Mr. MACK. Going back to joint industry funds, we had joint industry funds starting in 1952, and they were in effect for about 5 years. One of the previous witnesses stated there was no suspension against joint industry funds.

I disagree with this. I had active experience in joint industry funds through several unions in California. As a matter of fact, in one union, the business agent out of industry funds paid the rent of the union hall.

They paid the full rent, so it saved the union a considerable amount of money. There was no rent charge to them. It was legal because the industry fund meetings were being held in the union hall.

We had one instance where the business agent hired a secretary to handle industry funds, but that secretary spent 90 percent or her time working for the union. Unfortunately, in this industry, when labor meets with management, management has two strikes against them, because they are employing men from labor, and the business agent wields a considerable amount of power over management or the contractor.

If this man from management sitting on a committee doesn't accede to what the business manager wishes, they can really put plenty of heat on him for the men that he gets from the union hall. So this, unfortunately, puts us in a very, very unbearable and intolerable position of having to accede to labor's demands.

Historically, labor has only bargained for wages, hours, and working conditions. It has been this way ever since the beginning of the labor movement, and I think this is reasonable, and I think it is fair.

If you put this in, we are going to be financing labor for all their labor disputes. We are going to be financing labor for any product that they want to push or that they want to kill.

This is none of labor's business. What materials the contractor handles is his business. We hire people to put in the product we want to use. We want to use a good product if we can get it put in at a reasonable cost, and if a manufacturer can give us that product and guarantee it and his guarantee is good. We do not think it is the business of the employee to tell us what we are going to put in.

I don't think any business can work under those conditions, whether it is General Motors or Ford Motors or General Electric or the construction industry.

Gentlemen, these are very, very important points. Another thing, if we are going to pay all the costs of the labor disputes, you can imagine the increased-it is going to increase construction costs, and the Lord only knows that construction today has increased way, way beyond anything else.

We are going to put a load on your constituent and the public that they can't possibly bear up under.

We talk about low-income housing. It is going to be high-income housing.

Senator FANNIN. Mr. Mack, one thing: You talk about union interests. Safety is a factor in which the union has an interest and so those materials, if they did pertain to safety, I would say the union does have a right to voice their opinion.

Mr. MACK. I agree, and we have a joint safety committee. In California it is required under the law that we have tailgate meetings

every 10 working days. We have a booklet on safety that we put out to all our contractors showing them how to conduct a meeting, what to discuss at the meeting

Senator FANNIN. I am talking about the utilization of the materials. Mr. MACK. This includes materials.

Senator FANNIN. But when you make a statement that they haven't any interest as far as type of materials used, I would say that is questionable, because they do as far as safety is involved.

Mr. MACK. I agree, if it involves safety. We work with labor on that. This is my complete statement. If you have questions, I would be glad to answer them.

Senator YARBOROUGH. I have received notice that the Senate has agreed for us to continue to sit this morning.

I have no question. Unfortunately I was called out on a very urgent matter. Thank you, Senator, for conducting the hearings in my absence.

Senator FANNIN. Mr. Chairman, I believe they want their complete statements incorporated in the record.

Senator YARBOROUGH. They will be incorporated in the record. They are all to be printed in the record.

(The prepared statement of Mr. Mack follows:)

PREPARED STATEMENT OF J. D. MACK, EXECUTIVE MANAGER, PLUMBING-HEATINGCOOLING CONTRACTORS OF CALIFORNIA

S. 3149 would amend the Labor-Management Relations Act of 1947 to permit Joint Industry Funds to be established and used for product promotion and for the interpretation of collective bargaining agreements. Although these Industry Funds would be financed exclusively by the employer, their expenditures would be determined jointly by labor and management.

The two stated purposes of this bill, product promotion and the interpretation of collective bargaining agreements should not be the financial responsibility of the contractor in the construction industry. Forcing management to finance these two items places an additional unfair burden on the construction contractor, and will, without any doubt, increase the cost of construction.

PRODUCT PROMOTION

Construction contractors normally use thousands of products and believe that each product should stand on its own merits. To oppose a product is an unfair restriction of trade; to promote a product is the responsibility of the manufacturer. Under S. 3149, pressure could be exerted by labor which could make or break a manufacturer.

INTERPRETATION OF COLLECTIVE BARGAINING AGREEMENTS

At the present time when a labor dispute goes to arbitration, the costs are borne by the loser. Because of this provision, both labor and management make heroic efforts to settle these disputes themselves and only the execptional case is actually sent to arbitration. Under S. 3149, the employer-financed Industry Funds would bear the full cost of all arbitration proceedings. As labor would never have to bear the cost, they would have no interest in avoiding such proceedings, and the number of cases sent to arbitration would increase tremendously. This would lead to:

1. The allocation of a large percentage of the Industry Funds to arbitration proceedings;

2. The necessity of increasing the employer's contributions to the Industry Fund;

3. The necessity of raising prices to cover increased construction costs;

4. Damage to the contractor's public image because of the price raise ;

5. Inflation.

INDUSTRY FUNDS WOULD BE COMPULSORY

Although S. 3149 specifies that neither labor nor management be required to bargain on the establishment of an Industry Fund, in reality, labor could easily demand their establishment. Despite the wording in S. 3149, management would undoubtedly be subject to indirect economic reprisals by the union should they refuse to establish such an employer-financed Industry Fund-a fund which would benefit the unions so greatly.

JOINT MANAGEMENT OF INDUSTRY FUNDS WOULD BE COMPULSORY

Although S. 3149 is purportedly permissive, management's refusal to convert Industry Funds already in effect to jointly-managed Industry Funds would undoubtedly lead to economic reprisals by labor.

JOINT-MANAGED INDUSTRY FUNDS MEANS LABOR-MANAGED INDUSTRY FUNDS

S. 3149 would place management in an untenable position with labor. If management failed to agree with labor on the use of industry funds, labor could force their point by economic reprisals against management.

OPPORTUNITY FOR COERCIVE TACTICS

S. 3149 would substantially harm management and benefit labor. It would present opportunities to labor to utilize the identical coercive tactics that the original Section 302 of the Taft-Hartley Bill endeavored to prevent.

CURTAILMENT OF PRESENT INDUSTRY PROGRAMS

Management Industry Funds are often now used to finance classes in salesmanship, public relations and other subjects designed to raise productivity and promote the industry in general. Under S. 3149, labor might well eliminate such educational projects and insist that Industry Funds be used for purposes of labor's choosing.

INFRINGEMENT OF MANAGEMENT'S RIGHTS

A union's primary function is to represent its members with respect to wages, hours and working conditions. S. 3149 would greatly extend the union's scope of influence. It would take away management's prerogative of determining how to spend its own money and would permit labor to enter a field which has traditionally been reserved for management.

Senator YARBOROUGH. The next witness is Mr. Leon Kromer, executive vice president, Mechanical Contractors Association of America.

STATEMENT OF LEON B. KROMER, JR., EXECUTIVE VICE PRESIDENT, MECHANICAL CONTRACTORS ASSOCIATION OF AMERICA, INC.

Mr. KROMER. Thank you, Mr. Chairman.

This statement is submitted in behalf of the more than 1,200 members of the Mechanical Contractors Association of America, Inc. MCAA is a national association of contractors engaged in the installation of plumbing, heating, air conditioning, industrial, and process piping systems. With over 50 affiliated associations located throughout the United States, MCAA members employ over 125,000 plumbers and pipefitters on construction work that exceeds $3 billion annually.

The bill proposes to amend section 302 (c) of the Labor-Management Relations Act, as amended, to legalize joint administration of industry promotion funds whose purposes are directly related to product promotion, product research, market development, and related purposes. It would legalize joint administration of funds to defray the costs and

expenses of joint committees or boards "empowered to interpret provisions of collective bargaining agreements ****"

Before getting into a detailed critique of the bill, I would like to pose a series of basic questions about the terms used in the proposed legisla

tion:

Who is covered by the bill?

What is covered by the bill?

Who is an "employer of the construction industry”?

It can be agreed that the recognized independent contractor who bids a project is an employer in this industry-a general or mechanical contractor, for example. It can also be an oil company that performs construction work with in-plant employees; that is, industrial workers. It can also be a chemical company that hires building trades mechanics direct for construction work. Certainly these industrial enterprises are, in the context of this bill, employers of the construction industry.

Another question suggests itself: What exactly is the construction industry? It can be agreed that building an industrial plant from the ground up is construction; that expansion of existing plant facilities is construction. Is in-plant maintenance work construction? Is plant alterations work construction? Both maintenance and alteration work is performed by industrial owners and by independent contractors recognized as part of the construction industry.

I raise these questions to emphasize to you, with due respect to its sponsor, that this bill is poorly worded and loosely drafted. It uses terms that are not defined as suggested by these questions. It is a dangerous piece of legislation and its enactment will literally open a Pandora's box of confusion, a variety of interpretations by the courts and the National Labor Relations Board that can only result in serious disruptions throughout all industry.

Let us assume, in spite of the ambiguous language, that this bill does cover the construction contractor as the employer. What are the implications? Members of the committee are aware of industry promotion funds now common in the construction industry. There are thousands of such funds administered by management trustees. Some of the oldest funds in the construction industry are in the mechanical contracting segment of the industry. The programs undertaken by these promotion funds are within the prerogative of management and should not be jointly directed.

The programs include:

1. Working with architects and consulting engineers toward improvement in plans and specifications. The greatest strides in technological advancement in the construction industry have taken place in mechanical installations. There is continuing need for consultation with, and education of, engineers and architects. A number of the funds have been able to engage qualified specialists for this liaison work.

2. Conducting educational seminars through employing the services of highly qualified specialists in specific subject areas. The seminars have included courses directed to top management, to improve management techniques, to middle management, job superintendents and job foremen. The unions have enthusiastically endorsed the latter programs. Indeed, union business agents and other officials have supported and attended such courses.

3. With the need to encourage and educate minority groups to seek employment in the industry, the resources of industry promotion funds have been used effectively. In two instances, funds sponsor a television quiz program with the format of the well-known "College Bowl" national program with contestants drawn from local high schools.

It is estimated that there are over 800,000 viewers-mostly students in the two cities where these programs are broadcast. The program informs viewers of opportunities in the mechanical contracting industry, the training programs for apprentices and other information to encourage students to enter the industry. These programs have been very effective in reaching minority group students at the desired age level—that is, junior and senior high school students.

Working in the same problem area, another fund has engaged a fulltime employment adviser to aid and encourage members of minority groups having an interest in developing skills and abilities to qualify for jobs in the mechanical contracting industry. He has established liaison with various high schools and local community groups and has been successful in recruiting young men of minority groups to apply for the plumbers and pipefitters apprentice programs and as qualified union journeymen.

Within the first three months of the program, 75 minority group applicants were referred to apprentice committees for testing. In addition, 11 minority group plumbers and pipefitters are currently undergoing qualification tests for journeymen cards. The continued success of this program may lead other local associations to resolve the major problem of equal employment in our industry.

4. The resources of industry promotion funds have made it possible for mechanical contractors associations to combat the growing practice of electric utilities of offering subsidies to public school awarding authorities and other owners of construction. Complaints have been filed with public service commissions, suits started in appropriate State courts.

These activities have required the services of experts in electrical rate structures and, of course, legal counsel. Without industry funds, the small businessman could not match the resources of the electrical utilities.

To point out, as has been done, that bargaining over these funds is permissive, not mandatory, is misleading. It is pure fiction in practice. Anyone knowledgeable in collective bargaining in this industry is well aware that a union can, as a practical matter, require employers to bargain over a permissive subject through recognized devices of bargaining strategy.

The provision for product promotion is special interest legislation, because it is designed to overcome a specific problem in only one segment of the construction industry: The decision of the Ninth Circuit Court in the Paramount Plastering Case. The bill meets the special need of this one segment of this one industry that operated a fund found to be illegally administered. On this highly exceptional basis, legislation is proposed that would jeopardize continuation of funds that perform legitimate services to owners and the public.

This bill also constitutes special interest legislation with respect to the provision for joint administration of funds to defray expenses of committees or board in resolving disputes arising over agreements.