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From May Day to Labor Day, GlobalPost explores the human cost of what's been called a "race to the bottom." The hyper-accelerated movement of capital, jobs and resources from the world's corporations — manufacturing, agriculture and service — to the lowest bidder. In an era of diminished expectations, broken promises and sleight of hand, these are labor stories of governments, employers, unions and workers. 

Canada solidarity
Canadian Auto Workers Local 88 holds a 'Solidarity BBQ' for locked out Electro-Motive workers on January 7, 2012. (CAW Media/Courtesy)

Locked Out: Canadian workers pay heavy price in foreign acquisitions

Fired workers say Caterpillar just one of several multinationals that subjected country to 'economic rape' with government help.

LONDON, Ontario — Each day since the Employment Action Center opened in the basement of the local union hall here in London, at least a dozen of its unemployed members have gathered to figure out the next steps in life — and to reflect on what they’ve lost.

Until February these were employees of the Electro-Motive Diesel Plant, building the locomotives that criss-cross North America’s railways hauling passengers and goods to their destinations. It’s heavy, specialized work, but the kind you could make a comfortable living from, raise a family on and plan for the future.

That was until parent company Caterpillar abruptly closed up shop a month after locking out its 480 unionized workers who rejected a 50 percent pay cut, sending the jobs, equipment, and patented technology to Muncie, Indiana.

The corporation best known for its construction equipment had purchased Electro-Motive less than two years before, an $820 million bet that demand for rail transport would rise as the economy improved. The now-jobless workers in London say they feel betrayed and wonder how the Canadian government could let Caterpillar bypass legislation intended to protect the country’s industries. Electro-Motive had employed Londoners to build locomotives for over six decades, but these unemployed workers say Caterpillar never intended to keep the factory open.

“I expected to retire with a pension, and with the swipe of a pen they took that all away,” said Brandy Damm, 35, who was a welder at the plant and had worked there for four-and-a-half years before the lockout. 

“You knew the company was trying to give us zero when we made those people extremely rich.”
~Brandy Damm, former Electro-Motive employee

Damm, energetic and outgoing, is proudly wearing her Canadian Auto Workers T-shirt. She is one of the “peer helpers” at the Action Center. Her job is to sign up her former co-workers for training opportunities available through the province of Ontario and help them to navigate the red tape that comes along with such opportunities.

‘Action Centers’ like the one in London have become a more common sight across the province, which has a large industrial base but a relatively low unionization rate compared to the rest of the country. Run with the help of government funding, 256 centers have been set up in the province since 2006 in response to layoff situations at union workplaces.

Here members can check and post notices on one of the center’s temporary partitions, write and send resumes online, sign up for a “needs assessment” appointment, or just grab a coffee with their former co-workers. The Action Center will stay open for at least 18 months, said coordinator Bob Scott.

Scott was, until February, the plant chair for the union and had worked at Electro-Motive for 23 years.

It is hard for people to adjust after so long in the plant, said Scott, who will also eventually have to, “figure something out.” And there is another problem: Jobs in the London area are “very low-paying,” with manufacturing jobs even harder to come by, he said.

“A lot of people are travelling out west,” he added. “Kitchener-Waterloo (about 60 miles northeast) seems to be a little higher paying, but down in this end it’s very low-paying jobs right now.”

. . . .

Electro-Motive was bought by Caterpillar subsidiary Progress Rail Services in 2010 from Greenbrier, an American equity firm that had purchased the faltering plant in 2004.

“As soon as [Caterpillar] purchased it you could see the writing on the wall that we were going to have an issue,” said Scott.

Caterpillar had also attempted to buy the plant in 2004, but the union blocked the sale in retaliation for Caterpillar locking out workers at its plant in Brampton, Ontario plant in 1991.

“We met with Caterpillar and told them that at no point would they ever own this facility after what they had done in Brampton,” Scott said, alleging Caterpillar ultimately purchased Electro-Motive through “the back door.”

“They purchased us for the technology,” he said.

Caterpillar counters that the company's past relationship with the union wasn’t a factor when buying the plant, and that its focus was on the “things that needed to be done to make the plant competitive,” said company spokesperson Rusty Dunn.

Electro-Motive locked out its workers on New Year’s Day after tabling a final offer that would have cut wages from an average of $35 per hour to $16.50 per hour amounting to a 50 percent reduction.

“When they came back with their final offer, I knew that they didn’t want to operate in Canada,” said Damm.

Caterpillar subsidiary Progress Rail held a job fair in Muncie in March, a month after the company announced the London plant would close. Wages at the Indiana plant range from $13 to $19 dollars an hour with benefits, according to Dunn. Recent job postings for welders at the plant list the starting wage at $14.85 an hour.

For its part, the state of Indiana passed “right-to-work” legislation in February that bars employment contracts that require all workers in unionized workplaces to pay union dues. It was reported earlier this year that Caterpillar recruitment ads for managers at the plant required candidates have “union-free” work experience. It was also reported that municipal leaders gave $28 million in tax incentives to Caterpillar for the plant to come to Muncie, and Dunn confirmed in an email to the GlobalPost that there were “some economic development incentives from the state.”

“Indiana gave those guys an incentive to move,” said Wayne Fraser, director for Ontario and Atlantic Canada for the Steelworkers Union. “If you think about NAFTA (North American Free Trade Agreement) that’s an unfair practice. There has to be an equal playing field.”

“Today it’s in Indiana, tomorrow it’s in India,” adds Fraser.

. . . .

After Caterpillar announced that they were shutting the London plant in February, the union and their supporters picketed outside the gate for three more weeks hoping simply to negotiate a decent severance package for their members.

Adding insult to injury to many here was the fact that while the workers in London were left to walk the picket line, Caterpillar was recording record profits; $1.55 billion (US) in the first quarter of 2012.

“That was trying because you knew the company was trying to give us zero when we made those people extremely rich. We were hoping to get at least something,” said Damm.