Caterpillar Cracks the Whipsaw, Closing Ontario Plant

Caterpillar announced Friday it would close its London, Ontario, locomotive plant after 465 workers there refused to grant concessions that would cut their wages in half. Cat will ship the jobs to a non-union plant in Indiana. Photo: CAW.

Caterpillar announced Friday it would close its London, Ontario, locomotive plant after 465 workers there refused to grant concessions that would cut their wages in half.

Workers had been locked out since January 1, and Caterpillar did not try to use scabs.

The closure was expected by the Canadian Auto Workers, as Caterpillar has been blatant in its intent to whipsaw the well-paid workers in London against low-paid workers in a non-union plant it recently purchased in Muncie, Indiana.

CAW Local 27 President Tim Carrie and others said Cat had likely planned to delay the closure until March, but that the company’s PR losses pressured it to move more quickly. The local union has waged a campaign to build support across the city of London, from other unions, churches and NGOs, merchants, and community organizations.

Union picketers will maintain their 24-hour blockade of a mostly finished locomotive that is sitting on a spur line east of London “until our members are taken care of,” said Local 27 Vice President Jim Reid. Carrie predicts that Caterpillar will try to low-ball workers on severance, unemployment benefits, and pensions. He said the local was prepared to occupy the plant if Caterpillar doesn't offer workers a decent severance package.

Carrie said the union was successful in forcing a better severance package on Cat after workers occupied a factory in Brampton, Ontario, in 1991. He hinted that engines inside the locomotive plant would be blocked from removal.

Caterpillar had bought the plant, which used to be owned by General Motors, just 18 months ago. The automaker had previously sold it to vulture funds Berkshire Partners and Greenbrier Equity. Now it appears that Caterpillar bought the plant only in order to take possession of the patents and technology.

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Its closure would leave Canada without any locomotive producer, not to mention 465 fewer solid manufacturing jobs. Now Ontario newspapers are calling on the provincial and federal governments to stop foreign-owned companies from stealing important resources.

A columnist for the Toronto Star, for example, wrote, “Caterpillar likes to play hardball. So let’s play hardball.” David Olive called Caterpillar’s entire scenario an exercise in bad faith, from the plant’s purchase at a bargain price to its fake contract bargaining with the CAW. He called on the government, which has subsidized the plant, to nationalize it, or to “impose prohibitive tariffs on all Cat products,” which are crucial to mining the Athabasca tar sands in Alberta. If that breaks WTO rules, so be it.

The president of the Communications, Energy, and Paperworkers Union, which is considering a merger with the CAW, called on the government to seize Caterpillar's assets. David Cole asked, "Why do we have governments, if not to protect Canadians against this kind of corporate agression?"

To grind its point home, Caterpillar announced a job fair at the Muncie plant. The company has had trouble attracting skilled labor there for the $12.50-$14.50 per hour it is offering. The Wall Street Journal reports Cat sought managers there with “experience with providing union-free culture and union avoidance.”

In London, the company had demanded to cut the $35 wage by $18.50, eliminate cost-of-living increases, retiree benefits, and the defined-benefit pension plan, and hike drug insurance costs.

Caterpillar posted a record profit of $4.9 billion for 2011, with even higher profits predicted in 2012.


ThomasGB (not verified) | 02/09/12

I know the current politics says to bash capitalism but I think you and I live in countries that are on the top of quality of life because of it. I am curious and open to reading about some of the communities that are wonderfully communal all around the world that you mention, could you name some and maybe where we could read about them on the web? Unless we have to buy the book to find out about true sharing. :-)

Maxwell | 02/11/12

If Labour Notes readers are interested in reading more about this philosphy "I suggest" they head to ZNET and take a look for themselves.

ZNET is a good start to looking and asking those types of questions.

Maxwell | 02/08/12

I have participated in CAW & TCA Union Labour Education(PEL 96) and "it opened my mind" to the possibility that Capitalism does not have my best interests at heart. I am still employed by General Motors of Canada. The National Film Board of Canada produced a documentary in 1996 entitled,"Manufacturing Consent" which is based on Professor Noam Chomskys book of the same title. That documentary was the catalyst for me in "regognizing the proof" that Capitalism was immoral and unethical. I read somewhere that "the business of business is business" and that there would be "no Capitalism without labour". The sumation of these two statements means "I'm a modern day slave". So I went looking for another economic system that (1) has ethics and morals and (2) I own, control, manage and work at with others.
I think I found it. In 2004 I read a book entitled," Kibbutz - The Story of Givath-Brenner". Before we go any further let me write that Judaism is about caring, sharing and being fair. It is not a political ideology(Zionism). The book was about a community that was owned, managed and worked by people for people producing goods and services. The second book was "PARECON - Life After Capitalism". It's written by Michael Albert and the thrust of this book is almost identicle to that of "The Story of Givath-Brenner" but with no formal or informal religous affiliation. I have since learned that there are communities like this "all around the world" today. If Labour Notes readers are interested in reading more about this philosphy "I suggest" they head to ZNET and take a look for themselves. Capitalism has "too much power and influence" to change. In my opinion, finding others with a similiar belief might be easier. To the Caterpiller employees who have lost their jobs for no other reason than greed, look to yourselves, you have all the answers.
Mr. Blair M. Phillips
St. Catharines, Ontario