Connect to share and comment

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. 

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.

In the end the 480 workers won three weeks’ pay for every year of service.

Now with the plant all but closed (except for a skeletal shift of plant managers) the former workers are learning how to market themselves in resume writing workshops in the basement of the union hall while Doug Oberhelman, Caterpillar chairman and CEO, is making a fortune. 

Oberhelman, it was reported in April, made $14.8 million in salary and bonuses last year as reward for the performance of the company globally.

. . . .

Some labor advocates lay the blame for the failure of Electro-Motive in London at the feet of the Canadian government. They say it failed to enforce the Investment Canada Act, the piece of legislation meant primarily to regulate the foreign purchase of Canadian manufacturing companies by putting the onus on the foreign (mostly US) companies to prove that there is a “net benefit” to Canadians: new jobs, bringing innovation and trade to Canada and avoiding an adverse effect on competition within Canada. 

But in the last few years there have been several high-profile instances where a large international company bought a traditionally Canadian industrial company and then demanded major concessions from the workers.

In 2007 Pittsburgh-based US Steel bought the bankrupt Canadian Stelco in nearby Hamilton, Ontario and in short order idled various parts of its operations, claiming poor market conditions, then embarked on a bitter lockout of workers at two different plants.

The same year, UK-based mining giant Rio Tinto bought the Alcan Aluminium company. Then last December Rio Tinto locked out the workers at its smelting operations in Alma, Quebec in an ongoing dispute over the company’s demand to introduce new workers at 50 percent lower wages and no benefits.

In many of the cases, the government determined the deals were legal under the Investment Canada Act — or not covered by it. In the case of Electro-Motive, Michael Cimpaye, a spokesperson for Industry Canada, the ministry responsible for the enforcement of the act, maintained in an email to GlobalPost that the acquisition price fell short of the legislative threshold for a Canadian company.

“The threshold is $330 million and they’re saying [the purchase price of the plant] was $290 million,” said the Action Center coordinator Scott. “But the reality was their assets they claimed were $1.3 billion dollars . . . somebody dropped the ball.”

The Canadian Stelco deal was approved under the act because US Steel made certain guarantees to maintain staffing and production levels at the Canadian operations for at least three years. When US Steel went on to lock out its workers, first at its Lake Erie site in 2009, then at Hilton Works in 2010, the federal Conservative government signalled that it would be pursuing the matter through the courts as a breach of the Investment Act, but by December of last year the government’s legal action against the company was quietly dropped.

Then last week, Prime Minister Stephen Harper’s administration announced the government's plans to raise the $330 million threshold for reviewing deals to $1 billion.

“The government seems to be against any institution that aspires to improve wages and conditions,” concludes Dr. Pradeep Kumar, an expert on unions and industrial relations at Queen’s University in Kingston, Ontario, referring to the trail of foreign takeovers, labor disputes and plant shutdowns on this government’s watch.

“There’s no accountability in this process, there’s no transparency, and there ought to be,” said Joe Drexler, who runs campaigns for the United Steelworkers. “There needs to be a demonstrated net benefit to Canada, and that includes Canada’s people, and not just the multinational corporations that are coming in.

“It’s not just about Rio Tinto, it’s about US Steel, it’s about Caterpillar. It’s an economic rape of Canada,” Drexler said. “Ask yourself how often the lockout was used five years ago, three years ago, even two years ago as an offensive strategy by employers? It seems to be led by multinational corporations. You know a lockout is just an employer’s strike against the union . . . and it happened in all three of these instances, so they share something.”

. . . .

Caterpillar’s perceived aggressive tactics at the Electro-Motive plant, including the unheard-of demand for a 50 percent wage cut, seemed to strike a chord well beyond the borders of London. There was a large demonstration and march to the plant gates in January by supporters who had bussed in from across the province, willing to face the bitter cold with the union picketers.

The decision by the local Mark’s Work Warehouse, part of a national chain of work and safety clothing stores, to take Caterpillar equipment off their shelves in protest made national headlines in January, but the move was never intended to be permanent, and Caterpillar boots and gloves are once again for sale at the store.

And while motions to boycott Caterpillar products from use on municipal projects in the town of Ingersoll (neighboring London) and Hamilton (where US Steel locked out its workers in 2010) didn’t pass.

“From my perspective it was essential to focus in on a company that tapped into federal initiatives,” said Sam Merulla, the city councillor who brought forward the motion to boycott Caterpillar products in Hamilton.

“Their focus, in essence, is to make more and more money at the expense of anyone who comes in the way of that,” emphasized Merulla. “I find it offensive that they asked their labor force in London to take a 50 percent decrease — frankly that’s so aggressive, and so 1920.”

The Hamilton boycott motion failed to pass in March after large heavy equipment distributor Toromont, which distributes Caterpillar products, argued before the city council that it had pumped a large amount of money into the local economy. The vote was 11-4 against. Mark Hollman, a spokesperson for Canadian National Railway, the largest railway in Canada and a major customer of Electro-Motive, made clear that the rail company has no intention of overlooking Caterpillar products — or their competitor, GE — so as to get the best value from the marketplace.

“We will continue to purchase locomotives from both these manufacturers,” said Hollman.

Even worker representatives like Scott acknowledge mounting a successful boycott against Caterpillar now would be tough while the federal government is heavily promoting the Alberta oil sands development to the international community. Much of the heavy equipment used by contractors there is made by Caterpillar.

“Until our government actually puts some type of act in place that protects the corporations from being bought and sold in this country — at some point they have to put stipulations on, Scott said. “‘If you’re going to buy a facility that’s fine, but you’re going to follow the collective agreement for x amount of years, you can’t move, you can’t do anything,‘ Until they see that, I think these corporations are going to come in, buy the technology up, and leave.”

. . . .

Damm, who still describes herself as a “steelworker,” has no plans to find work in manufacturing again. “Too much heartbreak,” said Damm — though she will likely be alright. Since the shutdown she has been hired on as a part-time worker at the Canadian postal service. She also does small rod-iron artisanal jobs on the side and doesn’t have any kids. Damm worries more about her former co-workers, the ones who’ve been at the plant for over 20 years.

“They’re in a bit of a haze, trying to figure out what to do next, " she said. "Most of them have never had to fill out a resume.”