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Electro-Motive Lockout: Caterpillar To Close London, Ont. Plant, Company Says

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CAW workers picket outside at the Electro-Motive plant in London, Ont., on Friday, feb. 3, 2012. American-based heavy equipment maker Caterpillar Inc. announced Friday it was closing the plant, a month after it locked out about 450 workers. THE CANADIAN PRESS/Mark Spowart
CAW workers picket outside at the Electro-Motive plant in London, Ont., on Friday, feb. 3, 2012. American-based heavy equipment maker Caterpillar Inc. announced Friday it was closing the plant, a month after it locked out about 450 workers. THE CANADIAN PRESS/Mark Spowart

[This story was updated from an earlier version.]

TORONTO -- Caterpillar Inc. has announced that it will close the Electro-Motive plant in London, bringing a swift end to one of the most bitter labour disputes in decades, and igniting outrage and disappointment among union leaders and politicians.

“I’m disgusted. I’m angry,” CAW President Ken Lewenza told The Huffington Post Friday morning, shortly after learning of the decision. “I’ve seen workplace closures through consolidation, because the company went out of business, but I have never seen such a profitable company take such great advantage of a workforce and of a community as Caterpillar has done in this community.”

Despite reaping record profits in 2011, the Illinois-based heavy machinery manufacturing giant, which owns Electro-Motive through its subsidiary Progress Rail, articulated on Friday morning that it will cease operations at the locomotive assembly plant, realizing the worst fears of 481 CAW workers who were locked out of the facility on Jan. 1.

Previously on HuffPost: Unions Take Fight To Caterpillar Customers As Company Posts Record Profits.. Protesters Decry 'Corporate Greed' In London's Largest Ever Demonstration.. Caterpillar's Aggressive Labour Strategy May Be A Sign Of Things To Come

Contract talks broke down after union leaders refused a deal that would have cut benefits and slashed wages by more than half, from $35 to $16.50, giving rise to rumours that the company was planning to shift operations to a newly opened plant in Muncie, Ind., where workers are paid between $12 and $18 an hour.

Though union leaders put on a brave face for media and the public in recent weeks, the bravado quickly faded as reality set in among workers in a community battered by a string of layoffs and factory closures.

“We always suspected that Caterpillar’s agenda here was to close the facility,” said Tim Carrie, president of CAW Local 27, which represents the Electro-Motive workers. “But it’s almost like when you have somebody in your family that’s terminally ill. You know the worst is going to happen, but when it happens, it doesn’t seem to lessen the pain.”

CAW plant chairman Bob Scott says the news was met with devastation on the picket line.

“A lot of guys were teary-eyed, upset,” says Scott, who has worked at the plant for 23 years. “A lot of the families are young families. When they went to this plant the were figuring they were going to have a future there, and everything is just shattered this morning.”

Though the closure may have felt inevitable, there was a sense that it came sooner than expected.

As Mike Moffatt, a labour expert at the University of Western Ontario’s Ivey School of Business, points out, Caterpillar has been known to endure lengthy lockouts.

“The fact that this only lasted a month is a little unusual,” he said. “I’m a little puzzled by the timing. I guess what it means is that Caterpillar feels that its workers in Muncie are advanced enough to ramp up production.”

The company made no mention of Muncie, saying simply that it will shift operations to its other plants in North and South America. Progress Rail blamed the decision on the “unsustainable cost structure of the operation” and the failure to “negotiate a new, competitive agreement,” adding that, "It is regrettable that it has become necessary to close production operations at the London facility.”

The announcement sparked anger about the perceived inaction of the federal government, which has remained silent throughout the dispute.

Reached by phone on her way to the picket line on Friday morning, an audibly shaken Irene Mathyssen, NDP MP for London-Fanshawe, insisted that Ottawa should have intervened.

“This is a reality that we saw coming and surely our government must have seen coming and not only did nothing to prevent what happened here, but have washed their hands of it by saying, ‘This is provincial, this has nothing to do with us.’ Excuse me, but the jobs and the security of Canadian families is the government’s business,” she said. “This is a despicable dereliction of duty, and I don’t understand how they could be so callous and uncaring, and how they could be so shortsighted.”

Liberal Party Leader Bob Rae also called for more oversight.

"Foreign-owned companies like Caterpillar Inc. must be made to understand that we expect assurances in exchange for generous concessions, incentives and tax cuts," he said in a release.

"Stephen Harper once staged a photo op at Electro Motive – it’s time for him to go back there and fix this mess," he said, referring to a 2009 media spot that saw the Prime Minister use the plant as the backdrop for a corporate tax-break announcement.

Ottawa has maintained throughout the lockout that it was not the place of the federal government to get involved in the dispute, which fell under provincial jurisdiction.

For its part, the Ontario government has expressed frustration at Caterpillar for refusing to engage in talks with the workers at the plant.

"It’s not working because the balanced, made-in-Ontario approach requires that unions and management sit down and talk to try to work out their differences, and so far the owners of Electro-Motive have failed to live up to Ontarians expectations," Premier Dalton McGuinty told the London Chamber Of Commerce last month.

According to Greg Dennis, a spokesman from the Ontario Ministry of Labour, the province got word of the decision on Friday morning, moments before the company’s press release went out.

He says the primary objective of the province is to assure that workers are awarded whatever pay and benefits that they are legally entitled to receive.

“Obviously this is devastating and there is great concern for the workers and their families, but we also have to focus on the workers now, and that means making sure they get what’s owed them,” he said.

Lewenza, however, says the CAW is planning to ask both the federal and provincial ministers of labour to investigate Caterpillar and determine whether they bargained in good faith.

“This was a goddamn conspiracy. This was not fair and collective bargaining. This isn’t a company that wanted an agreement,” he said, adding that there should also be a “thorough and meaningful investigation” of the sale of the Electro-Motive plant to Caterpillar in 2010.

“This is far from over,” he said.

Meanwhile, in Muncie, Ind., the announcement was met with mixed emotions.

“My heart goes out to those workers and their families and the community there. I know how devastating it’s going to be when that plant leaves that community,” Mayor Dennis Tyler told HuffPost. “But to be honest with you, my community has been dealing with that for the last 15 years -- plants packing up and leaving -- and we need jobs just as London, Ont., would like to keep those jobs.”

Progress Rail is holding a job fair at its Muncie facility on Saturday, where it has advertised openings for materials handlers, assemblers, welders, quality inspectors, painters and maintenance technicians.

But Tyler says he has so far received no indication from the company that the jobs lost in London will wind up in his community.

He is planning to sit down with the chamber of commerce, which has been communicating with Progress Rail, to getter a better sense of the company’s intention.

“I have a duty and obligation if they’ve made a determination to leave Canada and head to the United States to do everything I can to try and secure that employment here,” he said, adding that while Muncie’s official unemployment sits at 10 per cent, the actual proportion of people out of work is closer to 20 per cent.

“Muncie, Indiana, in not the enemy in this thing,” he said.

With files from the Canadian Press

Correction: An earlier version of this story said it had not been announced where operations would be shifting to. However, an update has indicated operations are moving to other plants in North and South America. This version has been updated.

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