The Union claims that two sheet metal workers were entitled to an article 8 notice pursuant to the Employment Security and Income Maintenance Plan (ESIMP) in relation to the abolishment of their position in the Transcona Main Shop in Winnipeg on August 17, 1989. The joint statement of issue, filed at the hearing, describes the dispute as follows:

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The dispute concerns the application of article 8.1 and 8.7 of the ESIMP. They provide as follows:

The two employees in question have more than eight years of service, and could claim the benefits of Employment Security protection under the Plan if they were, in fact, adversely impacted by a technological, operational, or organizational ("T.O.&O.") change within the meaning of article 8.1 of the ESIMP. The Company submits that the lay-off of the grievors was occasioned by a downturn in freight traffic which falls within the exception provided for in article 8.7.

It submits that freight revenues for the first quarter of 1989 showed a year-to-year reduction of 74.3 million dollars. Additionally, it notes that there was a decline in the level of traffic of 8% in the first quarter of the year, as compared with the same period in 1988. In light of those figures, the Company implemented budget constrains in all departments, with a view to reducing expenses. In the result, according to the Company, a decision was made to reduce the number of cars to be repaired in the Transcona Main Shop Car Department as of March 1989. The figures tabled by the Company disclose that during 1989 the workload for sheet metal workers in boxcar repairs was generally deferred, causing a loss of some 1668.31 total hours. Additionally, certain miscellaneous sheet metal work projects were also reduced, occasioning a drop in available hours by an additional 1153 hours.

It is common ground that a number of positions in various trades at the Transcona Main Shop were abolished, totalling approximately 139. According to the Company all but 61 of those were the result of fluctuations in freight traffic. It is also common ground that although both grievors were laid off on August 17, 1989, Mr. Streilein was recalled on June 19, 1990 to temporary alternate employment in another bargaining unit, and that both employees were eventually recalled as sheet metal workers on November 25, 1991 at the Transcona Main Shop, where they are still employed.

The material before the Arbitrator establishes beyond controversy that the Company did suffer a reduction in freight volumes: 1989 saw a reduction of 12,962 gross ton miles, as compared with 1988, or a year-to-year decline of 7.2%. The thrust of the Union's position, or what it describes as the "real reasons" for the job reductions, relate to a decrease in the volume of locomotive radiator work and, to a lesser extent, the reduction in certain other types of work, including the supply of parts for insulated boxcars, the fabrication of blue flags, and the fabrication of blueprint racks, among others. The Union submits that these factors were the reasons for the Company indicating a planned T.O.&O. change which would occasion the redundancy of 7 employees, as expressed in its semi-annual plan released in January of 1989. The reductions in question were thereafter delayed because, in the Union's view, alternate work projects became available, including work on the grain boxcar program. In the Union's perspective what transpired, in fact, is a T.O.&O. change, as acknowledged by the Company in January of 1989, the impact of which was delayed because of the availability of extra work projects such as the grain boxcar program. When that program was completed, in August of 1989, the resulting reduction in the workforce was, the Union maintains, caused by the original reduction in the volume of work due to the T.O.&O. changes in radiator work and miscellaneous projects.

The Company does not dispute that certain changes, including the changes in radiator work, would qualify as T.O.&O. changes within the meaning of article 8 of the ESIMP. It appears, in fact, that some eight positions would be attributable to the decline in the volume of that work from the mid '80s through 1991. At the commencement of 1989 there were 46 sheet metal workers at the Transcona Main Shop. That figure was reduced to 45 effective March 31, 1989, by reason of the retirement of one employee. The Company's first semi-annual plan submitted in July 1988 foresaw the abolishment of 6 sheet metal worker positions at Transcona by reason of the implementation of cabooseless trains. In fact, however, that program did not proceed at the rate originally expected, and some 72% of the caboose fleet presently remains in operation. The projected abolishments were, therefore, not carried out. During the period relating to the same report, two other sheet metal worker positions were abolished elsewhere in Winnipeg. The positions so reduced were acknowledged to be the result of T.O.&O. changes and two employees subsequently retired with separation allowances negotiated under the terms of the ESIMP.

The semi-annual plan tabled in January of 1989 foresaw the abolishment of 7 sheet metal worker positions in the first quarter of 1989 at Transcona as a result of T.O.&O. changes. Because of the continuing volume of work available, however, those abolishments were not implemented as expected. Subsequently, the third semi-annual plan tabled in July of 1989 announced the reduction of the two sheet metal worker positions at Transcona by reason of the completion of the grain boxcar rehabilitation program. Those are the positions which are the subject of this grievance. The Company submits that those jobs were lost because of the downturn in traffic discussed above.

The fourth semi-annual plan tabled by the Company in January of 1990 identified a further sheet metal position abolished by reason of the operation of cabooseless trains. It appears that the position was abolished by reason of an article 8 notice on February 2, 1990. In the aggregate some 13 positions were expected to be abolished by reason of T.O.&O. changes between July of 1988 and December of 1989. The Company submits that the 7 positions which were supposed to be abolished in accordance with the January 1989 semi-annual report were not, in fact, eliminated and there were no adverse effects on employees as a result. In the result, according to the Company, the job abolishments predicted for the Transcona Main Shop did not occur, and the two lay-offs which are the subject of this grievance are entirely unrelated to those projected job abolishments.

In response to the submission of the Union that the reduction in radiator work is principally responsible for the lay-off the two employees effective August 17, 1989, the Company submits that in fact no employees were adversely affected by those changes, as those who were employed in the radiator shop were gradually reassigned to other sheet metal work positions within the Motive Power Shop or within the Car or Maintenance Departments at Transcona. The Company's representative submits that attrition of other employees has allowed all of those individuals to remain employed. In support of that position, he points to records establishing that 21 employees either resigned, retired, transferred or deceased during the period 1983 through 1989.

I turn to consider the merits of the competing positions advanced by the parties. Three facts appear undisputed: firstly, there has been a reduction in the amount of work available to sheet metal workers; secondly, there has been a reduction of the overall sheet metal workforce by attrition; and, thirdly, the general ratio of sheet metal workers to other trades employed at Transcona has remained relatively constant. On the whole of the material submitted, the Arbitrator has some difficulty accepting the causal link which the Union submits exists between the reduction of radiator and miscellaneous project work and the lay-off of the two employees on whose behalf this grievance is brought. By the Union's own reckoning, the elimination of radiator work might account for some eight positions being lost to the Union at Transcona. During this same period, however, some sixteen employees resigned, retired, transferred, or died. As those positions were not filled, the Arbitrator is compelled to conclude, on the balance of probabilities, that the adverse impact which may have been attributable to the changes in radiator work and other incidental changes, was effectively absorbed by the Company's decision not to replace the employees who resigned, retired, or were otherwise severed from employment. It is well established that the adverse impact of a T.O.&O. change can be offset by attrition. In SHP 345 the arbitrator made the following comment:

In a complex industrial operation it is, needless to say, difficult to isolate cause and effect in matters relating to reductions in a workforce over a period of time. The task is still more uncertain where, as in the instant case, a Union seeks to rely upon the concept of "creeping technological change" as the basis for its claim. Nevertheless, under the rules of arbitral procedure the burden of proof remains upon the Union to establish that a particular reduction in staff is the direct result of T.O.&O. changes within the meaning of article 8 of the ESIMP. In the instant case two significant factors compel the arbitrator to the conclusion that that burden has not been discharged. Firstly, in contrast to the proof which it failed to advance in SHP 334, the Company has established a year-to-year decline in freight traffic which occasioned budgetary constrains and reduced manpower contingency plans in the first part of 1989. Secondly, while the Arbitrator accepts, in principle, the argument of the Union that a work reduction due to the changes in locomotive radiator work could have a delayed impact if it were shown that employees were temporarily assigned elsewhere for a time, the evidence discloses that the rate of attrition among sheet metal workers at Transcona was such as to have more than offset the loss of work ultimately occasioned by that technological change. Indeed, on the balance of probabilities, the Arbitrator cannot conclude that the abolishment of the two positions which are the subject of this grievance can be said to be causally linked to the radiator work, to the loss of miscellaneous sheet metal work projects, or to the partial implementation of cabooseless trains. While it is clear that all of those factors contributed to a reduction in the amount of work available, the prima facie evidence presented by the Company, which stands unrebutted by the Union, is that that those impacts were fully absorbed by attrition.

For the foregoing reasons the Arbitrator cannot conclude that the lay-off of the grievors on August 17, 1989 was the result of T.O.&O. changes within the meaning of article 8 of the ESIMP. The grievance must, therefore, be dismissed.