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CAW calls for probe of Caterpillar takeover

Canadian Auto Workers president Ken Lewenza in front of the now-closed Electro-Motive plant in London, Ont., on Feb. 3.


The Canadian Auto Workers union has stepped up its fight to get the federal government to intervene in the closing of a Caterpillar Inc. , locomotive factory in London, Ont., that threw 700 people out of work.

The union wants Industry Minister Christian Paradis to examine the 2010 takeover by Caterpillar of Electro-Motive Diesel Inc., which operated the London plant that ceased operations last week. The plant was closed after the company locked out workers on Jan. 1, following the CAW's rejection of demands that its 450 members accept wage reductions of up to 50 per cent and agree to cuts in benefits, pensions and vacations.

"We do not accept the claim that the government had no power to intervene in the Caterpillar acquisition of Electro-Motive – either at the time of the initial acquisition or 18 months later when the company decided to strip the Canadian plant and shift production elsewhere," CAW president Ken Lewenza said in a letter to Mr. Paradis released Friday.

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He called on the Mr. Paradis to examine how the Investment Canada Act applied to the 2010 purchase. The government's actions in the battle over Potash Corp., and the rejection of the proposed acquisition of aerospace company MacDonald Detwiller & Associates by U.S.-based Alliant Technology demonstrate that the government can use the legislation as it sees fit, he noted.

"In practice, the government effectively created a new category called 'strategic assets' which clearly give the government power to intervene when needed," he wrote.

Industry Canada said earlier this week that Caterpillar's purchase of Electro-Motive was not subject to review under the Act, but simply a notification, which occurs when a foreign corporation that has subsidiaries in Canada is acquired.

Caterpillar said in the Feb. 3 four-paragraph news release announcing the closing that it was moving the work out of London to locations in North and South America.

But CAW officials and workers in London are convinced the locomotives will be built in Muncie, Ind. In the midst of negotiations on the contract the CAW rejected last year, Caterpillar announced it would build a locomotive factory in that city.

The state of Indiana helped out with $3.5-million (U.S.) in performance-based tax credits, up to $1-million in cash for training, another $1-million in infrastructure assistance and aid in applying for a $1-million U.S. government grant. Another $22.5-million in tax abatements and other financing was also available from the local county.

About 36 hours before the announcement of the London closing, Indiana Governor Mitch Daniels signed into law so-called right-to-work legislation, which hinders the ability of unions to organize.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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