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LETTER 22 Workplace Guarantees and Subcontracting
Mr. James M. Parent Assistant Directing Business Representative District Lodge No. 26 I.A.M.A.W., AFL-CIO 365 New Britain Road Kensington, Connecticut 06037
Dear Mr. Parent: This is to confirm the following understanding and agreement between the Company and the Union concerning workplace guarantees and subcontract-ing. This letter and Letter 22A supersede and replace all previous agreements on this subject, including the Memorandum of Agreement dated February 15, 2001. The parties agree that the division of this Letter 22 into separate sections is for ease of reference only. No substantive change to Letter 22 is intended by such division or by the labeling of the sections. Section 1. Workplace Guarantees: The Company agrees during the life of this Agreement that it will continue to employ bargaining unit members at its facilities in East Hartford, Middletown, and Cheshire. Section 2. Subcontracting and Transfer of Work (A) Except under the circumstances described in Section 3 hereof, the Company will make every reasonable effort to preserve the work presently and normally manufactured by employees covered by Article 2 of this Agree-ment. Therefore, it is not the intent of the Company to use subcontractors for the purpose of reducing or transferring work that is presently and normally manufactured by employees in the bargaining unit nor to place such work in Maine or Georgia, except in those circumstances. (B) The following definitions apply to the interpretation and administration of this Section 2: (1) “Work” means activities directly related to the manufacture, assembly, test, repair, over haul, development or inspection of aircraft engines and parts. It does not include activities performed by indirect bargaining unit employees. (2) (a) “presently and normally manufactured,” when applied to original equipment aircraft engines or parts (whether experimental or production), refers to machine operations, assembly, test and similar activities associated with specific products (commonly identified by part numbers) and/or operations for which a sourcing decision has been made by the Company that placed those products and/or operations (or a certain volume thereof) in the Company’s Connecticut facilities prior to the effective date of this Agreement; (b) “presently and normally manufactured,” when applied to aftermarket services, refers generally to aircraft engine overhauls and repairs of airfoils, combustors, cases, stators and rotating parts, without regard to specific engine models nor specific parts. (3) “to preserve” means to refrain from transferring out of the bargaining unit work presently and normally manufactured by employees covered by Article 2. To transfer work out of the bargaining unit means discontinuing work presently and normally manufactured within the facilities identified in Article 2 where that discontinuance is coupled with the assignment by the Company of the same work to a facility not identified in Article 2 (including subcontracting the same work to another employer) if such assignment of work is not simply a change in the work mix and as a result causes a layoff of bargaining unit employees in conjunction with that assignment of work. (4) “every reasonable effort” means pursuing actively and in good faith the goal of preserving the work presently and normally manufactured by employees covered by Article 2, while giving reasonable consideration to the Company’s own interests, including the profitability of its operations. The Company will assign extra value in its decision-making to choices that preserve such work in the bargaining unit. As part of any “meet and confer” process undertaken pursuant to Article 27, the Company will describe the efforts made to comply with this Letter and will provide the Union the opportunity to propose other reasonable efforts, including modifications to the collective bargaining agreement, which the Company will consider in good faith. In no event will “every reasonable effort” require the Company to make a capital investment, increase the size of the workforce, or require lower profits. Section 3. Exceptions The Company is not required to comply with Section 2(A) when: (A) Vendor assistance is required to meet schedule demands. Thirty (30) days, or as soon as practicable, prior to any involuntary reduction in the workforce covered by this Agreement, the Company will meet with the Union and will review the work of the affected facility currently on vendor assistance to discuss the opportunity to return that work to the facility. (B) A particular skill and/or specialized equipment is required and not available within the Company. The Company will also fully explore the availability of the particular skills and/or specialized equipment in other facilities before this decision is made. (C) The work is placed outside Pratt & Whitney as a result of partnership agreements, offsets, PMA requirements or joint ventures. (D) A product center or similar organization fails to meet Company established productivity and cost reduction goals for two (2) consecutive calendar quarters. Failure to meet a quarterly productivity or cost reduction goal shall substitute for the notice provided for in Article 27. Within 90 days of the signing of the prior Agreement, the parties formed a joint committee to review productivity measures, goals and implementation plans. It is agreed the productivity goals were monitored for a six month period before full implementation. During that period, the parties had an opportunity to review and modify the measurements. Any future changes to the resulting measurements will follow a similar procedure. Section 4. Additional Severance In the event an employee is laid off as a direct result of work placed outside Pratt & Whitney to satisfy partnership agreements, offset, PMA requirements and/or joint ventures, the employee will receive the following benefits: contractual severance pay, a $5,000 lump sum payment and six (6) months of medical and dental insurance coverage for the employee and his or her dependents (one year coverage if the employee is retirement eligible); however, the insurance coverage shall not be additive. Section 5. Product Center Joint Committees (A) The parties agree that a four member joint committee will be established for each product center or similar organization. The membership of this joint committee will consist of the Product Center General Manager, the Manager, Human Resources, a Business Representative, and the President of the applicable Local Lodge or their designee. The committee will meet on a monthly basis (subject to mutual agreement to cancel) to review any issues arising out of the above, in addition to productivity, training and cost reduction. (B) Prior to each such meeting, the Company will provide the Union a list of all covered work being subcontracted pursuant to the “vendor assistance” exception. This list will specify the part and part number, the date the part was sent out to the vendor, the reason the part was sent out to the vendor, the work being done on the part by the vendor and the date the part is scheduled to return to the Product Center. At the meeting, the Company will be prepared to review and discuss all information provided to the Union. (C) To facilitate the Product Center review meetings, the parties agree to the following guidelines for discussing temporary vendor assistance: (1) If parts are to be subcontracted for a period longer than ninety (90) days, the Company will advise the Union at a meeting of the Product Center joint committee and will explain the reasons therefore and the expected duration. Where business conditions permit, the Company will provide the Union this notice prior to subcontracting. (2) The parties recognize that where a part or parts are subcontracted for more than ninety (90) days, there may be disagreements about whether or not such subcontracting should come within the “vendor assistance” exception. However, the parties further recognize from experience that it is in their mutual interest to resolve such disagreements through the joint committee process and will continue to do so. (D) At these meetings, the Company will also discuss with the Union any plans to off load existing work as the result of any partnership agreements, offsets, PMA requirements or joint ventures. Section 6. Structure of the Business Nothing in this Letter shall require the Company to increase its manufacturing, overhaul or repair capacity in Connecticut nor limit the right of the Company to change the business structure of its operations, including, without limitation, the sale or purchase of assets, mergers, joint ventures, partnerships and the like. Section 7. Dispute Resolution Any disputes concerning workplace guarantees and subcontracting are not subject to the grievance procedure including arbitration. If a difference arises over the issues of subcontracting/workplace guarantees, productivity, training or cost reduction, it will be referred to and discussed by the Executive Steering Committee at their next regularly scheduled meeting.
Sincerely, James R. Miller Vice President, Industrial Relations Accepted this 6th day of December 2004
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