into the labor agreement and require all employers signatory to the contract to contribute a certain number of cents per hour to a common trust. This fund is then administered by duly elected management trustees for the common good to develop and strengthen the industry they represent.

By its passage of H. R. 1153, the House of Representatives has given its sanction to legislation that not only critically limits the positive values of these funds, but presents employers with the "Hobson's Choice" of either doing away with them entirely or agreeing to the principle that labor has the right to tax management. (in unlimited amounts) to finance jurisdictional disputes, grievance proceedings, re-interpretations of the labor agreement (formerly a binding document) and other purely labor concerns.

As a consequence, if H. R. 1153 is rubber stamped by the Senate, I am convinced that the restrictions placed on industry development funds would be sufficient to prohibit the renegotiation of these funds in the future.

First, industry funds, as they are now constituted, are undeniably the concern of management. The employers voluntarily agree to contribute their money to a fund which they have created to improve and develop their industry. Although this contribution is negotiated into the labor agreement, with the concurrence and often enthusiastic endorsement of labor, the unions categorically refuse to consider I.F. contributions as part of the total wage package. After our most recent contract was negotiated, the following sentence was added to the clause creating the Colorado Pipe Trades Industry Program: "The payments to the Colorado Pipe Trades Industry Program shall not be considered to bewages or compensation."

In view of this, I see no reason why a legitimate program, unselfishly negotiated in the best interests of the industry and composed entirely of employer contributions that are not recognized by the unions as part of the wage package, should not be employer administered.

In presenting labor's views to the House Committee, Mr. C. J. Haggarty commented that the employer's desire to administer their own development programs was "just another case of management wanting to have their cake and eat it too." This is, of course, ridiculous. It is not unreasonable to request that, if we pay for our own cake, we should have the privilege of dispensing the pieces.

Mr. Haggarty went on to say that, in his opinion (AFL-CIO) management development funds were not sufficiently related to labor interests to warrant inclusion in the labor agreement.

To answer this argument we must first accept the fact that a labor contract is a document of mutual interest to both labor and management. Choose any labor agreement and in it you will find items, such as trade line agreements, that are of interest to labor alone. Management does not argue that these are not sufficiently related to employer interests to warrant inclusion in collective bargaining contracts, but instead recognizes the fact that each party to an agreement has legitimate unilateral interests that are best served by including them in the negotiated agreement. To carry Mr. Haggarty's argument to any fair and logical conclusion would seriously disrupt the collective bargaining process and damage the machinery that the construction industry has voluntarily created to handle its affairs. Mr. Haggarty continued to develop a faulty premise even further by stating that, since this money was, nevertheless, collected through the collective bargaining process, that labor unions had every right to help administer and spend it. In line with this rather specious reasoning, I might point out that many contracts call for a union dues check-off. By applying Mr. Haggarty's curious logic, it would be reasonable to assume that, since these dues were accumulated through the collective bargaining process, that management would have an identical right to insist upon joint administration to, in Haggarty's words, "Aid in the proper disbursement of these funds."

In addition to providing for joint administration, H. R. 1153 also stipulates that Industry Fund money can only be used to promote products, product application and research, or to finance the interpretation of provisions in collective bargaining agreements. In Colorado, we use much of our income to promote better day to day labor relations. As a result of this approach, serious labor problems have become almost non-existent. We feel that this is a much healthier and more sensible solution than ignoring the causative factors and only providing Industry Fund money when it becomes necessary to bail ourselves out of trouble. H.R. 1153, in effect, suggests that we ignore preventative labor relations and only provide financing to help solve those problems which would not have existed had we had a good program of preventative labor relations.

The primary purpose of our Industry Fund is to bring new industry to our state, to make our contractors better managers and to generally try to elevate the depressing situation in which we find ourselves today. The purpose was not to finance Joint Arbitration Committees, although this is admittedly a legitimate area of expense and one we might contemplate in the future. To devote all of our money to this cause, however, is unreasonable. As Professor C. Northcote Parkinson said in his book, Parkinson's Law, "Expenses in this area will soon rise to meet income". This fund was created to fill a desperate need. Unfortunately, there are always a number of people who would like to dip their hands in the pot and channel the money to their own narrow purpose.

I agree with those members of the House who found nothing harmful in the above if labor and management desire to enter into such an agreement. The trouble is, that under H.R. 1153, we would be forced to enter into these agreements since, practically speaking, this would be the only kind of funds the unions would agree to negotiate. If industry funds were made mandatory subjects of Collective Bargaining, we would perhaps hold our own, but under the conditions set forth by H.R. 1153 this would be impossible.

H.R. 1153 then completely emasculates the value of Industry Funds by stating that the only other area in which money can be spent is product publicity. I am sure you will understand that, as contractors, product publicity is the least of our problems. We feel that this is the province of the product manufacturers, suppliers or individual dealers. Products in the construction industry are generally specified by architects or engineers. The contractor then bids on the basis of the specifications. If he gets the job, he installs the product called for in the plans. Promoting or studying these products would not benefit the contractor to any measurable degree.

I sincerely doubt if he would voluntarily contribute any money to such a cause when he is in need of help in so many areas of his own business.

The following are some of the areas in which our contractors feel we should work to improve the industry. Every one of these, if not expressly prohibited, is, at best, not clearly condoned by H.R. 1153:

1. Training in business and construction management.

2. Programs to teach contractors how to effectively merchandise their services.

3. Efforts to improve bidding procedures.

4. A program to standardize the writing of plans and specifications.

5. Public Relations to improve the image of the industry.

6. Representation before the State Legislature and the financing of legislative research.

7. The improvements of State and Local Building Codes.

8. Training programs for Apprentices and Journeymen.

9. Labor Relations.

10. The Development of more ethical practices in the construction industry.

11. Resolving jurisdictional disputes.

12. Financing programs of a civic nature such as Water Pollution Control. 13. Financing legal services and research.

14. Institutional advertising.

15. Providing liaison with other trade groups.

16. Statistical and economic research.

17. Providing the salaries and overhead necessary to carry on the programs above.

The implementation of these programs, however beneficial to labor and management alike, could subject the contributors to the possibility of criminal prosecution if the ambiguities and omissions in this bill are not resolved through the proper amendments.

Lastly, I disagree with the section of the bill that stipulates that jointly administered Industry Funds may not be used to finance purely management functions. Let me point out again that this is not a joint effort of labor and management. It is a gratuitous contribution by the employer in an attempt to remedy business conditions in this area. If the unions would agree to contribute, or even negotiate as part of their next wage package, an equal contribution, I would not object to joint administration. I cannot understand how Congress in its wisdom can insist that if the employers wish to contribute money in their own best interests, that labor has any legitimate claim to the administration of that money. An old Philosophy professor of mine used to be fond of saying "right is right and wrong is wrong". To him it was that simple.

Our Industry Fund is an attempt to solve our own problems and improve our economy without subsidization or government support. It is in the best American tradition of improving one's own lot through individual effort and sacrifice. We feel that it would be a gross ethical mistake to permit H.R. 1153 to destroy the many worthwhile things these funds can accomplish.

THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA,
Washington, D.C., October 15, 1966.

Hon. RALPH W. YARBORough,

Chairman, Senate Subcommittee on Labor,

New Senate Office Building, Washington, D.C.

DEAR SENATOR YARBOROUGH: This is in connection with the October 14, 1966, hearings held by the Subcommittee on Labor on H. R. 1153. We would appreciate having the enclosed statement of this association considered in connection with this Bill and having it made a part of the October 14 hearings record.

Sincerely,

Enclosure:

WILLIAM E. DUNN,
Executive Director.

PREPARED STATEMENT OF THE ASSOCIATED GENERAL CONTRACTORS,

WASHINGTON, D.C.

The Associated General Contractors is opposed to H.R. 1153 and similar legislation to legalize union participation in the control of management funds. The 44th Annual Convention of the Associated General Contractors, held March 4-7, 1963, approved this position in its adoption of a report expressing opposition to adding union representatives to the administration of industry advancement funds. AGC's main concern is that the strength of free, voluntary trade associations in the construction industry is at stake, and substantial damage to this vital area of our free enterprise system would be detrimental to the overall public interest.

DANGER OF MANDATORY BARGAINING

We appreciate the concern of the House of Representatives about the dangers of H. R. 1153 rendering bargaining mandatory on establishment and participation in such funds.

Although the Bill provides that "no labor organization and employer shall be required to bargain on the establishment on any such programs", you are no doubt aware of the well-established NLRB policy considering as "mandatory subjects of bargaining" any demand closely related to "wages, hours, and working conditions". What demand could be more closely related to "wages, hours, and working conditions" than a jointly controlled board to service grievances arising under labor agreements pertaining to "wages, hours, and working conditions"? In fact, the relationship would seem so definite as to be beyond correction by any provision to the contrary without involving the present concept of "mandatory bargaining" under the Taft-Hartley Act.

But even assuming the "mandatory bargaining" danger could be eliminated, which we doubt, the experience of this association with collective bargaining in the construction industry leads us to believe that the economic force of organized labor would still be exerted to establish and police these funds. In collective bargaining, indirect economic forces are easily applied on behalf of nonmandatory subjects of bargaining by offering relief from more onerous demands of a mandatory bargaining nature. Once jointly controlled funds are legalized, they may well appear on construction bargaining tables across the country along with demands of a mandatory nature.

We are convinced this legislation would result in making demands for the funds "mandatory subjects of bargaining", and that it would appear unlikely that the House amendment to the Bill could completely eliminate that effect.

MAY SPUR JURISDICTIONAL DISPUTES

Another danger inherent in H. R. 1153 is that it will cause increased jurisdictional unrest and conflicting claims over particular work by various trades. The underlying problems advocates seek to solve by this legislation are jurisdictional in

nature, the struggle of those interested in one building product or process over another product or process.

AGC strongly believes that it would be much more constructive to think in terms of promoting industrial peace in the construction industry, rather than in terms of aggravating one of its major problems.

In the Subcommittee hearings, Senator Morse asked one witness if organized labor's claim of having a direct interest in product promotion was valid. That they do have such an interest is evident from the thousands of jurisdictionally inspired work stoppages which plague the construction industry. Union participation in product promotion funds would lead to increased jurisdictional strife, since funds would be used to promote the jurisdictional claims of the various crafts.

CONCLUSION

On the basis of the policies of this association, the above explanation of our reasons, and the fact that notice of hearings and the hearings themselves were wholly inadequate for consideration of this controversial legislation, we would urge the Subcommittee to take no further action on H.R. 1153.

We thank the Subcommittee for this opportunity of presenting our views for the record, and having them considered.

PREPARED STATEMENT OF MECHANICAL CONTRACTORS ASSOCIATION OF PHILADELPHIA, PHILADELPHIA, PA.

STATEMENT IN OPPOSITION TO H.R. 1153 AMENDING SECTION 302(C) OF THE LABOR MANAGEMENT RELATIONS ACT OF 1957

This statement is submitted on behalf of the Mechanical Contractors Association of Philadelphia, Inc., a non-profit corporation composed of more than fifty mechanical contractors in the Metropolitan Philadelphia Area. The statement is submitted in lieu of an appearance and testimony at the hearing on Friday, October 14, 1966, of which notice was received too late to attend.

For almost thirty years, the Association has been engaged as the traditional bargaining agent with various craft unions engaged in the mechanical construction industry in the five county area known as Greater Philadelphia. It set up one of the first Industry Advancement Programs in the United States in a 1956 collective bargaining agreement which became operative only after three years of litigation during which unions contended that joint administration was proper under the law. This culminated in a decision of the Court of Appeals for the Third Circuit in 1959 in the matter of Mechanical Contractors Association of Philadelphia v. Local Union 420, 265 F. (2d) 603. This decision unequivocally upheld the propriety of an Industry Advancement Program unilaterally administered by an employer group and the impropriety of such a program jointly administered by representatives of management and labor.

Since that time, the Industry Advancement Program has operated effectively and peacefully to the present time.

It is therefore felt that in this area we have had an active part in the establishment of such a Fund; in the litigation which attended its creation; and in the active administration of the program on a day to day basis for many years, successfully meeting the practical problems which confront such a program.

The Mechanical Contractors Association of Philadelphia, Inc., therefore, does not oppose or condemn Industry Advancement Programs, nor product promotion funds which are of a different species, but which H.R. 1153 fails to distinguish. The Mechanical Contractors Association of Philadelphia, Inc., opposes H.R. 1153 because it sincerely believes it will be most detrimental to the continued operations of beneficial and successful Industry Advancement Programs that are unilaterally administered, and will probably result in the termination of such programs within a short period of time. The record before the House Committee on Education and Labor establishes that there are thousands of these unilateral Industry Advancement Programs being operated successfully in a proper manner under the existing law.

The opposition of the Mechanical Contractors Association of Philadelphia, Inc. to H.R. 1153 may be summarized as follows:

1. The provision for joint administration is not the proper remedy to achieve the professed objective of the Bill.

2. The Bill does not distinguish between Product Promotion Programs and Industry Advancement Programs.

3. If such a major innovation in labor and management relations as jointly administered funds to interpret and enforce collective bargaining agreements is advisable, it should not be limited only to the building and construction industry, but should be an amendment of general application to the Labor-Management Relations Act.

We shall treat with these three objections briefly.

I. JOINT ADMINISTRATION IS AN IMPROPER REMEDY

The record before the House Committee establishes that the impetus was a violation of Section 302(c) of L. M.R.A. primarily by the Plasterers who stubbornly adhered to a jointly administered fund that appeared to be used in the battle against drywall construction. Although Courts of Appeal for the various Circuits, including the Third as indicated above, uniformly concluded that such joint administration was unlawful, the industry was finally confronted with a definitive decision in Cement Masons v. Paramount Plasterers, 310 F. (2d) 179. Support for the Bill came from the painting industry which was in a similar situation.

2. The obvious solution was and is for the plastering industry to "get in line" with the thousands of programs that are in existence and to comply with the existing law which in no way impedes operations. This can be done by the simple expedient of amending existing Deeds of Trust.

3. An alternate remedy is suggested if the Congress believes that the few existing jointly administered funds should be legalized. It is respectfully suggested that the employer, who alone makes the contribution and finances the program, should be given an option to elect whether the program is to be unilaterally or jointly administered. The proposed legislation could be amended as follows: "Provided further, that the employer shall have the right to elect whether the funds described in 7(A) and (B) hereof shall be administered solely by the employer or jointly with the representatives of his employees.'

4. The report of the House Committee on Education and Labor recognizes the desirability of preserving existing Industry Advancement Programs administered solely by employers. At Page 3, the Majority Report states: "There is no objection to unilaterally administered Advancement Programs", and it is further stated: "H.R. 1153 was completely redrafted in Sub-Committee Executive Session to more specifically and clearly express its intent. One aim of this redrafting was to meet an industry criticism of the original Bill that the Bill was too broadly written and might do away with existing programs unilaterally administered". We submit that the redrafting does not accomplish its aims, and this is self-evident upon comparing the original Bill with the Bill as redrafted. Experience in day to day labor relations is inescapably drawn to the conclusion that the proposed Bill will be improperly interpreted as a mandate of the Congress to convert all existing Industry Advancement Programs into jointly administered funds. This will create either labor unrest, or the abolition of the programs which are admittedly beneficial to small business. It will add to a process that is already sufficiently complex another source of conflict, and it is difficult to understand how a practical and experienced approach to the problem could justify a conclusion that making the amendment a permissive, rather than a mandatory, subject of bargaining will be a panacea. It is well known that as a practical matter, permissive subjects of bargaining become the source of impasse and strike even though the overt cause of the strike is stated in terms of a mandatory subject of bargaining. This subject is being drafted as another exception to Section 302(c) to take its place along with other trust funds for Health and Welfare, for Pension and Retirement, for pooled vacation allowances, and for Apprentice Training Programs, all of which are mandatory subjects of bargaining, and all of which will certainly color this additional separate trust fund which will become an addition to the existing funds for bargaining purposes.

5. It is strongly suggested that if H.R. 1153 is a proper remedy, and if the proponents sincerely desire to support Industry Advancement Programs in the public interest, there can be no reason why the Bill should be restricted in its application to the building and construction industry and converted into special rather than general legislation. Why is it necessary to engraft a specific industry amendment to Section 302(c) of L.M.R.A., which is a statute of general application to all industries?

6. Finally, it is suggested that the administration of an Industry Advancement Program by representatives of labor is unwise. It is evident that the program does not directly affect wages, hours and working conditions in which Unions have a legitimate interest, such as in the case of Welfare Funds, Pension Funds, Vaca