Progress Rail Services, Inc. Closes London, Ontario Facility

[Ian MacMillan]

Source: Eastern Rail News
http://www.facebook.com/groups/342280115789918/

BREAKING NEWS: Progress Rail Services, Inc. Closes London, Ontario Facility

February 3, 2012 – LaGrange, IL – Progress Rail Services Corp., a subsidiary of U.S. construction conglomerate Caterpillar, announced internally today that they have made the difficult decision to cease all production at Electro-Motive Canada’s London, Ontario facility, citing failed efforts to negotiate a competitive labor agreement with the Canadian Auto Workers Union.

EMD went on to say, “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.”

The company had locked out 450 workers from the London facility on January 1. Costs were the main factor in the dispute, with the company pushing employees to take a 50 per cent pay cut.

“Market conditions made today’s regrettable decision unavoidable,” said EMD.

The plan is to start the process of conducting an orderly closure of the London production operations, which includes the transfer of locomotive assembly operations to other facilities in North and South America.

[Scottl]

Unfortunately, this seemed all but inevitable.  Asking for a 50% pay cut sends a clear signal.  I feel for the people who lost their jobs and London will miss that employer. 

[Ed Kapuscinski]

50%? That's insane.

If someone asked me to take a 50% paycut, I'd punch em in the eye.

No joke. That's just insulting.

[lock4244]

The choice was 50% or 100% pay cut. They chose the latter. Tough call because even if they'd taken the 50%, with the plant in Muncie coming on line, there was no way that London would survive considering IN is a 'right to work' state now. Unions run Ontario to a certain degree, certainly they have a sympathetic ear in Premier dipsh*t, so from Progess Rail's perspective, Ontario is bad for business.

The 100% pay cut option is even worse, though since they rejected the 50%, they're going to get severance based on their current, higher rate of pay.

62 years of Canadian diesel history coming to a close... very sad indeed 

[seusscaboose]

Recession + Unions = unhappy CAT
overseas "emerging" ( ) markets + new contracts to better negotiate = happy CAT

[Scottl]

The new "overseas" for EMD is... wait for it.... Indiana. 

[wm3798]

I believe 50% of what? is a legitimate question.  Unions have a tendency to artificially inflate wages in part to inflate the percentage that they take in the form of dues.  I don't know what the particulars in London were, but if there's guys making $50-60/hr where the market dictates that similar jobs earn substantially less, then do the math. 

Progress Rail is doing what the president asked them to do... bring jobs home.  (or at least stop at home long enough to learn a little Spanish before the trip further south...)

Lee

[Ian MacMillan]

The move is now being used as a battle tool in NH

http://www.unionleader.com/article/20120210/NEWS06/702109989

Others touted the bill's economic advantages with several citing the move by Caterpillar from Canada to Indiana after that state passed right-to-work legislation last week.

[Ryan87]

The offer was cutting an average hourly wage of 32 dollars to an average wage of 16.
Plus cat wanted the employees to give up theyre health benifits. I wouldn't blame the employees for turning
That down, personally I'd be insulted. :p

[Ian MacMillan]

The offer was cutting an average hourly wage of 32 dollars to an average wage of 16.
Plus cat wanted the employees to give up theyre health benifits. I wouldn't blame the employees for turning
That down, personally I'd be insulted. :p

An insult as it maybe... If I was told 50% or 100% I would take the 50% and then go look some where else. If I can find $32hr somewhere else, then I leave, and Cat can fill my position at $16... but the jobs still stay in ON, not being moved somewhere else.

[davefoxx]

An insult as it maybe... If I was told 50% or 100% I would take the 50% and then go look some where else. If I can find $32hr somewhere else, then I leave, and Cat can fill my position at $16... but the jobs still stay in ON, not being moved somewhere else.

+1.  I don't live in Ontario, but I can tell you that a lot of people in this area (northeastern Maryland and Delaware) don't even make close to $16.00 per hour.

[Ryan87]

Well in Manitoba, Unemployment insurance is 60% of your wage I imagine it's similar in Ontario so I'd rather collect that while I look for something else 

either way the offer was well below average for skilled manufacturing, Cat had no intention of ever staying in Canada...

[John]

It's a reality - corporations are going to always try to reduce their costs. For most, labor is the biggest cost.

[C855B]

Wellllllll... working for a US division of a Canadian company, while I think what was done to GMD is despicable, I do understand why it was done this way. Canada has pretty stringent rules about the employer-employee relationship that we don't. For that matter, it is even plausible that the proposed 50% pay cut itself was illegal, but since it was never implemented and there was an overriding labor contract, it wasn't actionable.

As Ryan pointed out, the 50% ploy was a specific tactic. If my choices were to keep a job for an unknown period of time at 50% or not have to work at all for a known, extended period and get 60% while I look for a new job, hell, sign me up! Plus, the former choice is very stressful, as companies that adjust their balance sheet by significantly reducing pay are typically not long for this world - be a good doobie "to save the company" and you're out on the street anyway, at 60% of your 50% pay. That would suck.

PR was closing the plant anyway. I don't know why... maybe CDN employment law?... they didn't declare the closure immediately and send everyone home. It could be that there is a similar law to what we have here, that if there is a change in corporate ownership to out of state/country, employees are guaranteed six months of notice at their pre-acquisition pay. Turning it into a "contract dispute" allowed PR to short-circuit this provision, if there is one.

As to the $32 vs $16... I would conjecture that much of the GMD staff were high-skilled trades - machinists, welders, pipefitters, crane operators, etc. Bearing in mind the US/CDN exchange rate at the time the old contract went into effect (CDN dollar ~85% of the US dollar), I would fully expect these trades to be in the $US50,000/year range. That corresponds very roughly to $CDN28/hr. Allow for incremental increases in the contract, and voila!, $32/hr. The pay is not outrageous, as some of you assert.

PR is not going to be paying the folks in Indiana $16/hr for skilled work. IMO they simply wanted a way to get out of a perceived stranglehold of a labor contract under a labor-biased set of laws. The way they went about it was, again, despicable, but given the pro-corporate policies in the US over the past couple of decades regardless of administration, it was foolish to operate a major plant in a non-US jurisdiction where core costs were mostly out of their control.

[Ian MacMillan]

Yes it was obliviously a ploy. But I would like to see what the wages are going to be in Indiana as it is now coming out that new union busting legislation in that state was brought forward to entice Caterpillar to move it all to Indiana.