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The action came after the employees in London, Ontario, rejected a contract proposed by Electro-Motive Canada. The Canadian Auto Workers union said the proposal would cut wages in half, substantially reduce benefits and end the current pension plan.
“It’s not really a proposal, it’s an ultimatum,” said Tim Carrie, president of the union local that represents the factory’s workers. “This is an attack on middle-class jobs.”
On a Web site with updates about the dispute, Electro-Motive, which Caterpillar acquired in 2010, said the lockout would remain in effect “until a ratified contract is in place.”
The company said the union’s decision not to strike constituted “acceptance of the new wages and benefits as represented in EMC’s final offer.” The company said it was “hopeful of a speedy ratification allowing union members to return to work.”
But some of the union’s executive members have suggested that Caterpillar’s contract demands were intended to provoke a shutdown of the Canadian factory as a prelude to moving all production to the United States.
Caterpillar has a long history of tough labor negotiations and bitter labor disputes. In 1995, workers at the company’s unionized operations in the United States returned to work after declaring a 17-month strike a failure. In 2009, workers took executives at Caterpillar France hostage during a dispute over the restructuring of operations in Grenoble.
Electro-Motive is the second-largest maker of locomotives in North America, after General Electric, and for most of its history was a unit of General Motors. While the parent company, Electro-Motive Diesel, is based in LaGrange, Ill., its only assembly plant in recent years has been the Canadian operation.
But last October, Progress Rail, Caterpillar’s rail operations holding company, opened a new locomotive assembly plant in Muncie, Ind.
The Canadian Auto Workers say that wages and benefits are substantially lower at the new American factory.
The union has suggested that, in addition to reducing labor costs, the company may also want to end Canadian production to avoid potential problems with “Buy American” provisions of United States government procurement rules. While the United States government has said that Canada is exempt from any such measures, labor leaders say that has not always been the case in practice.
The purchase of Electro-Motive Canada was reviewed by the Canadian government under the nation’s foreign investment laws. The union has asked the government to release what conditions, if any, were attached to the subsequent approval. The Canadian government recently settled a dispute with United States Steel under those laws after the company shut down a Canadian steel maker shortly after acquiring it.
“When a foreign company comes in and purchases an existing facility, there has to be a benefit to Canadians,” said Mr. Carrie, the union executive. “Americans coming in and trying to slash wages in half is not a benefit to Canadians.”
Industry Canada, the government department that handles investment reviews, was closed for the New Year holiday on Monday and did not respond to requests for comment.
Anne Marie Quinn, a spokeswoman for Electro-Motive Canada, declined to answer questions about the company’s contract demands, its long-term production plans or any commitments made to the Canadian government.
The company’s Web site about the labor dispute, though, said that the cost of wages and benefits for its workers in Illinois, who are represented by the United Automobile Workers, is about half that for the London plant.
The site says that the now-expired contract at the Canadian factory “also has?antiquated work rules that make the London operation inefficient.”
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