1. What is the difference between so-called decision bargaining and effects bargaining? The employer operates a meat slaughtering, processing, and packing business at several U.S. plant locations, including Hog Heaven, Nebraska, where this labor dispute occurred. The company and union have been engaged in a bargaining relationship for many years, with the most recent contract covering a three-year period (subsequently extended one additional year). Before the Hog Heaven plant’s closing, the union represented 1,900 to 2,000 employees at the plant.

Five years ago the Hog Heaven plant began experiencing economic difficulties. As profit losses mounted, the company began to receive pressure from its financial lenders and finally sought some labor cost concessions from the union. After voluntary mid-term negotiations with the union, employees voted to accept productivity standards for use in determining incentive pay increases to aid the company’s financial situation. Despite the work-rule changes, the company’s financial problems continued to mount. In June, management notified the union of its decision to close the ‘‘beef kill’’ and related departments effective December 12. The company also notified the union that in order to remain competitive, high productivity levels would have to be maintained in the ‘‘hog-kill-and-cut’’ department.

In August of that year, the parties agreed to eliminate all incentive pay options while continuing to require employees to meet the higher productivity standards previously jointly agreed to in mid-term bargaining. In exchange, the company agreed that it would not seek any further cost concessions from the union for the remaining two years of the contract’s term. The company’s estimated cost savings from the August concession by the union was approximately $5 million annually.