MRO Magazine

Electro Motive workers ratify closeout deal with Caterpillar


February 27, 2012
By PEM Magazine

LONDON, Ont. — Unionized workers at Electro-Motive Canada have overwhelmingly ratified a closeout deal that gives them richer-than-required severance, bonuses and allows for the orderly shutdown of the U.S. company’s locomotive plant in London, Ont.

About 500 workers at the plant voted 95 per cent Thursday in favour of the deal, negotiated by the Canadian Auto Workers union earlier this week.

The locomotive maker, Progress Rail Services, is a unit of U.S. heavy equipment giant Caterpillar Inc. (NYSE:CAT) and shut down the plant three weeks ago after a month-long lockout over a wage dispute with workers.

The closeout deal provides three weeks pay for each year unionized workers have been on the job — a measure well beyond current provincial labour standards.


The agreement also pays workers ratification bonuses of $1,500 each and limited company-paid health care benefits, while Progress will complete funding the employees’ pension trust.

As well, Progress will pay the union $350,000 to fund settlement of all grievances, establish an adjustment program and other measures.

The manufacturer said it will issue cheques in the next two weeks and expects individual severance payments will range between a low of $13,000 for workers with three years on the job and high of about $148,000 for employees with 30 years on the job.

“The agreement, which was ratified today by union members, provides a full settlement of all claims and grievances, present, past and future, that the union or any bargaining unit employee may have against the company,” the locomotive maker, said in a release.

The company said it will now begin “a safe and orderly windown of the facility.”

“While it is regrettable not being able to reach an agreement with the union that would have sustained the London plant, (Electro-Motive) is pleased that the parties were able to successfully negotiate a generous severance agreement for represented employees.”

CAW president Ken Lewenza said the closure and shutdowns of truck, auto parts and other plants in southwestern Ontario have hit the region hard and require an industrial strategy from Ottawa to help the region’s troubled manufacturing sector.

Instead, the economy is shifting towards the Western Canadian oil and other resources sectors, propping up a high dollar that is killing manufacturers in central Canada.

“We need to talk about a jobs strategy in manufacturing,” Lewenza told a conference call. “We’re talking only about energy in Alberta.”

The locomotive plant began operations in 1951 and has many employees with decades on the job.

In the past, Canadian plants that shut down were sometimes picketed by workers who blocked gates and prevented equipment from being moved out until they had negotiated a closeout deal.

Electro-Motive shut down the southwestern plant early this month and is moving the work to a plant in Indiana after locking out the Local 27 CAW hourly workers in a pay dispute.

The company had demanded wage cuts of nearly half and other concessions so the plant could be in line with labour costs at its U.S. and other plants.

The union refused such large concessions and the company locked out the workers Jan. 1. The plant closure led critics to question federal foreign investment rules in Canada.

The shutdown will hit the industrial economy in southwestern Ontario hard and cut another 1,700 spinoff jobs linked to the locomotive plant.

Ontario’s manufacturing economy has been battered in recent years from the restructuring of the North American auto sector as well as other blue-collar industries.

While economic power in Canada has shifted to the resource-rich Western provinces, the high dollar and the streamlining at GM, Ford and Chrysler have led to the shutdown of several auto and truck plants across southern Ontario, home of Canada’s auto sector.

The provincial jobless rate jumped to 8.1 per cent last month, well above the national average.

— With files from John Valorzi in Toronto