Workers at Caterpillar Inc.’s London, Ont., locomotive operation have approved a deal on severance pay and pensions, bringing an end to an acrimonious plant closing that left almost 700 employees out of work.
Caterpillar’s Electro-Motive Canada unit locked out workers on Jan. 1 after they rejected the company’s proposal to slash wages by as much as 50 per cent, citing the need to become globally competitive. On Feb. 3, Caterpillar closed the plant for good, and appears to be planning to shift work to its Progress Rail unit in Indiana.
Workers voted 95 per cent in favour of the severance package, which provides three weeks of pay for each year served. Labour laws stipulate workers with less than five years of experience aren’t required to receive severance, while those with more than five years on the job get one week’s pay for each year served to a maximum of 26 weeks.
Though the severance package is above the required minimum “nobody is walking out of here celebrating,” CAW national president Ken Lewenza said Thursday at a news conference at the Marconi Club in London’s east end. “People are now walking out of here with a soft transition to job loss.”
Peoria, Ill.-based Caterpillar bought the 62-year-old locomotive plant 18 months ago. The closing garnered media attention from as far away as the U.K., U.S., Australia and Sweden.
Wes Gatschene, 28, said he will use the severance to pay down debt, which has ballooned since the lockout. The welder and millwright has two children, and a mortgage on a house. Like other plant employees, he said he might head to booming Western Canada to look for work, leaving his family in London.
“I'm relieved,” said John Vandergulik, a quality auditor with almost 23 years at the plant, who is hoping to find work at local John Deere facilities. “Now a lot of the uncertainty is gone.”
Details on pensions are still being ironed out, partly because the plant was formerly owned by General Motors and 190 workers had pensions with GM.
After 29 and a half years at the factory, Ross Seeley said he was planning to retire in six months. “It's disappointing,” he said of the potential impact on his pension. He's not yet sure of how it will be affected, but estimates it could be reduced by a third or more, given his long tenure at GM. The shutdown feels like a “bad divorce,” he said.
Outside the plant, several workers started dismantling the picket line – taking down flags, loading lumber from a makeshift shelter onto a pickup, and folding tarps. They talked of Ontario’s future – of maybe going North to the mines – before going home.
In addition to the three weeks pay per year, each employee will get a lump-sum ratification bonus of $1,500 and a drug plan to Aug. 31. The CAW will receive a lump sum payment of $350,000 for settling grievances, job-retraining and job-search assistance.
Company officials were not available for an interview on Thursday. In a statement, the company said it is now focusing on a safe and orderly wind-down of the facility.
“While it is regrettable not being able to reach an agreement with the union that would have sustained the London plant, EMC is pleased that the parties were able to successfully negotiate a generous severance agreement for represented employees,” it said. “We wish them all the best for the future.”
A total 190 plant employees, some just six months from retirement, spent years as employees of General Motors Corp., which owned the plant before selling it to a hedge fund in 2005. Caterpillar bought the operation from the hedge fund in 2010.
Those workers will receive a combined pension from the General Motors of Canada Ltd. unionized pension fund and the pension fund of Electro-Motive Canada.
But the CAW is negotiating with GM Canada about whether those employees will be allowed to participate in so-called grow-in provisions, which would allow them to begin drawing a GM pension earlier than age 65.
“We are currently in discussions with GM about GM’s obligation to this group of 190 people with respect to both pension and other benefit entitlements, “ CAW benefits specialist Jeff Wareham said.
Mr. Lewenza said discussions with GM continued Thursday. “We think we have some very sound arguments on behalf of our members,” he said.
“General Motors sold this facility with the commitment that workers would have long-term job security and obviously that did not happen.”