Sun Microsystems, Inc., Louisville, CO; Notice of Negative Determination on Reconsideration

By application dated April 15, 2007, a worker requested administrative reconsideration. The request for reconsideration alleged that the subject firm shifted production and support functions abroad. On May 27, 2007, the Department issued a Notice of Affirmative Determination Regarding Application for Reconsideration for the workers and former workers of Sun Microsystems, Inc., Louisville, Colorado (the subject firm). The Department's Notice of Affirmative Determination was published in the Federal Register on June 7, 2007 (72 FR 31614).

The worker-filed petition for Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) identified the appropriate subdivision employing the workers group as “Sun Microsystems, Louisville, Colorado,” the articles produced at the subject firm as “high tech computer storage devices,” and the subject worker group as workers engaged in “Production AME + R+D (Inspection).” The petitioners stated that their work has been “outsourced to Mexico and possible Hungary.”

Because the petition is dated January 19, 2007, the relevant period is January 19, 2006 through January 18, 2007.

The initial negative determination (issued March 14, 2007) stated that the subject firm “did not shift work performed in Louisville, Colorado abroad, nor did it shift production from its manufacturing facility in Puerto Rico to a foreign country;” that the parent entity, Sun Microsystems (Sun), sold the Puerto Rico facility to another firm, “thus curtailing the need for support persons” at the subject firm; and that “separations of workers at the Louisville location are in great part attributable to a worldwide company restructuring and reduction in workforce.”

A document attached to a petition (dated February 6, 2007, and filed on behalf of the same worker group) explained that, as a result of Sun's acquisition of StorageTek Classic (StorageTek), certain staff positions in the Storage Operations organization were eliminated. For example, StorageTek's products and their associated business processes, tools and systems would be merged with Sun's products and their associated business processes, tools and systems; the supply chain management and materials organizations for Sun and StorageTek would be consolidated into a single team; Sun's manufacturing and support activities in Puerto Rico would be outsourced in September 2006 to a contract manufacturer; and the staff that supported Sun's Puerto Rico facility would be eliminated since the contract manufacturer would be taking over those functions.

According to previously-submitted information, StorageTek was a company with production facilities in Puerto Rico and a pre-production facility in Louisville, Colorado. The information also revealed that after Sun acquired StorageTek in August 2005, Sun ceased to operate the manufacturing facility in Puerto Rico and that those workers at the Louisville, Colorado facility who supported the Puerto Rico facility were separated.

Because the subject workers inspected sheetmetal parts, cables, harnesses, tape rollers, motherboards, personal computer boards, and disk drives during the relevant period, and the workers are not separately identifiable by product line, the Department determines that the subject workers are engaged in the production of inspected component parts of computer storage devices.

In order for a TAA certification to be issued, the subject workers must meet the group eligibility requirements under Section 222 of the Trade Act of 1974, as amended. The applicable requirements can be satisfied in one of two ways:

I. Section (a)(2)(A)—

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. the sales or production, or both, of such firm or subdivision have decreased absolutely; and

C. increased imports of articles like or directly competitive with articles produced by such firm or subdivision have contributed importantly to such workers' separation or threat of separation and to the decline in sales or production of such firm or subdivision; or

II. Section (a)(2)(B)—

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. there has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and

C. One of the following must be satisfied:

1. The country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States; or

2. the country to which the workers' firm has shifted production of the articles is a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act; or

3. there has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision.

Previously-submitted information revealed that the subject firm's employment level declined more than five percent from the corresponding period the previous year, the Department determines that a significant number or proportion of the workers at the subject firm has become totally or partially separated. Because the subject firm has ceased to inspect component parts of computer storage devices, the Department determines that, during the relevant period, the subject firm's production of inspected component parts of computer storage devices have decreased absolutely.

Because the employment decline and the production decline criteria were met, the Department focused the reconsideration investigation on whether either Section (a)(2)(A)(C) or Section (a)(2)(B)(B) and Section (a)(2)(B)(C) were met.

The first issue is whether, during the relevant period, the subject firm shifted production of inspected component parts of computer storage devices to a country that is a party to a free trade agreement with the United States or a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act.

Sun officials confirmed that after Sun acquired StorageTek in August 2005, it ceased to operate the facility in Puerto Rico. The official also stated that, pursuant to a September 2006 agreement between Sun and a domestic contract manufacturer, the contract manufacturer is performing production and inspection work at Sun's Puerto Rico facility. As such, the Department determines that the subject firm did not shift production to a foreign country; rather, the inspection work that was done by the subject workers is being done by the afore-mentioned contract manufacturer in Puerto Rico.

Even if the subject firm shifted inspection work to Puerto Rico, the subject workers would not be eligible to apply for TAA benefits because Puerto Rico is a U.S. Territory and is not a foreign country.

The second issue is whether, during the relevant period, increased imports of articles like or directly competitive with the inspected component parts produced at the subject firm contributed importantly to the subject workers' separations.

During the reconsideration investigation, Sun officials confirmed that Sun's Louisville, Colorado facility did not import articles like or directly competitive with the component parts produced at the subject firm. Because the inspected component parts produced at the subject firm were sent to Puerto Rico to be assembled, the Sun officials also confirmed that while it controlled the Puerto Rico facility during the relevant period, the Puerto Rico facility did not import any articles like or directly competitive with the component parts produced at the subject firm. Further, the contract manufacturer who took over production at the Puerto Rico facility provided information that revealed no imports of articles like or directly competitive with the component parts produced at the subject firm.

Because the reconsideration investigation has not produced any information that support a finding that the subject workers' separations are due to either a shift of production abroad or increased imports of articles like or directly competitive with the inspected component parts produced at the subject firm, the Department affirms the initial negative determination.

In order for the Department to issue a certification of eligibility to apply for Alternative Trade Adjustment Assistance (ATAA), the subject worker group must be certified eligible to apply for Trade Adjustment Assistance (TAA). Since the subject workers are denied eligibility to apply for TAA, the workers cannot be certified eligible for ATAA.

Conclusion

After careful reconsideration, I affirm the original notice of negative determination of eligibility to apply for worker adjustment assistance for workers and former workers of Sun Microsystems, Inc., Louisville, Colorado.