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  • Friday, February 3, 2:42 PM Caterpillar (CAT +2.8%) says it will close a locomotive assembly plant in Canada where unionized workers have been locked out since the beginning of the year after they refused to accept pay cuts and other concessions. The Canadian Auto Workers Union says CAT never intended to keep the plant open.
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This news story has 41 comments:

  •  
    You'll see that same plant rise up in Mexico, at 1/4 the cost......
    3 Feb, 03:49 PM Reply Like
  •  
    CAT is moving the work to Muncie, Indiana. The wage scale at the Canadian plant was double what American workers command. If memory serves me, the Muncie workers are looking at $16.50 a hour jobs, while the Canadian workers were getting up to $34 a hour.

    The plant in Canada was part of a Caterpillar acquisition, not a longstanding facility of theirs.
    4 Feb, 08:37 AM Reply Like
  •  
    I doubt the $16.50 is what the American worker is commanding. It is what Caterpillar is offering. Caterpillar is bringing jobs to an area that has been hit very hard by auto industry closures, and taking advantage of that. They are bringing the jobs in, but at much lower wage rates. Not a single locomotive has come out of the Muncie plant yet, and rumour has it they have had some difficulty getting skilled trades into the plant at those wages. There may be lots of overtime worked in Mexico if Caterpillar can't get Muncie up and running in a reasonable amount of time.
    4 Feb, 09:13 AM Reply Like
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    It says mountains about what unions do to businesses. How long before the Indiana plant becomes too expensive and the NLRB files a suit to stop them from leaving that plant.
    5 Feb, 07:57 AM Reply Like
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    It probably has already been built!
    3 Feb, 06:38 PM Reply Like
  •  
    I've been in the union all my working life, but the unions have over played their hands. With the global economy there is no job, no plant, no contract safe from being moved to a more company friendly state or country. The unions have tied their future to the Democrats and they both are about to be made insignificant because of the 2012 elections.
    3 Feb, 10:35 PM Reply Like
  •  
    When Upton Sinclair wrote "The Jungle" in the early 20th century, unions were a necessary evil.

    Since then, many unions have become just unnecessarily evil.
    4 Feb, 06:55 AM Reply Like
  •  
    Caterpillar (CAT) offered the employees a 50% pay cut. No company has ever done that to its workforce before (at least in Canada). The lowball offer was done to get the unionized workers to strike, but Caterpillar locked them out instead. Caterpillar's motive was to close the London plant, so that they could move the work to Muncie, Indiana. A big slap in the face, especially after Caterpillar reported record earnings earlier this week, and a near $5 billion dollar yearly profit. The folks in Muncie may be happy for the "American jobs" coming back, but it's only a matter of time before Caterpillar closes that plant, and moves the work to Mexico or other cheaper labour locales.
    4 Feb, 07:52 AM Reply Like
  •  
    flyingdutch, if cat's motive was to close the london plant why not just do it and be done with it? what benefit does cat gain by "getting the union workers to strike" if they're going to shut it down anyway?
    4 Feb, 08:27 AM Reply Like
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    How much was it going to cost for Caterpillar to move all the technology down to Muncie? Throw the lowball offer out there, and if the union takes it, saves the company the move for now. It also makes the company look better, in that they made an offer to the employees, but the union turned it down. Bad union. If Caterpillar had just shut it down, it would make Caterpillar look like the bad guys. It's all about image. I'm actually surprised that Caterpillar announced the closure so early. I was thinking that they would draw this out til' the summer. At least the four hundred people losing their jobs can start looking for work and get on with their lives.
    4 Feb, 08:39 AM Reply Like
  •  
    Like in Europe, in Canada it is not that easy to get approval to fire and shut down a plant. Most likely they would be forced to pay them salary even if they don't work for the life of a given contract. You really must think twice before you hire people in some countries. Consequently people tend not to open up or hire in highly unionized, labor regulated, socialized countries unless they absolutely have to. Sadly the US is gradually moving this direction too. That means low job growth for us until we reverse this.
    4 Feb, 12:09 PM Reply Like
  •  
    I know you are a popular guy and probably make lots of money. How is it good that US and Canadian workers only make 8 to 15 dollars an hour. Then the biggest Consumer(The US) market in the world can't afford to buy what Korea and China make.
    Moderation in all things... I am not sure we want to turn in to a poorly paid country providing manufactured goods to India China and Korea. We will need to have our children work in the factories because they won't be able to afford an education. Crime will go up in our countries as well when people try to feed their families.
    Perhaps I have misunderstood you?
    What typee of country do we want.? Should there only be the rich and the poor? Is that some Divine Design that you believe?
    4 Feb, 03:38 PM Reply Like
  •  
    The Canadian Government gave many millions of dollars to Cat to keep the plant open....you know ..."Corporate Welfare". Then our Prime Minister did a Photo Shoot before the Election to show how much of a business man he is. It is very hypocritical.
    Anyhow many Canadians are angry just as Americans are angry when a plant closes and moves to Mexico. What was the harm in paying 34$ and hour( which is only a living wage in Canada) for a company who made 5 billion dollars last year?
    Part of being a good Corporate Citizen is knowing when you are being too greedy. Currently Canadians are asking their Municipalities , Provinces and Federal Government not to buy Cat Equiptment. Working men and women in the Trucking Industry may find themselves buying more Volvo Trucks. Cat is almost the sole source of Heavy epuipment to the Tars Sands up north but the Canadian Public has no influence there.
    I like to make money like everyone else on this board but sometimes Companies can't see the forest for the trees. Where is their loyalt?. Canadians support them but they don't support us.
    4 Feb, 12:11 PM Reply Like
  •  
    It is unskilled labor. If you want to make a good living, develop some real skills. Canadian workers have had many advantages over American workers, including comprehensive health care and much better social benefits.

    Interestingly enough, Germany has a good system of vocational training that allows people to upgrade their skills and thereby attain greater earnings. Plus a skilled artisan enjoy his or work work more.
    5 Feb, 05:41 AM Reply Like
  •  
    if cat got the caw to go on strike, cat could blame the plant closing on the strike and then cat would not have to pay out any severance pay.
    11 Feb, 12:52 PM Reply Like
  •  
    Love capitalism
    4 Feb, 10:16 AM Reply Like
  •  
    It's what made this country have the highest standard of living in the world.
    5 Feb, 08:00 AM Reply Like
  •  
    Cat probably is bound by contract to give 6 months notice of the plant closure to the bargaining unit. The union is also probably correct that Cat never intended to keep the plant open, knowing the union would not except the deep cuts they wanted. I went through this when Phillips Petroleum closed the 80 year old Kansas City refinery, we found out later that Phillips had already bought land in both Borger and Sweeney Texas to build 2 super Cat Cracker refineries. That decision was made years before.
    4 Feb, 10:36 AM Reply Like
  •  
    Here's a quote from Canada's "Globe and Mail" newspaper from last night, quoting CAW leader Ken Lewenza about Caterpillar and the London Electro-Motive plant:
    “I’ve never had a situation where I’ve dealt with such an unethical, immoral, disrespectful, highly profitable company like Caterpillar,” Mr. Lewenza said in a telephone interview Friday as he drove to London from Toronto to meet with the workers.

    He said that during bargaining in December, he told the company’s negotiators: “If it’s in your business plan to close us, don’t punish us, let’s work out a closure agreement. They said: ‘We have no intention of closing the facility.’ ”

    The closing infuriated Mr. Lewenza, whose union represents the plant’s workers. Caterpillar had demanded pay cuts of 50 per cent in many job categories, elimination of a defined-benefit pension plan, reductions in dental and other benefits and the end of a cost-of-living adjustment.
    4 Feb, 11:04 AM Reply Like
  •  
    What the CAW neglected to mention was that that plant was the most expensive plant that (CAT) owned, and was losing money. Reportedly, some assembly line workers there were making over $125,000 a year with bennies.

    Just a note, but at one time that plant was owned by (GM) and was sold off as a "negative asset" - meaning it was a net loser for profits.
    4 Feb, 01:17 PM Reply Like
  •  
    What happens next in Canada when another manufacturer employes the same negotiation process with the union?

    Will the union learn from the Caterpillar incident? No. They will strike and lose their jobs once again and the union leadership will complain about ethics in labor negotiations.
    4 Feb, 01:46 PM Reply Like
  •  
    This "offer" to the unionized employees was being watched by many on both sides of the border. Why? Because if the employees at Electro-Motive had accepted the 50% pay cut, there would be a lineup of companies who would try do the same to their employees. Caterpillar could have asked for a much smaller pay cut, but they didn't, as their true intentions were to take the jobs out of Canada in the first place.
    If companies don't want to manufacture things in Canada, and want to offer second world wages, go to the USA. Cost of living in London, Ontario is a hell of a lot higher than Muncie, Indiana. A good house is 200K +, gas is $5/gallon, gallon of milk is $4.50. You may think that $30/hour is a fortune, but it's how far that $30 takes you in terms of goods and services you can buy with that money that makes all the difference. We also have a 13% sales tax here in Ontario, not the 7% that Indiana has.
    I applaud the men & women at Electro-Motive. They stood up for themselves, even if it meant losing their jobs. It also made a strong point to other companies thinking of making similar offers to their employees. Not gonna happen, unless you're looking to leave Canada, and there are a lot of unionized jobs in Canada where leaving town (thankfully) is not an option.
    Caterpillar is not a company that bargains in good faith. The CAW was right to fight Caterpillar. A company that cares for their employees would have never offered such an absurd pay cut. Caterpillar wanted out of Canada, and they did it. Good for them. Now their CEO can get a bigger payraise next year.
    4 Feb, 02:20 PM Reply Like
  •  
    FlyingDutch,

    Stop coming to a investing website and lying your head off. A) People here are looking for profits and to make money off of the capitalistic system B) They are a lot smarter than your average union worker.

    You aren't going to find much sympathy here. Quoting some fool like that union thug Lewenza who refused countenance even a 1% cut in wages saying "Our core salary is not for sale" shows that you think people here at this site are idiots.

    The biggest idiot here is you. So go away to Huffington Post and stop wasting everyone's time here.
    4 Feb, 03:47 PM Reply Like
  •  
    Easy Deja Vu.
    I'm just presenting the Canadian side to this story. I don't need to post lies. All the information that I'm passing along is directly from Canadian press sources. I'm not asking you to agree with it. I'm here at SeekingAlpha to learn to make money just like you. The EMD picket line is a little over a mile from where I work, so I have a soft spot in my heart for them, and I'm sure the angle I'm presenting won't be easily found in any American newspapers.
    Save the name calling for the Yahoo! message boards.
    5 Feb, 04:48 AM Reply Like
  •  
    You are right. Name calling is uncalled for. I can disagree but do so politely. I apologize.
    7 Feb, 09:51 AM Reply Like
  •  
    why don't you read some of the articles I have posted on my wall and read for yourself about the truth of what went down. You will be completely embarrassed and ashamed by your own comments after reading the articles.
    11 Feb, 12:54 PM Reply Like
  •  
    you are dead wrong about the EMD plant in London losing money. It made millions every year as it was the plant that set the bar high for quality. Locos made in CAT's other plants don't even come close to meeting industry specs. GE is the top builder of Locomotives in the world now and they pay their workers over $30 hr + benefits.
    15 Feb, 01:38 PM Reply Like
  •  
    I have been to alot of mexican factories they have alot of QC problems building things that require education brain power . Besides no manufacture would put a plant in mexico right now. too much crime . it is going to get worse I would bet companies like GE who have a lot of factories down there are having securety problems with protecting there people that go down there now in the boarder towns lot of kidnapping
    By the way I really liked mexico and the people I feel sorry for them right now.
    4 Feb, 02:26 PM Reply Like
  •  
    Indiana just recently became a "Right To Work State." It is already paying off. Congratulations Gov. Daniels.
    5 Feb, 01:19 AM Reply Like
  •  
    Right to work means "We import illegal Mexican labour" you goof. There are 30 million illegal workers in the US. Can't wait for an immigration raid on the Muncie plant. It will be hilarious.
    5 Feb, 11:59 AM Reply Like
  •  
    Loon, how about providing some evidence for your bumper sticker slogan? And where did you get that 30 million figure, when even the most partisan only claim max of 13 million and most state between 9 and 11 million?
    5 Feb, 12:58 PM Reply Like
  •  
    Search the US Immigration site. They report between 12 and 20 million illegal workers in the US "But the true number is unknown".
    Canada's population is 30 million. California is 33 million....
    How many of this huge army of workers gets a decent wage? Do not tell me that loyal citizens wages are not driven down by this army of workers that holds all other American workers to a low standard.
    Do you think this is good for your economy?
    You know who wants that huge cheap workforce in the US. Big Corporations like Cat.
    The best country is one that your nieghbour is fed educated and happy.
    5 Feb, 04:43 PM Reply Like
  •  
    And how many of those illegals have the skills that are in demand and are actually paying high wages? I would bet less than 5% at most. Anyone has the skills to pluck chickens at Tyson, which is why they don't pay much. Workers with no skills would be payed pretty low wages even if every illegal were deported tomorrow.
    5 Feb, 11:13 PM Reply Like
  •  
    Cat complained that the workers were unskilled in the plant in Ont.....Just sayin.. There is two sides to every story.
    5 Feb, 11:27 PM Reply Like
  •  
    Business 101 - if you can't make money, don't do it.
    5 Feb, 08:08 AM Reply Like
  •  
    Canada is still existing and functioning like a British Crown Colony.
    5 Feb, 11:13 AM Reply Like
  •  
    When was the last time a top CAT executive took a salary cut of 50%, and no stock options, because of economic downturn, while telling union workers to do the same ?
    6 Feb, 01:42 AM Reply Like
  •  
    "loon"...
    "The best country is one that your nieghbour
    is fed educated and happy. "
    My reply to your statement, is clearly defined by
    the US Constitution, under entitlements... "life,liberty and the pursuit of happiness", while your above definition is what has caused the most current European financial implosion.
    Not until we as a nation demand the best from our people will this nation regain what it has lost. Not until the "dummying down " in
    education is reversed, will things change for the betterment of all.
    What happened in MA after the SB last night is an indicator of the stupidity, and moral absences within our current generation.
    SFB(s--tforbrains) works well in the toilet, but it won't get you very far in the real world of today's global competition.
    6 Feb, 08:29 AM Reply Like
  •  
    On Sept.17th of this year I boosted Cat as a stock on these boards. If you go to my profile and then comments ...go to Sept 17th 2011.
    I don't like being told I am shit for brains just because I have a conscience.
    I like money as much as anyone here.
    I acknowledge there are work ethic problems in the US. But there are also a lot of people sick of beating their heads agaist the wall. Some companies should have loyalty to their communities.
    "And thats all I have to say about that!"
    6 Feb, 11:36 AM Reply Like
  •  
    THe 50% pay cut was for only a select group of workers, mostly unskilled starters. The big issues, as with most unions, were work rules, pensions, healthcare costs, etc that made it unprofitable to build things there but those issues don't make headlines. Congrats to Indiana for becoming a right to work state. Every state should be right to work. Unions broke manufacturing and now they are breaking the american taxpayer. Police, fire and public pensions in general out of control, Unfunded liabilities rapidly approaching the amount that SS is unfunded yet people keep voting for peole supported by unions. Look at Detroit for where unions will get you. Illinois headed for bankruptcy. California, New Jersey fighting for second in line.
    7 Feb, 02:21 PM Reply Like
  •  
    there are NO health care costs for companies in Canada, we have free health care. the wage cuts for non-skilled were 55% and skilled 40%. However only less than 10% of the employees were classed as skilled. The health and pension benefits were also being slashed completely out. EMD Canada made the highest quality standard locomotives in the world. GM who pays their employees $30 hr will be gaining the customers from EMD Canada because now they are the only one who can come close to building a locomotive of the same quality.
    11 Feb, 01:03 PM Reply Like
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