Caterpillar Closes Canadian Plant to Take Advantage of Cheaper Workers--in the U.S.

Caterpillar is moving to newly "Right-To-Work" Indiana, offering rock-bottom wages and searching for anti-union managers. Is the US the new source for cheap labor?

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.

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 aggression?"

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.

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