solved its grievances and disputes. There are over 200 such joint boards in operation today. Some of them have existed for as long as 50 years. A number of them cover an entire state or multi-state area. As a result of the successful operation of these joint boards and committees, the painting industry can boast of an enviable record of industrial peace in all parts of the country, relatively free of strikes and job shut-downs during the terms of existing collective bargaining agreements.

Yet the industrial peace I referred to, which so obviously benefits the public as well as members of the industry, is subsantially threatened by court decisions applying a literal interpretation to Section 302. A case in point is the joint committee program which for years has successfully resolved contract disputes in the Southern California area, more specifically in the jurisdiction of the Orange Belt District Council of Painters. The federal district court there rendered judgment several months ago that since that type of operation was not specifically described as permissible in Section 302(c), the program could not be financed through a joint trust fund. From a practical standpoint a joint committee such as I have described cannot be funded any other way. Therefore, our industry in Southern California faces the bleak prospect of returning to the age of economic "muscle" and "dog-eat-dog" atmosphere which threatened its ruination prior to the promulgation of their joint committee disputes plan. Other areas of the country may soon be similarly afflicted. And the need for this legislation is rapidly becoming acute.

With respect to neither promotion funds nor joint committee funds have we ever experienced any wrong-doing. With respect to neither was any evidence of abuse presented to Congress in 1947 upon the enactment of Section 302. With respect to neither were the few critics of previous bills similar to this one able to state that misuse had occurred. They contented themselves with the observation that joint funding raised the "possibility" of mismanagement. Surely any worth-while program may, if placed in the hands of irresponsible persons, be misdirected. Surely there have been such instances with respect to joint funds which are presently permitted by Section 302. Fortunately, the laws of the land have proved adequate to the task of correcting the situation as it arose. We shudder to contemplate the condition of society were it bereft of all protective legislation hypothetically susceptible to abuse.

In this connection, we are pleased to observe that S. 3149 contains carefully drawn and effective safeguards as to both types of funds. First, payments must be made to a separate trust and earmarked solely for the purpose specified in the Bill. Second, such funds may not be commingled with others or used to defray the cost of programs that are either employer or union functions. Third, these funds are subject to the strictures of clause (B) of the proviso to clause (5) of Section 302 (c), including requirements that the detailed basis on which payments are to be made be specified in the agreement, that employees and employers be equally represented in the administration of the funds, that provision be made of impartial arbitration to break deadlocks, and that an annual audit of the funds be made available to interested persons. Fourth, the subject funds would be governed by the Welfare and Pension Plans Disclosure Act. Fifth, and finally, this Bill states that neither party shall be required to bargain on the establishment of such funds, and refusal to do so shall not constitute an unfair labor practice. On this point, critics have said that, despite the provision that such funds may only be established on a voluntary basis, Unions in the construction industry are strong enough to compel agreement by devious means. It has been suggested, for example, that by demanding and striking for an unreasonably high wage package while making it privately known that a lesser package would be acceptable if a trust fund program were achieved, a union could in effect compel compliance. Even accepting for argument's sake the dubious premise concerning the relative strengths of labor and management, we find this suggestion incredible. For it is manifest that joint programs of the nature covered by this Bill can only be effective if both parties are convinced of their worth and effectuate it with complete enthusiasm. Whether the program succeeds will depend not so much on its structure, but on its actual operation. One may be able to compel and enforce payment into a fund. But cooperation and the exertion of best effort, which constitute the foundation of such programs, cannot be compelled or enforced either by economic action or in a court of law. In that context, it is clear to us that coercion of any sort is not a realistic possibility.

This Bill is familiar to the Congress. Similar Bills have been before the House in 1962, 1963 and 1965. In 1965 this Bill's predecessor, H.R. 1153, was passed

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by the House. We are hopeful that with this Hearing we stand on the threshhold of final enactment in this session of Congress. Thank you for the opportunity to present the views of the Brotherhood.

PREPARED STATEMENT OF ASSOCIATED GENERAL CONTRACTORS OF
GREATER MILWAUKEE, INC

This statement is submitted on behalf of the Associated General Contractors of Greater Milwaukee, Inc., a non-profit corporation affiliated with The Associated General Contractors of America, composed of construction firms operating in the Milwaukee area. This Association is steadfastly opposed to S. 3149.

AGC of Milwaukee specifically adopts and supports the positions taken by The Associated General Contractors of America and its Philadelphia affiliate. The General Building Contractors Association, in their appearances before the Subcommittee on July 15, 1968.

Section (a) of the proposed bill constitutes an unwarranted intrusion into an area universally recognized as part of management's normal and traditional role, the field of product promotion. One of the most vexing problems facing the construction industry today is the jurisdictional dispute. The enactment of this bill will result in aggravating this problem. Construction companies have contracts with a number of different unions. Among these unions, strong rivalries exist as to jurisdiction over any given product or process. It is inescapable that if jointly administered products promotion funds are permitted in this industry, their administration will become intertwined in the jurisdictional rivalries of the unions involved. In practical effect, this bill, if enacted, would allow the various building trade unions to utilize joint product promotion funds to support their work jurisdiction disputes. With further regard to Section (a), we are aware that the industry has been assured that the word "product" as used in the bill is not intended to encompass industry advancement programs. However, in order that there be no question whatever and that there be no temptation to an overzealous union to misconstrue the bill's intent, we would respectfully suggest that the word "product" be specifically defined in the bill itself as follows:

Product as used herein refers only to tangible materials or substances physically incorporated in buildings or other facilities, or the application of such materials as in painting or decorating. It does not refer to the activities of the so-called industry advancement programs.

The language of this proposed amendment is already present in the legislative history of the identical bill in the House, H.R. 15198. Recognizing this problem, Representative Steiger of Wisconsin specifically distinguished the product promotion funds from the industry advancement funds during his remarks on the floor of the House on April 1, 1968.

Section (b) of the bill would run counter to the cause of industrial peace in the construction industry. Presently, management and the unions share the cost of resolving their differences in the interpretation of the collective bargaining agreement. This system provides a built-in deterrent against either party filing frivolous claims. This deterrent will be removed with regard to the unions if this bill is enacted into law. With management providing 100 percent of the money, and the union having a 50 percent voice in how that money will be spent, the temptation toward frivolous cases, opulent facilities, and protracted grievance sessions will be greatly enhanced.

For the above reasons, the Associated General Contractors of Greater Milwaukee strongly oppose the enactment of S. 3149.

It is respectfully requested that this statement be entered in the hearing record of the Subcommittee.

PREPARED STATEMENT OF WILLIAM H. LINDSAY, JR., EXECUTIVE VICE PRESIDENT, MECHANICAL CONTRACTORS ASSOCIATION OF PHILADELPHIA, INC., PHILADELPHIA, PA.

As secretary and Executive Vice President of the Mechanical Contractors Association of Philadelphia, Inc., and on behalf of its membership, I submit this writing to register our opposition to Senate Bill 3149 which proposes an amendment to Section 302 (c) of the Labor-Management Relations Act of 1947 by creating an additional exception to the prohibition against payment of money

or other things of value by an employer or association of employers to a labor organization.

For over thirty years, the Mechanical Contractors Association of Philadelphia, Inc., with a membership of more than fifty-five contractors engaged in the mechanical contractors industry, has been the bargaining agent for employers in negotiations with the craft unions engaged in the mechanical construction industry in the five county area of Southeastern Pennsylvania, Northern Delaware and Southern New Jersey, all known as Greater Philadelphia.

The Association was responsible for the establishment of one of the first industry advancement programs in the United States. That program, born in strife in 1956 because of the contention of unions that it should be jointly administered, developed into an effective and successful program only after a determination by the United States Court of Appeals for the Third Circuit in 1959, in Mechanical Contractors Association of Philadelphia v. Local Union 420, 265 F. 2d 603, that unions could not receive employers' funds for the purposes of the program and could not participate jointly with management in the administration of the funds.

One of the most recent undertakings of the Philadelphia Industry Fund has been to engage an employment director whose fulltime job is recruiting minority group members for training in the trades utilized by participating employers, establishment of a community relations program to encourage minority groups to develop skills in those trades, and take advantage of opportunities which exist in the industry. Since the middle of February, 1968, the Association has sent to be tested 104 applicants to two unions with whom the Association has Collective Bargaining Agreements. However, in that area, as in many others, the unions, by reason of their own goals or by reason of political necessity, may find it expedient to impede or resist progress. The same is true of many other areas in which the industry advancement program has acted under the direction of experienced management personnel desirous of promoting the welfare of the industry on social, economic, business and educational levels. It is the opinion of the members of the Association that Senate Bill 3149, if enacted into law, will effectively toll the final bell for the successful program and activities of the industry advancement program.

This special interest legislation is aimed only at "any employer of the construction industry". The long history of the Bill and its predecessors, none of which was enacted into law, demonstrate that the sole purpose of the Bill is to legalize existing unlawful arrangements involving a small number of the craft unions in the construction industry. This attempt to legalize an unlawful practice may enable a small number of construction employers and unions to return to the ranks of the law abiding, but the side effects would be devastating. The Bill would add another weapon to the already formidable arsenal of the construction industry unions. Contract settlements in the construction industry in the past four years have been higher than in any other industry, and they have far exceeded the average for all industry.

In 1966 and 1967, construction industry labor agreements have reached a record high. To now compel employers in that industry to divert industry funds into two special funds proposed by this Bill and give equal control would do no service to the industry, to the persons they service or to the country as a whole. This Association is well aware of the provisos of the Bill which indicate that it would not be an unfair labor practice for either management or labor to refuse to bargain as to contributions to a product promotion fund or a fund for a joint committee to interpret provisions for collective bargaining agreements. Despite that language, we have used the words "compel employers to participate” because our knowledge and long experience lead to the conclusion that this will be the net effect of the Bill.

Only a novice in the field of labor relations will take comfort from the provisos of the Bill which make the proposed trust funds permissive rather than mandatory issues for bargaining. It requires a rejection of all knowledge and practical experience to assume that such provisos will effectively prevent adamant insistence by the unions to the point of strike. Any person who is not familiar with the device of holding to an outrageous position on one or more mandatory issues of bargaining until there is capitulation on a permissive subject of bargaining is not experienced in construction industry negotiations and is not a keen observer of the American labor scene.

The recent record high wage and fringe settlements have resulted from the already excessive imbalance of power in favor of the construction unions and

the inability of construction employers to withstand a strike of even short duration.

If you recognize, as we think you must, that the Bill will result in forcing employer contributions to union established trust funds for very limited purposes, and if you consider, as you must, that labor costs in the construction industry have already ascended at a very disproportionately high rate, you must then conclude that the net effect of the Bill will be to wipe out broad based industry promotion funds which perform both private and public services, in favor of a union controlled product promotion fund and a union controlled fund to pay employees of, or representatives on, a joint committee or a joint board empowered to interpreted provisions of collective bargaining agreements or disputes arising thereunder. A simple examination of the two purposes stated in the Bill demonstrates that neither is necessary and neither constitutes a sufficient basis for creating an exception to the prohibitions of Section 302 of the Labor-Management Relations Act. That Section has left the basic prohibition intact for the very reasons which prompted its enactment in 1947. The proposed amendment will serve to negate the effect of that prohibition with no counterresultant good effect.

How can a product promotion fund jointly administered by unions noted for vigorous opposition to any type of automation or any kind of pre-site assembly effectively serve the construction industry? One must concede the union's right to oppose automation or development of time, labor and money saving devices, but it requires a peculiar kind of thinking to legislatively compel the very employers against whom the unions will take those positions to contribute funds to support those unions' positions in the name of "product promotion". The strife and dispuation which will arise from any attempt to jointly administer an "industry promotional program" will prevent any effective action by the employers who are paying its cost if the union registers any objection. Can any person experienced in construction industry labor matters doubt that any attempt by employers to make expenditures of funds, to study or develop automation, equipment or other time or labor saving devices, at least will result in severe disagreement and, more probably, be the occasion for more work stoppages in the industry.

The construction industry unions are well organized on local, national and international levels. They are affiliated with the AFL-CIO and they have considerable assets and vast machinery available to them for fostering such promotional programs as they may deem desirable. Nothing prevents the few who will benefit from this legislation from engaging in joint promotional efforts with management and labor, each paying its own costs.

On the other hand, employers in the construction industry are loosely organized and do not have the vast political machinery of the unions. They must rely upon contributions to foster and promote their own industry in the manner they think best. The Philadelphia Mechanical Contractors has achieved sound industry goals which, in its opinion, could not have been achieved with joint administration of the Philadelphia Fund and could not have been achieved under any trust so limited in purpose as the industry promotional program referred to in the pending Bill.

With regard to the second specific fund contemplated by the Bill, i.e., a fund to defray the costs and expenses of a joint committee or a joint board to interpret provisions of collective bargaining agreements, we believe that it is an invitation to chaos. If a vast fund is created at the sole expense of the Employers, what can it be used for? Should a joint committee or joint board hire investigators? Who would designate those investigators? Should the members of the committee or board receive salaries or payment on a per-case basis? What would be the purpose of it all? At present, all of the contracts between this Association and the unions with which it deals provide for a grievance procedure culminating in arbitration. There is no cost involved except in the event of an arbitration since each step of procedure to that point provides for meetings between management representatives who are salaried management employees and union representatives who are salaried union employees. To date, neither has objected that the grievance procedure imposes any hazard or justified any additional payment. Representatives of both sides have always considered it to be part of their respective jobs. The cost generated by the occasional arbitration resulting from a failure of the parties to amicably resolve a dispute is borne equally by the parties which is as it should be. There is no vast fund to encourage patronage by creating employment for faithful union members or loyal retainers of incumbent officers or by adding to existing union staffs engaged for the purpose of administering

the currently existing joint funds such as welfare, pension, apprentice and vacation funds.

The basic prohibitions of Section 302 of the Act are sound. The present limited exceptions to those provisions are meritorious and there exist adequate safeguards to prevent abuse under those exceptions.

There is no merit or logic to the proposed amendment for it invites abuse of and disregard for the purpose of Section 302. More important, it is a partial defeat of the purpose and policy of the Act for it will not:

*** promote the full flow of commerce, to prescribe the legitimate rights of both employees and employers in their relations affecting commerce, provide orderly and peaceful procedures for preventing the interference by either the legitimate rights of the other. ***"

Above all else, it is clear that this Bill is not a Bill to permit a cooperative effort between unions and industry in product promotion or in the interpretation of contracts or settling of disputes. All of that is permitted and occurs without any violation of existing law. There is nothing to prevent any union and the employers whose employees they represent from engaging in a cooperative industry promotional program. All that the law prohibits is payment by employers to the unions. If there is any genuine interest in a cooperative effort, the parties can arrange to take such action as is mutually agreeable to them with each to bear its own share of the cost.

If this Bill becomes law, it will not serve as a basis for industry promotion. Indeed, one of the functions of an industry promotion fund is to resist this very kind of legislation. Could that be done with a fund over which some union had control? It is equally clear that no law prohibits a cooperative effort for purposes of contract interpretation or settlement of grievances and disputes. The law encourages that presently and with great success. There is no need to single out the construction industry as one which must contribute to a union controlled fund, for that purpose. There is no more need for such a fund in the construction industry than in any other industry. One example of establishment of joint boards or committees functioning on a national, multi-state area and local level is provided by the trucking industry.

The trucking industry employs more people than the construction industry. The Teamsters Union, which represents trucking employees, is larger than all of the construction unions combined. In addition, to many promotional or industry advancement funds administered solely by employees, the trucking industry participates in joint committees hearings with Teamsters to interpret agreements and resolve disputes thereunder at all levels. They do this without any special legislation and without any union established fund made up of employer contributions.

Many other industries and unions achieve the same results under the present law, including those in the construction industry in Philadelphia.

The Mechanical Contractors Association of Philadelphia, Inc., urges this Committee not to victimize the construction industry with the burden of this legislation. We urge the defeat of Senate Bill 3149.

PREPARED STATEMENT OF JOHN M. MONTGOMERY, COUNSEL, NATIONAL PAINT, VARNISH AND LACQUER ASSOCIATIONS, INC.

Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity of appearing before you to present the position of the National Paint, Varnish and Lacquer Association on S. 3149. This Association-with headquarters at 1500 Rhode Island Avenue, N.W., Washington, D.C.-is a voluntary non-profit association which, like Chambers of Commerce and Boards of Trade, acts as a business league for the industry which supplies paint and kindred products for this country's needs. Its members collectively produce about 90% of the total national dollar volume of paint, varnish, lacquer and similar products.

We strongly support S. 3149, the legislation presently before your Committee, which would amend Section 302(c) of the Labor-Management Relations Act of 1947 in order to permit employer contributions to trust funds established through the processes of collective bargaining agreements for the purpose of:

1. A joint industry promotional program; and

2. A joint committee or joint board empowered to interpret provisions of the collective bargaining agreement and to adjudicate disputes that might arise during the period of such agreements.