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Dispute-hit Class 66 plant to close

The plant, which has built more than 600 Class 66 for the UK, Europe and Egypt, as well as thousands of locos for North American markets, has been the focus of an industrial relations breakdown since January 1, 2012, that stems from a failure in pay and condition negotiations involving the Canadian Auto Workers union (CAW). Workers have been locked out of the plant since the beginning of the new year.
   Progress Rail is a subsidiary of the Caterpillar Inc, the world's largest manufacturer of construction and mining equipment, and bought EMD in August 2010 for $820million, and has been in talks with the CAW for nine months that should have led to a new wage agreement. The workers’ existing contracts expired at the end of December, and the management moved part-completed locos to other locations for completion.
    The CAW claim that hourly rates would be cut from $35 to $16.50, coupled with changes to benefits, and has been fighting the corner of the 500-strong workforce. A revised offer from Progress included a five-tier pay scale ranging from $16.50 to $34.00 an hour. The company also terminated the existing pension scheme, replacing it with an employee-funded retirement savings plan.
    Now Progress Rail’s parent, Caterpillar, has had enough of a month of picket lines, and decided to flex its muscle and shut the plant. It’s a bitter blow to the workforce in difficult times.
    Progress Rail opened a new manufacturing plant at Muncie, Indiana, where wages are said to be an average of US$ 24,000 (£15,500) per year – substantial difference to the higher wages paid at London, Ontario. Muncie is also a non-union plant.
    Costs at the EMD plant were always viewed as high by Caterpillar, and wanted to harmonise them with other plants. Only last month, Caterpillar reported annual profits had risen 83% to a record $4.9 billion.
    In a letter to all EMD staff at the fated plant, Caterpillar CEO and President Billy Ainsworth said: “We have had the very unfortunate task of announcing the decision to cease production at Electro-Motive Canada’s London, Ontario facility. Our efforts – spanning about 9 months – to negotiate a competitive labor agreement with the Canadian Auto Workers union were not successful.
   “As you know, we compete in a global marketplace where orders for locomotives are won or lost based on extremely competitive pricing and the ability to meet short turnaround times. All facilities within EMC, Electro-Motive Diesel and Progress Rail Services must achieve and maintain competitive costs, quality and operating flexibility to win in the global marketplace. The London plant, primarily because of an antiquated labor contract, faced serious competitive disadvantages. Even though EMC’s final offer addressed these competitive disadvantages, the union would not accept our offer.
   “The gulf between the company and the union was simply too wide to resolve. Market conditions made today’s regrettable decision unavoidable.”
    The process of an orderly closure will begin that will include the transfer of loco building to other facilities.