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Working In These Times

Thursday, Feb 9, 2012, 2:12 pm

Caterpillar Lays Off Locked-Out Canadian Workers, Moves Jobs to Low-Wage Indiana

BY Mike Elk

A union campaign poster for a January 21 action against Caterpillar—when workers were locked-out, not laid-off.   (Image courtesy Canadian Auto Workers union)

Ontario's loss is new 'right-to-work' state's gain—but Hoosiers won't make as much as northern neighbors

After locking out 465 members of the Canadian Auto Workers (CAW) Local 27 in London, Ontario, Caterpillar decided last Friday to close its 62-year-old locomotive facility there and move production to newly “right-to-work” Indiana, where American workers will work for half of what Canadian workers would make. Caterpillar's decision to close the plant  after workers refused to agree to major wage concessions has provoked outrage across Canada in light of the fact that Illinois-based Caterpillar made a record $4.8 billion in profits in 2011.

CAW members, who have already been blockading a completed locomotive from leaving the London plant, have vowed to continue blocking any products from leaving there as they attempt to extract a better severance from the company. The CAW local is also considering occupying the plant. “The CAW has occupied workplaces when employers have shown disrespect,” Canadian Auto Workers Union President Ken Lewenza told Bloomberg. “It’s a tool. It’s an option.”

As I reported last week, under the Investment Canada Act, foreign companies taking over Canadian companies must demonstrate a "net benefit" to Canada. Critics claim that the government allowed a foreign-owned company (Caterpillar) to buy a Canadian company without having any intention of providing any “net benefit” to Canada.

“The big bad Americans saw past our myopia—beyond the cash value of the plant’s physical property—to size up and seize the company’s intellectual property: the innovation, trade secrets, manufacturing processes and R&D residing in London,” wrote op-ed columnist Martin Egg Cohn in the Toronto Star. “It won’t just relocate the heavy equipment on the factory floor, but harvest the technological know-how subsidized with government incentives and writeoffs. This wasn’t bullying, it was highway robbery — with our politicians watching from the sidelines.”

Some union leaders in Canada are calling upon the Canadian government to take drastic action to prevent Caterpillar from leaving.

“This decision is a slap in the face to Canada, which gave [Caterpillar subsidiary] Electro-Motive tax breaks to protect jobs. It's an act of corporate aggression against Canada and we should retaliate with an immediate tariff against Caterpillar products imported to Canada,” says Dave Coles, president of the Communications, Energy and Paperworkers Union of Canada (CEP), whose union is in the process of merging with the Canadian Auto Workers.  “The Ontario and federal governments should take the same action in this situation as former Premier Danny Williams did at AbitiBowater in Newfoundland—they should seize the Caterpillar assets in London and ensure that all community and worker obligations are fully met.”

Caterpillar did not return request for comment. But the company did announce it would hold a job fair at a locomotive facility in Muncie, Ind., where it advertised starting wages of around $12-$18.50 an hour—half of what workers in Ontario were making. Production that had been in London is being moved to Muncie.

Earlier in the year, Caterpillar placed an ad saying it was looking for a manager at the plant with "experience providing union-free culture and union avoidance."

Follow Mike Elk on Twitter: @MikeElk

Mike Elk wrote for In These Times and its labor blog, Working In These Times, from 2010 to 2014. He is currently a labor reporter at Politico.

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