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decided: September 20, 1988.


Appeals from the Orders of the Unemployment Compensation Board of Review, in the cases of William B. Bosworth (Lead Token), No. B-257296, and John D. Boydell (Token Claimant), No. B-257297.


Richard I. Thomas, with him, Richard R. Riese and Candace M. Buzzelli, Thorp, Reed & Armstrong, for petitioner.

No appearance for respondent.

Richard E. Gordon, Grossinger & Gordon, for intervenors, employees/claimants.

Judges Barry and McGinley, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge McGinley.

Author: Mcginley

[ 119 Pa. Commw. Page 568]

Babcock and Wilcox Company (Babcock) appeals a decision of the Unemployment Compensation Board of Review (Board), affirming a referee's decision granting unemployment compensation benefits to William B. Bosworth and John D. Boydell (lead tokens), Intervenors in this appeal, and other union employees of Babcock. We affirm.

The relevant facts, as found by the referee and adopted by the Board in both claims are as follows:

2. Claimant is the Lead Token Claimant regarding claims for Unemployment Compensation benefits filed on behalf of bargaining unit employees employed by the employer and represented by the United Steel Workers of America, Local 1082 (hereinafter called the union and/or Local 1082).

3. A three-year labor/management agreement between the employer and Local 1082 had an expiration date at midnight on August 16, 1986, and prior to said expiration date the union and the employer had engaged in negotiations; but no new labor/management agreement was reached as of August 16, 1986.

[ 119 Pa. Commw. Page 5694]

. Babcock & Wilcox is a corporation and a wholly owned subsidiary of a parent corporation, McDermott, Inc., and the employer's Beaver Falls Works encompasses facilities and operating plants at Beaver Falls, Ambridge, and Koppel, PA.

5. There are some 3,300 bargaining unit employees employed at the employer's Beaver Valley Works, but as of September 10, 1986, approximately 2,000 employees were on layoff and approximately 1,300 were actively employed.

6. McDermott, Inc., has a number of subsidiary corporations and/or divisions; and Babcock & Wilcox was the only subsidiary or division that was losing money, and the employer herein had actually been losing money during the entire term of the three-year labor/management agreement that was expiring as of August 16, 1986; and the employer calculated its loss for August 1986 alone as $5,000,000 and its total loss for the aforesaid three-year period as being approximately $100,000,000.

7. Since Babcock & Wilcox was the only subsidiary and/or division that had been losing money, considerable pressure was being exerted by McDermott International for the subsidiary corporation to show a profit and/or reduce its losses and this pressure from the parent corporation was reflected by the employer in the labor/management negotiations hereinafter described.

8. In fact, as early as 1985 the employer had sought to terminate the existing three-year labor/management agreement and implement a $3.25 per hour wage reduction with a commitment by the employer of a capital investment of $185,000,000 (provided by McDermott International)

[ 119 Pa. Commw. Page 570]

    wherein the facilities of Babcock & Wilcox would be improved and upgraded, but the union would not agree to same with the result that capital improvements were not effectuated, and the labor/management agreement continued in effect until its expiration date on August 16, 1986.

9. Babcock & Wilcox employees constitute some 5.5 per cent of the total work force of McDermott International; and Babcock & Wilcox revenues amount to six per cent of the total revenues of McDermott International.

10. In an attempt to reach a new labor/management agreement the parties commenced negotiating on July 16, 1986, and the employer made proposals at negotiating sessions on August 1, 13, 14, 15 and 16, 1986.

11. At all negotiating sessions the employer was asking for concessions in wage reductions and other areas and at all time material hereto the employer informed Local 1082 representatives that Babcock & Wilcox was losing money and needed concessions to remain competitive.

12. All of the employer's proposals requested reduction in total employment costs, and the union position, originally, was the present labor/management agreement should be extended for an additional three-year term.

13. It was not until August 14, 1986, the union submitted its first written proposal to the employer and it basically restated the union's oral proposal of July 16, 1986, to extend the expiring labor/management agreement for an additional term of three years; to which the employer was not amenable.

14. At a negotiating session on August 15, 1986, the union submitted ...

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