PEDESTAL ACTUATORS FROM CHINA

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UNITED STATES INTERNATIONAL TRADE COMMISSION PEDESTAL ACTUATORS FROM CHINA Investigation No. TA-421-1 DETERMINATION AND VIEWS OF THE COMMISSION (USITC Publication No. 3557, November 2002) 1 19 U.S.C.

§ 2451(b)(1). 2 For purposes of this investigation, pedestal actuators consist of electromechanical linear actuators, imported with or without motors, or as part of scooter subassemblies, all the foregoing used for lifting and lowering, or for pushing or pulling. The products under investigation include any subassembly of pedestal actuator parts and components.

Pedestal actuators are powered by fractional horsepower DC or AC motors, which drive a ball bearing screw or acme screw through a gear reducer to convert rotary to linear motion. The products are designed for flat or base mounting, have telescoping members, with bearings or bearing surfaces, and rigidly support the load and provide anti-rotation. Pedestal actuators are provided for in subheadings 8483.40.50 and 8483.40.80 and in heading 8501 of the Harmonized Tariff System of the United States.

3 Chairman Deanna Tanner Okun and Commissioner Lynn M. Bragg make a negative determination. 4 Chairman Deanna Tanner Okun and Commissioner Lynn M.

Bragg, having made negative determinations regarding market disruption, were not eligible to vote on remedy. 1 UNITED STATES INTERNATIONAL TRADE COMMISSION Investigation No. TA-421-1 ... more. less.

PEDESTAL ACTUATORS DETERMINATION On the basis of information developed in the subject investigation, the United States International Trade Commission determines, pursuant to section 421(b)(1) of the Trade Act of 1974, 1 that pedestal actuators 2 from the People 9s Republic of China are being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the domestic producers of like or directly competitive products. 3 PROPOSALS WITH RESPECT TO REMEDY 4 Vice Chairman Jennifer A. Hillman and Commissioner Marcia E. Miller propose that the President impose a quantitative restriction for a three-year period on imports of the subject pedestal actuators from China, in the amount of 5,626 units in the first year; 6,470 units in the second year; and 7,440 units in the third year. Commissioner Stephen Koplan proposes that the President impose a quantitative restriction on pedestal actuators imported into the United States from China in the amount of 4,425 units in the first year; 4,514 units in the second year; and 4,604 units in the third year. The Commissioners find that the respective actions that they propose are necessary to remedy the market disruption found to exist. 2 BACKGROUND Following receipt of a petition filed on August 19, 2002 on behalf of Motion Systems Corporation, the Commission instituted investigation No. TA-421-1, Pedestal Actuators From China , under section 421 of the Trade Act of 1974 to determine whether pedestal actuators from China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. Notice of the institution of the Commission 9s investigation and of the scheduling of a public hearing to be held in connection therewith was given by posting a copy of the notice on the Commission 9s website ( www.usitc.gov ) and by publishing the notice in the Federal Register of August 26, 2002 (67 FR 54822). The hearing was held on October 1, 2002 in Washington, DC; all persons who requested the opportunity were permitted to appear in person or by counsel. The Commission transmitted its determination to the President and U.S. Trade Representative on October 18, 2002; it transmitted its remedy proposals to the President and U.S. Trade Representative on November 7, 2002. The views of the Commission are contained in USITC Publication 3557 (November 2002), entitled Pedestal Actuators from China: Investigation No. TA-421-1 . 5 Vice Chairman Hillman and Commissioners Miller and Koplan reached an affirmative determination, and Chairman Okun and Commissioner Bragg reached a negative determination. Chairman Okun joins the discussion regarding background, statutory framework, domestic industry (and like or directly competitive article), and rapidly increasing imports. 6 Section 421 was added to the Trade Act by the U.S.-China Relations Act of 2000, P.L. 106-286 (2000). 7 Confidential Report (CR) at I-1, n. 2; Public Report (PR) at I-1, n. 2. 8 CR at I-2-6; PR at I-2-5. 3 VIEWS OF THE COMMISSION ON MARKET DISRUPTION I.INTRODUCTION 1.Determination Pursuant to section 421(b)(1) of the Trade Act of 1974 (19 U.S.C. § 2451(b)(1)) and on the basis of the information in this investigation, the Commission determines that pedestal actuators from the People 9s Republic of China (China) are being imported into the United States in such increased quantities or under such conditions as to cause market disruption to the domestic producers of pedestal actuators. 5 2.Background and scope of investigation The Commission instituted this investigation effective August 19, 2002, following receipt of a petition filed by Motion Systems Corporation, a domestic producer of pedestal actuators. The petition alleged that pedestal actuators from China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. Section 421 was added to the Trade Act of 1974 in 2000, 6 and this is the first investigation that the Commission has conducted under this provision. The imported pedestal actuators from China that are the subject of this investigation consist of: electromechanical linear actuators, imported with or without motors, or as part of scooter subassemblies, all the foregoing used for lifting and lowering, or for pushing or pulling. The products under investigation include any subassembly of pedestal actuator parts and components. Pedestal actuators are powered by fractional horsepower DC or AC motors, which drive a ball bearing screw or acme screw through a gear reducer to convert rotary to linear motion. The products are designed for flat or base mounting, have telescoping members, with bearing or bearing surfaces, and rigidly support the load and provide anti-rotation. 7 The imported and domestic pedestal actuators covered by this investigation are used principally in mobility scooters for the purpose of raising or lowering the seat. Such scooters typically are used by persons who are mobility impaired. The pedestal actuator includes the device that goes up and down, the motor that powers that movement, and the mount that is attached to the body of the scooter. The pedestal actuator is designed to both raise and lower the seat and to keep the seat stable, particularly when in an elevated position. The user of the scooter activates the pedestal actuator by pressing a button on the scooter 9s handle bar. 8 9 19 U.S.C. § 2451(b)(1). 10 19 U.S.C. § 2451(c)(1). 11 19 U.S.C. § 2451(c)(2). 4 3.Statutory framework The determination that the Commission must make is set out in section 421(b)(1) 9 of the Trade Act, which states in part that the Commission, upon the filing of a petition or receipt of a request or resolution, shall promptly conduct an investigation 3 to determine whether products of the People 9s Republic of China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. This standard is satisfied if the following conditions are met 3 (1)there is market disruption or the threat of market disruption to domestic producers of the like or directly competitive products; and (2)imports from China are in such increased quantities or under such conditions as to cause or threaten to cause such market disruption. The term cmarket disruption d is defined in section 421(c)(1) 10 to exist 3 whenever imports of an article like or directly competitive with an article produced by a domestic industry are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury, to the domestic industry. Thus, in order to determine that market disruption exists, the Commission must find that each of three conditions is satisfied 3 (1)imports of the subject product from China are increasing rapidly, either absolutely or relatively; (2)the domestic industry is materially injured, or threatened with material injury; and (3)such rapidly increasing imports are a significant cause of the material injury or the threat of material injury. Section 421(c)(2) further states that the term csignificant cause d refers cto a cause which contributes significantly to the material injury of the domestic industry, but need not be equal to or greater than any other cause. d 11 12 19 U.S.C. § 2451(d). 13 19 U.S.C. § 2252. 5 Section 421(d) 12 provides that the Commission, in determining whether market disruption exists, cshall consider objective factors, including 3 (1)the volume of imports of the product which is the subject of the investigation; (2)the effect of imports of such product on prices in the United States for like or directly competitive articles; and (3)the effect of imports of such product on the domestic industry producing like or directly competitive articles. d Section 421(d) further provides that the presence or absence of any of these three factors cis not necessarily dispositive of whether market disruption exists. d II.WHETHER MARKET DISRUPTION EXISTS 1.Domestic industry Section 421(c), like other safeguard provisions such as section 202 of the Trade Act of 1974, 13 defines the domestic industry in terms of the producers of clike or directly competitive d products. In making determinations under section 202 of the Trade Act, the Commission follows a two-step practice of first determining what constitutes the product like or directly competitive with the imports subject to the investigation, and then identifying who produces it (the domestic industry). In the absence of instruction to the contrary in either section 421 or its legislative history, we find it appropriate to follow this practice in this investigation. a.Like or directly competitive domestic article (i) The statutory framework and Commission practice The term "like or directly competitive" is defined in the legislative history of what is now section 202 of the Trade Act as follows 3 The words clike d and cdirectly competitive d, as used previously and in this bill are not to be regarded as synonymous or explanatory of each other, but rather to distinguish between "like" articles and articles which, although not "like," are nevertheless "directly competitive." In such context, "like" articles are those which are substantially identical in inherent or intrinsic characteristics (i.e., materials from which made, appearance, quality, texture, etc.), and "directly competitive" articles are those which, although not substantially identical in their inherent or 14 H.R. Rep. No. 571, 93rd Cong., 1st Sess. 45 (1973); S. Rep. No. 1298, 93nd Cong., 2d Sess., at 121-122 (1974). 15 See, e.g. , Extruded Rubber Thread , Inv. No. TA-201-72, USITC Pub. 3375 (Dec. 2000) at I-5-6; Circular Welded Carbon Quality Line Pipe , Inv. No. TA-201-70, USITC Pub. 3261 (Dec. 1999) at I-10; Wheat Gluten , Inv. No. TA-201-67, USITC Pub. 3088 (March 1998) at I-9. These factors are similar, but not identical, to those considered by the Commission when making its domestic like product determination in title VII investigations. In title VII cases, the Commission generally considers a number of factors, including: (1) physical characteristics and uses; (2) interchangeability; (3) channels of distribution; (4) customer and producer perceptions of the products; (5) common manufacturing facilities, production processes and production employees; and, where appropriate, (6) price. See, e.g., Certain Cold-Rolled Steel Products from Argentina, Brazil, Japan, Russia, South Africa, and Thailand , Inv. Nos. 701-TA-393 and 731-TA-829-830, 833-834, 836, and 838 (Final), USITC Pub. 3283 (March 2000) at 3, n.6. 16 See, e.g., Circular Welded Carbon Quality Line Pipe , Inv. No. TA-201-70, USITC Pub. 3261 (Dec. 1999) at I-10 ; Certain Cold-Rolled Steel Products from Argentina, Brazil, Japan, Russia, South Africa, and Thailand , Inv. Nos. 701-TA-393 and 731-TA-829-830, 833-834, 836, and 838 (Final), USITC Pub. 3283 (March 2000) at 3. 17 Extruded Rubber Thread , Inv. No. TA-201-72, USITC Pub. 3375 (Dec. 2000) at I-6; Circular Welded Carbon Quality Line Pipe , Inv. No. TA-201-70, USITC Pub. 3261 (Dec. 1999) at I-10. 18 See, e.g., Lamb Meat , Inv. No. TA-201-68, USITC Pub. 3176 (April 1999) at I-10; and Wheat Gluten , Inv. No. TA-201-67, USITC Pub. 3088 (March 1998) at I-9. 19 Crabmeat from Swimming Crabs , Inv. No. TA-201-71, USITC Pub. 3349 (August 2000) at I-7. 20 See, e.g., Circular Welded Carbon Quality Line Pipe , Inv. No. TA-201-70, USITC Pub. 3261 (Dec. 1999) at I-11-12. In a limited number of instances under section 202 when the facts so warranted, the Commission has defined the domestic product more broadly than the imported product identified in the notice of investigation. See, e.g., Fresh Winter Tomatoes , Inv. No. TA-201-64 (Provisional Relief Phase), USITC Pub. 2881 (Apr. 1995) at I-7, 13 (producers of cherry tomatoes part of domestic industry even though imports of cherry tomatoes were not part of scope of investigation); but compare, Circular Welded Carbon Quality Line Pipe , Inv. No. TA-20170, USITC Pub. 3261 (Dec. 1999) at I-11-12 (finding that standard pipe and oil country tubular goods are distinct products with different applications and not clike d imported line pipe even though made on the same production equipment used (continued...) 6 intrinsic characteristics, are substantially equivalent for commercial purposes, that is, are adapted to the same uses and are essentially interchangeable therefor. 14 When assessing what constitutes the like or directly competitive product in section 202 safeguard cases, the Commission traditionally has considered such factors as (1) the physical properties of the article, (2) its customs treatment, (3) its manufacturing process (i.e., where and how it is made), (4) its uses, and (5) the marketing channels through which the product is sold. 15 The Commission has considered the decision regarding like or directly competitive product to be a factual determination. 16 In deciding what constitutes the like or directly competitive product, the Commission has looked for clear dividing lines among possible products and disregarded minor variations. 17 Under section 202, if the Commission found that there is domestic production of a like product, it has not found it necessary to look further and determine whether there are also domestic producers of directly competitive products. 18 The Commission has found that the domestic product need not be identical to the imported product in all respects, so long as it is csubstantially identical. d 19 However, the Commission has found a domestic product to be a separate and distinct product and not like or directly competitive with the imported product when it had different physical properties, was produced by a different process, or had different applications. 20 20 (...continued) to manufacture line pipe). 21 Petitioner 9s Posthearing Brief at 20-21. 22 Petitioner 9s Posthearing Brief at 21-22. 23 Petitioner 9s Posthearing Brief at 22. 24 Petitioner 9s Posthearing Brief at 22-23. 25 Respondent 9s Posthearing Brief at 1. 26 Respondent 9s Posthearing Brief at 1. 27 Respondent 9s Prehearing Brief at 12. 7 (ii)Arguments of the parties In the instant case, the petitioner argues that the like product should be limited to electromechanical pedestal actuators, and the respondent argues that it should include all electromechanical linear actuators, including pedestal actuators. Petitioner Motion Systems asserts that domestically produced pedestal linear actuators 3 and not all linear actuators 3 are like or directly competitive with pedestal linear actuators imported from China. Petitioner states that the domestic and imported pedestal actuators cshare common inherent or intrinsic physical characteristics, including flat or base mounting, bearing support of the extension tube, offset load capability, anti-rotation provided by the extension tube, and compression load capability, all in a compact self-contained unit with minimal retracted height. d Petitioner states that the cvast majority d of other linear actuators, by contrast, do not feature any of these characteristics, and that no linear actuator includes all of them. 21 Petitioner also asserts that domestic and imported pedestal actuators are cdirectly interchangeable, d but that other linear actuators would have to be modified to be used in a mobility scooter. Petitioner also asserts that the production processes of pedestal and non-pedestal actuators are different, and refers to the off-site fabricating work performed by Moran Power Dynamics, Inc. (Moran) in a tolling operation, in which Moran creates the body of the pedestal actuator and installs certain components. 22 Petitioner asserts that marketing channels are different for pedestal actuators, in that domestically produced pedestal actuators are sold directly to mobility scooter manufacturers and other original equipment manufacturer (OEM) customers, while other linear actuators are sold both to OEM customers and through distributors from stock. 23 Petitioner notes that pedestal actuators enter under various HTS numbers depending on motor size and other attributes, and that each HTS number includes products in addition to pedestal actuators, 24 but it does not claim that customs treatment here is of any help in identifying the like product. Respondent CCL Industrial Motor Ltd. (CIM), a producer of pedestal actuators in China, asserts that cdozens d of domestic companies produce a wide range of electromechanical linear actuators that are either like or directly competitive with the subject imports. 25 Respondent asserts that there is no distinct domestic pedestal actuator industry, and that the term cpedestal actuator d is not accepted industry terminology but merely petitioner 9s ccontrivance to describe its two models of linear actuators. d 26 Respondent asserts that all electromechanical linear actuators perform the same basic function -- the conversion of rotational to linear motion to move a load -- in the same basic way: via an electric motor, gear chain, and lead screw and nut. 27 Respondent states that cmany d electromechanical linear actuators, together with petitioner 9s two pedestal models, share the same basic components as the subject imported 28 Respondent 9s Posthearing Brief at 10, citing in part testimony of Mr. Flowers, Tr. at 231. 29 Respondent 9s Posthearing Brief at 13. 30 Respondent 9s Posthearing Brief at 19-21. 31 Respondent 9s Posthearing Brief at 21-23. 32 Reproduced in the CR and PR at appendix A. 33 CR at I-2-6; PR at I-2-5. We find the different domestic models of pedestal actuators that embody these (continued...) 8 product, such as a ball screw and a bearing and a thrust bearing and a mounting plate, 28 and that none of the physical characteristics cited by petitioner to distinguish its product, including flat or base mounting, is unique to petitioner 9s product. 29 Respondent also asserts that the information in the investigation shows that various types of linear actuators are produced using the same production processes, facilities, equipment, and employees, and notes that the petitioner itself produced a wide variety of other linear actuators. 30 Respondent further asserts that all electromechanical linear actuators are customized for particular end-use applications, and thus are marketed directly to end-users. It argues therefore that the channels of distribution for linear actuators produced by the other domestic manufacturers do not differ in any way from those produced and sold by petitioner. 31 (iii)Analysis We begin our like or directly competitive product analysis with the imported product or products described in our notice of investigation. That notice describes the imported product as follows: For purposes of this investigation, pedestal actuators consist of electromechanical linear actuators, imported with or without motors, or as part of scooter subassemblies, all the foregoing used for lifting and lowering, or for pushing or pulling. The products under investigation include any subassembly of pedestal actuator parts and components. Pedestal actuators are powered by fractional horsepower DC or AC motors, which drive a ball bearing screw or acme screw through a gear reducer to convert rotary to linear motion. The products are designed for flat or base mounting, have telescoping members, with bearing or bearing surfaces, and rigidly support the load and provide anti-rotation. Pedestal actuators are provided for in subheadings 8483.40.50 and 8483.40.80 and in heading 8501 of the HTS. 32 In making our like product finding, we find it appropriate to apply the factors the Commission traditionally has applied in section 202 investigations (i.e., physical properties, customs treatment, production processes and facilities, uses, and marketing channels) to determine what constitutes the like or directly competitive domestic article and whether there are clear dividing lines between the domestic like or directly competitive products. Physical properties . We find that domestic pedestal actuators have the same physical properties as the imported pedestal actuators, but other types of domestically produced linear actuators do not. We find that the imported and domestic pedestal actuators share common inherent or intrinsic physical characteristics, including flat or base mounting, bearing support of the extension tube, offset load capability, anti-rotation provided by the extension tube, and compression load capability. 33 We note that 33 (...continued) properties, such as petitioner 9s 85272 and 85872 models, and various versions thereof, to share common inherent or intrinsic physical properties, despite minor differences in design, materials, and capabilities. See descriptions in the CR at I-5-6; PR at I-3-5. 34 CR at I-6-7; PR at I-5. 35 CR at I-17-20; PR at I-13-15. 36 CR at I-3; PR at I-3. 37 CR at I-9-10; PR at I-6. 38 CR at I-9; PR at I-6. 39 CR at I-10; PR at I-7. 40 CR at I-22; PR at I-16. 9 petitioner alleges that the imported pedestal actuators from China are virtually identical to those produced at its plant and in fact were copied from its 85872 model product line, and that petitioner is pursuing various trademark infringement and other claims in a court action. 34 None of the parties argues that domestic pedestal actuators are not like the imported pedestal actuators. We find, however, that linear actuators as a whole do not have the same or substantially identical physical properties as the imported pedestal actuators that are the subject of this investigation. While other linear actuators may share some or many of the same physical properties as the imported pedestal actuators, they lack one or more key physical properties of pedestal actuators, such as the pedestal flat mount, bearing support of the extension tube, anti-rotational capability, offset load capability, or compression load capability. 35 These differences are reflected in the configuration of the pedestal actuator where the outer tube is securely welded to a metal plate and the inner telescoping tube (to which the screw mechanism is attached) is rigidly supported inside the outer tube with bearing surfaces. 36 Pedestal and other linear actuators also may differ in other significant ways, such as in terms of maximum load capabilities (as rated in pounds of linear thrust or lift load) and type of application (commercial or industrial). 37 For example, currently available pedestal actuators are designed to lift 500 pounds or the maximum anticipated weight of a person and chair seat, while some industrial actuators can generate up to 10,000 pounds of force for use in such areas as oil refineries. 38 Industrial actuators typically are manufactured to tighter tolerances for added precision in movement than those for commercial applications, and frequently run with a much higher duty cycle (on-time vs. off-time). 39 Production processes and facilities . We also find that the information in the record shows that pedestal and other linear actuators are largely made by different processes and in different facilities. While certain components of pedestal and other linear actuators, such as the linear actuator drive, can be and are made in the same plant and on the same equipment, considerable additional specialized fabricating and assembly work must be performed to produce a pedestal actuator. In the case of the petitioner, which accounts for most of the domestic production of pedestal actuators, this additional specialized work is performed in a different facility, involves different workers and skills, and accounts for a substantial part of the value and labor of a finished pedestal actuator. 40 While several responding firms indicated that there are similarities in the machinery and worker skills necessary to produce pedestal and other linear actuators, they also indicate that they do not produce pedestal actuators. Two of the firms indicate that additional 41 CR at I-23; PR at I-17. 42 About 95 percent of the pedestal actuators manufactured by the petitioner are used in scooter seat applications. CR at I-6; PR at I-3. 43 CR at I-20-21; PR at I-15, referencing use of both pedestal and non-pedestal actuators by *** in powered seat lifts. 44 CR at I-25; PR at I-18. 45 CR at I-25; PR at I-18. The petitioner asserts that a clarge percentage, if not the majority d of linear actuators are built as stock units and sold through distributors. Id . 46 CR at I-8-9; PR at I-5-6. 10 tooling or worker training would be required, and a third firm characterizes the additional steps required as adding substantially to the cost. 41 Uses . The information in the record shows that the imported and domestic pedestal actuators are used for the same purpose, but imported pedestal actuators and non-pedestal domestic linear actuators primarily are used for different purposes. 42 Imported and domestic pedestal actuators are used primarily in conjunction with raising and lowering seats, while most other linear actuators are used in a variety of commercial and industrial applications, ranging from fitness and office equipment to use in refineries. While pedestal actuators and (supported) non-pedestal actuators can both be used, from a purely technical standpoint, for the purpose of raising a seat, such interchangeability appears to exist in only a few instances. 43 Most firms responding to the Commission 9s questionnaire stated that pedestal actuators do not compete for sales with other linear actuators. 44 Marketing channels . The information in the record shows that imported and domestic pedestal actuators are produced to order for sales to OEM customers, mainly scooter manufacturers, and thus are sold through the same channels of distribution. However, the information in the record is mixed as to whether pedestal actuators and other linear actuators are sold through the same channels of distribution. Questionnaire responses from reporting firms indicate that the great majority of their linear actuators are shipped to end users, with small amounts maintained in inventory. 45 However, the vast majority of non- pedestal actuators are sold to users other than scooter manufacturers. Customs treatment . We find the information in the record with respect to customs treatment to be of little assistance in addressing the like product issue because pedestal actuators and other linear actuators are not separately provided for in the Harmonized Tariff Schedule, but instead enter under larger basket categories. Customs treatment depends upon whether the actuator is imported with a motor, and if with a motor, the type and rating of the motor. For those without motors, treatment depends upon whether the actuator contains ball bearing screws. 46 In view of the above, we find that the imported and domestic pedestal actuators are like each other. In addition, in view of the differences in physical properties, manufacturing processes and facilities, and uses for pedestal and other types of linear actuators, we find that there is a clear dividing line between pedestal actuators and other types of linear actuators, and that only domestic pedestal actuators are like the imported pedestal actuators that are the subject of this investigation. 47 The House Report states that the section 421 safeguard would provide relief to domestic industries when imports cause or threaten to cause market disruption cto the domestic producers as a whole of like or directly competitive products. d H.R. Rep. No. 106-632, 106 th Cong., 2d Sess. (2000) at 16. 48 19 U.S.C. § 2252(c)(6)(A)(i). 49 CR at I-28; PR at I-20. 50 CR at I-8; PR at I-5. 51 Petitioner 9s Posthearing Brief at 22. 52 CR at I-24; PR at I-16. 53 CR at I-41; PR at I-26. 54 The fee accounted for roughly *** percent of the value of Motion Systems 9 commercial shipments of pedestal actuators until interim 2002, when the share climbed to *** percent. CR at I-37; PR at I-25. 55 No party has argued that Moran, as a toller, should not be included in the domestic industry producing pedestal actuators. 11 b.The domestic industry Neither section 421 nor its legislative history defines the term cdomestic industry. d However, the term is defined in other statutory authorities, and wording in the legislative history of section 421 suggests that the Commission should look to the definition in section 202 of the Trade Act. 47 Section 202(c)(6)(A)(i) of the Trade Act defines the term cdomestic industry d to mean 3 with respect to an article, the domestic producers as a whole of the like or directly competitive article or those producers whose collective production of the like or directly competitive article constitutes a major proportion of the total domestic production of such article. 48 In recent investigations under section 202 of the Trade Act of 1974, if the Commission found domestic production of a like product, it found the domestic industry to consist of the domestic firms and workers producing that product. We find that practice instructive here. The record identifies three domestic firms that produce pedestal actuators, Motion Systems, Amigo Mobility, and Moran. Motion Systems, the petitioner, produces and sells pedestal actuators on the open market. Amigo 9s *** production of pedestal actuators is used internally. 49 Moran performs certain fabricating and assembly work on a toll basis for Motion Systems. The record shows that Moran 9s operations add significant value, particularly labor value, to the pedestal actuators produced by Motion Systems, and that a significant portion *** of the work force employed in the production of pedestal actuators is at Moran. Motion Systems ***. The finished assembly is then tested, marked, and packaged for shipment. 50 Petitioner states that the work at Moran requires highly skilled workers who perform critical welding and assembly operations. 51 A significant portion, ***, of the labor value of Motion Systems 9 two pedestal actuator products is performed by Moran, 52 and in 2001, *** of the *** production and related workers employed in the production of pedestal actuators worked for Moran. 53 The conversion or processing fee paid to Moran was significant throughout the period examined. 54 55 Accordingly, we find that the domestic industry consists of the operations of Motion Systems, Moran, and Amigo Mobility that are engaged in the production of pedestal actuators. 56 Staff memorandum Inv-Z-176. 57 CR and PR at table C-1. 58 Chairman Okun does not join in the remainder of these views. See Dissenting Views of Chairman Deanna Tanner Okun. 59 Section 406 of the Trade Act of 1974 (19 U.S.C. § 2436) provides a remedy in the case of market disruption from Communist countries. China previously has been regarded as a Communist country. The legislative history of section 421 states that section 406 will no longer apply to imports from China. 60 Section 771(7)(A); 19 U.S.C. § 1677(7)(A). 12 2.Rapidly increasing imports Statutory framework. The first of the three statutory criteria for finding whether market disruption exists concerns whether imports of the subject product from China care increasing rapidly, either absolutely or relatively. d Thus, under the statute the increase must be occurring crapidly, d but the word cor d indicates that the test is met if the rapid increase is in either absolute or relative terms. The use of the word care d suggests that the rapid increase should be relatively recent or continuing, as opposed to in the distant past. Section 421 does not otherwise define crapidly increasing d or the timing or circumstances of the increase. Finding. We find that imports of pedestal actuators from China are increasing rapidly in both absolute and relative terms. In absolute terms, imports from China were zero during 1997-2000, and then rose to *** units in 2001; imports from China in interim (January-June) 2002 were *** units, as compared to zero in the same period of 2001. The ratio of imports from China relative to domestic production was zero percent during 1997- 2000, and then rose to *** percent in 2001; the ratio was *** percent in interim 2002 as compared to zero percent in the same period of 2001. The ratio of imports from China relative to U.S. domestic consumption was zero during 1997-2000 and then rose to *** percent of U.S. domestic consumption in 2001. 56 The ratio was *** percent in interim 2002, as compared to zero percent in the same period of 2001. 57 These data show that the increase in imports of pedestal actuators from China has been rapid in both absolute and relative terms and that the increase was greatest and sharpest at the end of the period examined. Based on these data, we find that the first criterion is met. 58 3.The domestic industry is materially injured Statutory framework. The second criterion concerns whether the domestic industry is materially injured or threatened with material injury. The criterion is expressed in the disjunctive, and is satisfied if we find either material injury or the threat of material injury. Neither section 421 nor its legislative history defines the terms cmaterial injury d or cthreat, d identifies economic factors to be considered, or cross-references any definitions, factors, or Commission practice under other statutory authorities to which the Commission might look for instruction. However, the term cmaterial injury d appears in both section 406 of the Trade Act of 1974 59 and Title VII of the Tariff Act of 1930. Title VII of the Tariff Act defines cmaterial injury d to mean charm which is not inconsequential, immaterial, or unimportant. d 60 Section 406 does not define cmaterial injury, d but its legislative history contrasts the term with cserious d injury used in section 201 3 61 Trade Act of 1974, Senate Report No. 93-1298, 93 rd Cong., 2 nd Sess., at 212, reprinted in 1974 U.S.C.A.A.N. 7186, 7343-44. 62 See, e.g., section 202(c)(1)(B) of the Trade Act (19 U.S.C. § 2252(c)(1)(B)). 63 CR at I-24-25; PR at I-18. 64 CR at I-33, I-58; PR at I-22-23, I-33-34. 65 CR at I-31, I-48; PR at I-22, I-29. 13 the market disruption test is intended to be more easily met than the serious injury tests in section 201. . . . the term 8material injury 9 in section 406 is intended to represent a lesser degree of injury than the term 8serious injury 9 standard employed in section 201. 61 In the absence of express direction in section 421, we find that cmaterial injury d in section 421 represents a lesser degree of injury than cserious d injury under section 202 of the Trade Act. We also find it appropriate to consider all relevant economic factors that have a bearing on the state of the industry. We consider the three broad factors in section 202(c)(1)(A) relating to idling of productive facilities, inability of firms to operate at a reasonable level of profitability, and unemployment or underemployment. We also consider other relevant economic factors, such as production, sales, inventories, capacity and capacity utilization, market share, employment, wages, productivity, profits, cash flow, capital expenditures, and research and development expenditures. 62 We do not view any single factor as necessarily dispositive, and consider all relevant factors within the context of the relevant business cycle and conditions of competition that are distinctive to the affected industry. Finding. For the reasons set forth below, we find that the domestic industry is materially injured. 3 Overview of the domestic industry As indicated above, the domestic industry consists of two domestic producers of pedestal actuators, Mobility Systems and Amigo Mobility, and also the operations of Moran, which performs significant fabrication and assembly work on the pedestal actuators produced and sold by Motion Systems. Motion Systems is the predominant domestic producer. Motion Systems produces its pedestal actuators to order for sales to OEM end users, while the pedestal actuators produced by Amigo Mobility are used internally to produce downstream products; neither firm manufactures for inventory. 63 The primary use of pedestal actuators is to raise and lower the seats of mobility scooters, and overall demand for these scooters is reported to be rising in the United States. 64 In *** 2001, Electric Mobility, a domestic OEM manufacturer of mobility scooters and power chairs that until that year had been buying from Motion Systems, began purchasing pedestal actuators produced in China by CIM; Electric Mobility is CIM 9s only customer for the subject product, and all of CIM 9s pedestal actuator production is shipped to Electric Mobility. 65 Thus, while demand for the industry 9s product is growing, since *** 2001 Motion Systems, the principal domestic producer, has lost its *** customer to CIM, a producer in China. 3 Analysis of factors For the most part, the indicators relating to the condition of the domestic industry remained steady or were improving during the period 1997 to 2000 and into 2001, and the industry was healthy. The indicators first showed a decline in 2001, although the industry remained at a relatively healthy level in 66 CR and PR at table C-1. The data in the report include production and shipment data for Amigo Mobility, but not financial or employment related data. Amigo accounted for a *** part, about *** percent, of domestic production in 2001, and its production was captively consumed. 67 CR and PR at table C-1. 68 CR and PR at table 11. We also considered inventory levels. These levels remained at a constant zero during the period examined. The domestic industry does not maintain inventories because pedestal actuators are produced to order. CR at I-38; PR at I-26. 69 CR and PR at table 7. 70 CR and PR at table 7. 71 CR and PR at table 15. 72 CR and PR at table 10. 73 CR and PR at table 10. 74 CR and PR at table 10. 14 2001 based on full-year data. However, the indicators deteriorated sharply in the first half of 2002 as compared to the same period of 2001. Virtually all of the indicators of the industry 9s health (production, sales, capacity utilization, market share, employment, hours worked, worker productivity, operating income, cash flow, and capital expenditures) were lower in 2001 than in 2000, and were sharply lower in the first half of 2002 as compared to the same period of 2001. Industry production increased each year during the period 1997-2000, and was at its highest level during the period examined in 2000. 66 Industry production then fell in 2001, by *** percent. Production in January-June 2002 was sharply lower than in the same period of 2001 3 only a fraction (slightly over *** of the level in the same interim period in 2001. 67 Since pedestal actuators are produced to order, unit sales were comparable to production and followed the same upward and then downward trend as production, and were sharply down in interim 2002 as compared to the same period of 2001. 68 Domestic capacity remained stable during the period investigated. 69 However, capacity utilization, which had risen steadily from 1997 through 2000 to *** percent, fell sharply in 2001 to *** percent, and the rate in January-June 2002 (*** percent) was only a fraction (less than ***) of the rate in the same period of 2001 (*** percent). 70 The share of the domestic market held by domestic producers fluctuated during 1997-2000, ranging between *** percent and *** percent. However, the market share held by domestic producers fell sharply in 2001 to its lowest full year level of the period examined (*** percent), and the market share held by domestic producers in January-June 2002 (*** percent) was only a small portion of the share held in the same period of 2001 (*** percent). 71 Industry employment, as measured in terms of production and related workers, rose between 1997 and 2000, when it reached its highest level. The number of production and related workers fell in 2001 by *** percent from the 2000 level; the level in January-June 2002 was *** percent below the level in the same interim period of 2001. 72 Hours worked by production and related workers followed a similar trend, rising through 2000 and then falling in 2001; hours worked were sharply lower in January-June 2002 than in the same interim period of 2001. 73 Worker productivity rose through 1999, then declined marginally in 2000 and declined sharply in 2001; productivity was sharply lower in January-June 2002 than in the same period of 2001. 74 Operating income reported for pedestal actuator operations rose irregularly from 1997 to 2000, and reached its highest level of the period examined in 2000. It then declined by about *** percent in 2001 from the 2000 level. As measured on a full-year basis, the industry remained relatively profitable in 2001, with operating income of $*** and an operating margin of *** percent, as compared to operating income of 75 CR and PR at table 11. 76 CR and PR at table 11. 77 CR and PR at table 13. 78 CR and PR at table 13. In the course of the investigation, Commission staff conducted a verification of the financial information provided by Motion Systems. As part of the verification process, staff examined costs and allocations relating to company product lines, including ***. Staff found the firm 9s allocation methodology to be reasonable and consistent over the period for which data were provided. ***. Motion Systems included within selling, general, and administrative (SG&A) expenses a ***. We examined these expenses to determine their impact on Motion Systems 9 condition and the domestic industry 9s condition. In general, we do not view it as our role to second-guess company decisions regarding ***. In any event, we note that ***. Even if *** were to have been included within SG&A over the period, the industry 9s operating profits would nevertheless have shown a *** decline. Moreover, the other main domestic producer, Moran, which was unaffected by Motion Systems 9 ***, operated at a *** in interim 2002, largely due to the substantial loss of business as compared to interim 2001. Accordingly, we are satisfied that the financial data reported by the domestic industry are consistent with a finding of material injury. 79 19 U.S.C. § 2451(c)(2). 80 Section 406(e)(2)(B)(ii), 19 U.S.C. § 2436(e)(2)(B)(ii). 15 $*** and an operating margin of *** percent in 2000. However, in January-June 2002, the industry operated at a *** of $*** and an operating margin of *** percent, as compared to a *** of $*** and an operating margin of *** percent in the same period of 2001. 75 Industry cash flow followed a similar trend, rising irregularly during 1997-2000 and reaching its highest level in 2000 before falling in 2001; cash flow in January-June 2002 was *** and was sharply below the level for the same period of 2001. 76 Capital expenditures fluctuated from year to year during the period investigated and were highest in 2000 at $***; capital expenditures fell sharply in 2001 to $*** and were $*** in January-June 2002 as compared to $*** in the same period of 2001. 77 R&D expenditures, in contrast, were much more stable, and rose through 2000 before declining by a small amount in 2001; R&D expenditures were slightly higher in January-June 2002 ($***) than in the same period of 2001 ($***). 78 In view of the sharp decline in domestic industry production, sales, capacity utilization, market share, employment, hours worked, worker productivity, operating income, cash flow, and capital expenditures, we find that the domestic industry is materially injured and the second criterion is met. 4.Rapidly increasing imports from China are a significant cause of material injury Statutory framework. The third criterion concerns whether the rapidly increasing imports from China are a csignificant cause d of material injury to the domestic industry. As noted above, the term csignificant cause d is defined in section 421(c)(2) to mean ca cause which contributes significantly to the material injury of the domestic industry, but need not be equal to or greater than any other cause. d 79 Section 406 uses the same causation test and definition. 80 The legislative history of section 406 describes the causation test as follows 3 Under this standard, the imports subject to investigation need not be the leading or most important cause of injury or more important (or even equal to) any other cause, so long as a direct and significant causal link exists. Thus, if the ITC finds that there are several causes of the material injury, it should seek to determine whether the imports subject to investigation are a significant 81 Omnibus Trade and Competitiveness Act of 1988, House Conf. Report No. 100-576, 100 th Cong., 2 nd Sess., reprinted in 1988 U.S.C.A.A.N. 1547, 1724. 82 19 U.S.C. § 2451(d). 83 19 U.S.C. § 2451(e)(2)(C). The fourth factor in the section 406 list is omitted. 84 Section 771(7)(B)(i) of the Tariff Act of 1930, 19 U.S.C. § 1677(7)(B)(i). However, they do not include any of the more specific factors that the Commission must consider in order to assess causation under title VII. 85 Petitioner 9s Posthearing Brief, at 52-54. 86 Petitioner 9s Posthearing Brief, at 56-57. 87 Petitioner 9s Posthearing Brief, at 58. 16 contributing cause of the injury or are such a subordinate, subsidiary or unimportant cause as to eliminate a direct and significant causal relationship. . . . 81 Section 421(d) includes a list of three factors that the Commission is required to consider in determining whether market disruption exists and that relate to the Commission 9s causation analysis 3 (1)the volume of imports of the product which is the subject of the investigation; (2)the effect of imports of such product on prices in the United States for like or directly competitive articles; and (3)the effect of imports of such product on the domestic industry producing like or directly competitive articles. 82 Section 421(d) makes clear that the presence or absence of any of these factors is not necessarily dispositive of whether market disruption exists. The three factors are similar to a list of factors in section 406(e)(2)(C) of the Trade Act 83 and parallel the criteria in Title VII of the Tariff Act that the Commission must consider in determining whether a domestic industry is injured by reason of dumped imports. 84 Arguments of the parties. The petitioner asserts that increased imports of pedestal actuators from China are a significant cause and the only cause of material injury to the domestic industry. Petitioner asserts that import penetration is higher in this case than in most of the section 406 investigations in which the Commission found the causation test to be met. 85 Petitioner asserts that the loss in its market share corresponds exactly to the gain in market share by the imports from China, and that it lost sales to the imports due to the vast difference in price between its product and that of the imports from China. Petitioner asserts that domestic prices were suppressed as low-priced imports were increasing. 86 Petitioner disputes claims made by the respondent about problems with the quality of its product, and asserts that Electric Mobility 9s motivation for switching to imports from China was cmost importantly, if not exclusively, price. d 87 Respondent asserts that Electric Mobility switched suppliers due to problems with the pedestal actuators supplied by petitioner, and that the decision to switch suppliers was made before it selected CIM, the Chinese producer, as its new supplier. Respondent states that Electric Mobility experienced many problems with the pedestal actuators supplied by petitioner, including problems with quality, delivery, lead times, and failure to provide a volume discount, and that petitioner failed to address such problems. 88 Respondent 9s Posthearing Brief, at 28-29. 89 Respondent 9s Posthearing Brief, at 40. 90 CR at I-34; PR at I-23. 91 CR at I-34; PR at I-23. 92 CR and PR at table 15. We note that these market share figures may be understated in that they are based on apparent U.S. consumption that includes non-subject imports. While these non-subject imports meet the technical definition of pedestal actuators found in the petition, they are not used in mobility scooters or wheelchairs and do not compete directly with either the domestic product or the imports from China. CR at I-34-35; PR at I-23-24. 93 CR and PR at table C-1. 94 CR and PR at table 16. 17 Respondent states that this was the reason why Electric Mobility decided to switch suppliers. 88 Respondent contends that CIM, in contrast, has proven responsive in addressing any problems with respect to its product. 89 Finding. We find that imports of pedestal actuators from China are increasing rapidly so as to be a significant cause of material injury to the domestic pedestal actuator industry. We first considered information relevant to the three statutory factors that relate to our causation analysis 3 the volume of imports, the effect of imports on prices, and the effect of imports on the domestic industry. As the data cited earlier in these views show, pedestal actuators were first imported from China in *** 2001, 90 and the volume of imports became significant immediately thereafter. Import volume totaled *** units in 2001, and all entered in the second half of the year. Import volume in the first six months of 2002 rose to *** units, substantially more than the total for all of 2001. 91 The amount of this increase takes on added significance when measured in terms of share of domestic consumption. Imports of pedestal actuators from China, which were zero percent of domestic consumption during the period 1997-2000, accounted for *** percent of domestic consumption in 2001, and *** percent in January-June 2002, nearly *** of the domestic market, as compared to zero percent in the same period of 2001. 92 The increase in market share of imports from China mirrors directly a decline in the market share held by domestic pedestal actuators. Between 1997 and 2000, domestic market share fluctuated between *** percent and *** percent. However, in 2001, as subject imports gained over *** percent of the market, domestic market share fell to *** percent. Between interim 2001 and interim 2002, domestic market share fell from *** percent to only *** percent, while subject import share rose from 0 percent to *** percent. 93 Thus, the volume of the imports from China increased rapidly during the latter part of the period examined, displacing domestic pedestal actuators from a significant share of the domestic market in 2001 and interim 2002. With regard to the effect of imports on domestic prices, the Commission gathered pricing data on two products, one of which was produced by both Motion Systems (the firm 9s 85872 model) and CIM, principally for sale to Electric Mobility. In the one calendar quarter in which both the imported and domestic product were sold in the domestic market (July-September 2001) and in which they competed, the imported product was sold at less than *** percent of the price of the domestic model ($*** for the imported model vs. $*** for the domestic model). 94 There were no reported sales of this domestic model thereafter, as Motion Systems 9 sales of this model to Electric Mobility were supplanted by the low-priced 95 CR and PR at table 16. Motion Systems had earlier, in February 2001, ***. CR at I-56; PR at I-32. 96 CR and PR at figure D-2. 97 Motion Systems alleged that the imports from China suppressed domestic prices and that it has not increased its prices on any pedestal actuators since the imports began to enter the U.S. market. However, such a trend is difficult to discern from the pricing data collected. There is no pricing data for the 85872 model after the calendar quarter in which imports from China entered the market. When Motion Systems lost sales of the 85872 model to imports, its sales of the higher priced 85272 model represented a larger portion of its total sales, and its unit sales values therefore increased toward the end of the period examined. CR and PR at table C-1. 98 CR and PR at table 6. 99 In particular, during the period examined, industry production and shipments peaked in 2000, the year before the imports began, and then both indicators fell by *** percent in 2001, and in January-June 2002 were only *** the level of the same period in 2001; domestic capacity utilization, which had risen through 2000 to *** percent, fell to *** percent in 2001, and was *** percent in January-June 2002 as compared to *** percent in the same period of 2001; domestic employment reached its highest level of the period examined in 2000, and then fell by *** percent in 2001, and the employment level in January-June 2002 was *** percent below the level of the same period of 2001; industry operating income rose irregularly during 1997-2000, and then declined in 2001 by about *** from the 2000 level; the industry operated at a *** in January-June 2002 as opposed to a *** in January-June 2001. CR at I-36-45; PR at I-I-24-28. 18 imports from China. 95 The domestic price of the other pedestal actuator product, for which there were no imports from China, fluctuated but rose overall during the period examined. 96 Thus, the record shows that the significant underselling by imports from China negatively affected the domestic industry by taking away a significant volume of domestic sales. 97 The rapidly increasing imports have had a significant adverse effect on the domestic industry. The data show that the imports from China have displaced the domestic product virtually on a one-for-one basis 98 since Electric Mobility switched from Motion Systems to CIM as its source. The change in the industry 9s condition coincided with the surge in imports from China. As the data above show, the industry was healthy through most of the period examined. Its health began to change only in 2001 when the imports from China began to enter, and by January-June 2002, when imports had captured nearly *** of the domestic market, the industry 9s condition had sharply deteriorated and it was materially injured. As stated above, virtually all of the indicators of the industry 9s health (production, sales, capacity utilization, market share, employment, hours worked, worker productivity, operating income, cash flow, and capital expenditures) rose through the first part of the period examined and reached their best levels in 2000, began to decline in 2001, and fell sharply in the first half of 2002 as compared to the same period of 2001. 99 We examined whether factors other than the surge in low priced imports from China may have contributed to the decline in the domestic industry 9s condition. We examined the arguments raised by respondent as well as other possible causes. As explained below, there is no information in the record that supports a finding that any of these other possible causes contributed in a significant way to the deterioration of the condition of the domestic industry after imports entered the market. Hence, we have found that the rapidly increasing imports are a significant cause of the material injury. We considered respondent 9s claim that Electric Mobility switched from Motion Systems to CIM primarily because of quality problems (mainly oil leaks), and also lengthy lead times and poor volume discount policy. We note initially that the fact that a purchaser found the imports from China to be superior to domestic product in quality, delivery, or volume discount policy does not lead to the conclusion that a negative determination is warranted. We must examine whether the increased imports from China were a significant cause of injury. 100 Indeed, the fax containing *** informal quote is dated January 2001, a month after Electric Mobility indicates it placed its first order with CIM. See Respondent 9s Posthearing Brief at Exh. 1H. 101 Moreover, had Electric Mobility chosen a domestic company other than Motion Systems, the domestic industry (as then reconstituted) would have retained that business. 102 Tr. at 90-91, 94, 176, 179, 187. 103 CIM submitted records of Electric Mobility purporting to show that 24 units had been returned to Electric Mobility by customers for oil/grease leaks from 1998 to 2001, and two examples where Electric Mobility replaced carpets because of oil leakage. Respondent 9s Posthearing Brief at Exh. 2. We note that it is not clear from the documents alone that these leaks involved the pedestal actuator, and note that the two carpet incidents occurred in 2000 and 2001, respectively, after Electric Mobility indicates that it decided to drop Motion Systems ( see Tr. at 169). CIM included affidavits of Electric Mobility company officials stating that they saw 500 examples of leaks every year, had raised the issue with Motion Systems "many times", and Motions Systems did nothing about it. Respondent 9s Posthearing Brief at Exh. 1B, 1D. However, the documents submitted to the Commission showing units Electric Mobility sent back to Motion Systems only showed 3 units returned for oil leaks. Respondent 9s Posthearing Brief at Exh. 1H. Electric Mobility submitted documents purporting to show 536 units returned to Motion Systems overall between 1998 and 2001. Respondent 9s Posthearing Brief at Exh. 1 (we note that the attached debit memos cover only 317 units). Motion Systems indicates that its records show only 169 warranty returns between 1998 and 2002. Petitioner 9s Final Comments at 8. Between 1998 and 2001, Motion Systems supplied 38,265 pedestal actuators to Electric Mobility. EC-Z-055 at Table 1. If the number of returns to Motion Systems were 536, the rate of return would be 1.4 percent. EC-Z-055 at Table 1. The Commission requested an Electric Mobility official to provide data on how the rate of returned pedestal actuators compared to the rate of returns of other inputs purchased by Electric Mobility. Tr. at 185-86. However, the company never provided this information. 19 We have, however, examined the record information as to other possible causes of injury, including whether the alleged failings of the domestic industry were such that it would have been injured even in the absence of an increase in imports from China. We examined CIM 9s claim that Electric Mobility decided to drop Motion Systems in late 1999, before deciding to purchase from CIM. A representative of Electric Mobility testified that Electric Mobility sought bids for pedestal actuators from nine companies, many of them U.S. companies, and obtained three informal quotes in 2000 (from CIM, ***). However, we find that the record does not indicate that Electric Mobility would have bought from another company in lieu of the Chinese source. Of the three companies that provided informal quotes, the record indicates that Electric Mobility followed up only on the CIM quote and tested only the CIM product. 100 Moreover, the record does not show that *** have any history of supplying pedestal actuators of the type Motion Systems produced. Electric Mobility submitted no internal documents indicating a decision to drop Motion Systems prior to selecting CIM. The information in the Commission 9s record indicates that the first time Motion Systems heard of Electric Mobility 9s decision to switch suppliers was in February 2001, two months after Electric Mobility placed its first order with CIM. 101 The Commission requested both petitioner and respondent to provide contemporaneous documentation regarding the issue of oil or grease leaks by Motion Systems 9 pedestal actuators supplied to Electric Mobility. 102 While the record indicates that Electric Mobility officials were aware of instances in which the Motion Systems product leaked oil or grease, it does not establish that Electric Mobility considered it to be a problem of such magnitude as to lead it to drop Motion Systems as a supplier. 103 Electric Mobility provided no contemporaneous internal company documents, letters or e-mail correspondence with Motion Systems, or notes of phone conversations, suggesting that this had been 104 This absence of documentation by Electric Mobility supports Motion Systems 9 assertion that, in company files, "there is no record of written correspondence from, or face-to-face or telephone discussions with, Electric Mobility of oil leakage as a significant problem." Petitioner 9s Posthearing Brief at 59. Motion Systems indicated that its records showed 5 units returned for oil leaks, only 2 of which occurred prior to the time (late 1999) that Electric Mobility claims it decided to drop Motion Systems. Petitioner 9s Posthearing Brief at 59-60. 105 Respondent 9s Posthearing Brief at Exh. 1C, Petitioner 9s Posthearing Brief at Exh. 9. 106 Petitioner 9s Posthearing Brief at Exh. 11. 107 CR and PR at table 6. 108 CR at I-33; PR at I-22. 109 CR at I-28 (n. 74), I-31-36; PR at I-20 (n. 74), I-21-24. Staff conversation with *** Oct. 10, 2002, and *** Oct. 8, 2002. 20 considered a significant problem for Electric Mobility. 104 This may be because Electric Mobility ameliorated any problem by placing an adhesive back covering on the actuator. 105 Indeed, Electric Mobility continued to use Motion Systems as its sole supplier of pedestal actuators until it switched to CIM in 2001. The same reasoning applicable to the alleged oil leak problem applies to Electric Mobility 9s other allegations regarding Motion Systems, such as lengthy lead times and inadequate volume discount policies. With regard to lead times, we note that an Electric Mobility official wrote a letter to Motion Systems in December 1999 (about the time Electric Mobility claims to have decided to drop Motion Systems) thanking the company for accommodating Electric Mobility 9s caccelerated schedules d and looking forward to a ccontinuing successful relationship. d 106 In any event, the record does not indicate that any alleged problems, including oil leaks, lead times, and volume discount policy, were so severe as to cause Electric Mobility not to purchase from Motion Systems. Finally, the record co

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