clerks, and mill providers.
All office and plant clerical employees and technical
employees employed at the Claymont facility; exclud-
ing production and maintenance employees, profes-
sional employees, confidential employees, guards, and
supervisors.
CITISTEEL USA, INC.