6 February, 2012
Rather than bargain in good faith, Caterpillar’s Electro-Motive Diesel (EMD) dropped a bombshell 3 February on locked-out Canadian workers: the company announced it was closing its train locomotive plant in London, Ontario. The US-based heavy equipment maker now leaves no doubt that it was playing a vile game of economic blackmail through collective negotiations with the Canadian Auto Workers’ (CAW) union.
The announced shutdown comes five weeks after Caterpillar’s Progress Rail Services, the corporate entity of EMD, locked out 465 CAW Local 27 members after trying to slice their pay to C$16.50-per-hour from C$34 in collective bargaining. EMD also sought to eliminate a defined benefit pension plan and reduce overtime pay and holiday time.
Friday’s announcement comes only 18 months after Caterpillar bought the plant and was awarded C$5 million in tax breaks from the Canadian government to promote industrial development.
Ken Lewenza
“Caterpillar had no intention of keeping this plant open,” said CAW President Ken Lewenza. “From day one, we believed that Caterpillar was trying to provoke a crisis, by forcing deep cuts that were not possible.”
This sting to Canada’s industrial base comes seven days after Caterpillar reported record annual reports of US$4.9 billion in 2011, an 83% jump over 2010 earnings of US$2.7 billion. The closure announcement also came a day before Progress Rail Services was to hold a jobs fair in Muncie, Indiana, where the company opened a similar diesel locomotive plant in October 2011 and is now one-third toward a staffing level of 650.
Average salaries in the start-up Muncie plant range from US$12-16-per-hour. (See prior ICEM report on this dispute.) On 1 February, Indiana became the first US state since 2001 to adopt a right-to-work (for less) law, meaning companies and trade unions are forbidden from entering into union security clauses in collective agreements. This means workers have the choice whether or not to pay union fees, yet are entitled to representation if their workplace has union certification.
Caterpillar lobbied the Indiana state legislature ardently for passage and in full likelihood will zealously resist unionisation of the Muncie facility, a former ABB manufacturing site. This comes amidst Caterpillar CEO Doug Oberhelman enjoying 2011 salary and perks of US$10 million, while his company was out to gouge C$30 million from the 465 CAW members in London.
In Caterpillar’s announcement to close the 62-year-old Ontario plant, it cited London’s cost structure and the fact that assembly of locomotives will be shifted to plants in North and South America. Besides Muncie, EMD operates locomotive diesel plants in Sete Lagoas, Minas Gerais state, Brazil; Sahagún, Hidalgo state, Mexico; and in the US city of LaGrange, Illinois, where members of the United Auto Workers (UAW) continue to work without a current collective agreement.
The 1 January lockout and forthcoming plant closure in London has been met with complete indifference by the Tory-led Canadian federal government of Stephen Harper, as well as the Liberal Ontario provincial government of Dalton McGuinty. Only three days before the closure announcement and a month into this extortionist lockout, McGuinty urged EMD to return to the bargaining table. “So far the owners of Electro-Motive have failed to live up to Ontarians expectations,” he said in a speech to the London Chamber of Commerce.
Within days, his words became hollow. The CAW’s Lewenza pointed at government inaction and stated these job losses are casualties of an outdated and dysfunctional Investment Canada Act that attaches no commitment between Canadian jobs and corporate takeovers.
“The Stephen Harper government is entirely in the pocket of the corporate elite,” Lewenza said. “I am disgusted at this government and its indifference towards the suffering of workers and the unemployed.”