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2 January, 2012
Local 27 members of the Canadian Auto Workers (CAW) union were locked out at the New Year by Caterpillar Inc.’s Electro-Motive Diesel (EMD) in a callous display of corporate might that could lead to corporate flight from Canada. The 650 CAW members in London, Ontario, voted by 98% on 30 December for strike action and 24 hours later – just as they were returning to jobs on New Year’s Eve following a holiday shutdown – they were locked out.
The lockout indignation comes on the heels of deeper indignation: Caterpillar’s EMD – run as part of the US company’s Progress Rail Services Corp. – attempt to extract unreasonable wage and benefit concessions from Canadian union members as excuse to shift production of electric-powered diesel engines and associated railroad components to a start-up and lower wage plant in Muncie, US state of Indiana.
EMD began operations in Muncie in October 2011. Until Saturday night’s lockout, CAW and EMD had bargained under a seven-month contract extension, something the two sides agreed to in May 2011. However, EMD never once wavered from an initial, hostile and family-wrecking proposal demanding wage cuts from C$35-per hour to C$16.50, health benefits cut in half, and elimination of a pension scheme.
At the same time, EMD was advertising for a Human Resources manager in Muncie with the stipulation that he/she have “experience with providing union-free culture and union avoidance.”
EMD is paying average salaries between US$12-16-per hour in Muncie. Caterpillar and its wholly-owned Progress Rail Services is seeking to dislodge General Electric’s (GE) Transportation Division as the US’s premiere supplier of train locomotives at a time of government stimulus funding for infrastructure and transport needs. GE operates three major rail division plants that are unionised and pay average salaries of US$30-per hour or more.
EMD’s London, Ontario, plant was purchased by Caterpillar in August 2010 for US$820 million from Greenbriar Equity Group and Berkshire Partners. The two capital companies in turn bought the manufacturing plant in 2005 for a quarter of that amount from General Motors when GM was shedding its non-auto making businesses.
CAW President Ken Lewenza
Then, Caterpillar was interested in buying the southwestern Ontario plant but CAW opposed the deal because of Caterpillar’s horrid labour relations record in the US. Now, with Caterpillar in control and deploying obvious whipsawing of CAW members against non-union Muncie workers that will number 650 this year, CAW Local 27 is forced to blockade the London plant to prevent equipment from leaving for the Indiana city 350 miles to the south.
On Saturday, CAW President Ken Lewenza called the lockout “a serious attack on working people, their families and the greater community of London.
“If (Caterpillar) is not going to do business in Canada, this wage cut is designed as a mechanism to blame workers,” Lewenza said in a published report, referring to production flight and a possible plant closing. In mid-December, the CAW lodged a formal complaint with the government over Caterpillar’s violation of the Investment Canada Act.
EMD has other railroad manufacturing facilities in Sete Lagoas, Minas Gerais state, Brazil, and Sahagún, Hidalgo state, Mexico, a facility it operates jointly with Bombardier. EMD sells locomotives, replacement parts, and diesel powered engines for marine propulsion, oil drilling and power generation in 130 countries, and currently has major contracts with companies providing equipment for state railways in Egypt, Saudi Arabia, and South Africa.
Caterpillar’s deep contract concession proposals, the lockout, matched with lucrative incentives from Indiana’s anti-union state government for the Muncie start-up are a cause of great concern, particularly for two countries that each lack socially-minded industrial policies in the wake of a financial crisis.