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The Globe and Mail

Caterpillar to close Ontario locomotive office, sets layoffs

The former Electro-Motive Canada plant in London on March 06, 2013. In 2012 Caterpillar shut down its London locomotive plant, and has now announced the closure of its London rail locomotive office, laying off 50 workers.

Deborah Baic/The Globe and Mail

Ontario's industrial heartland is losing more skilled jobs as Illinois-based Caterpillar Inc. cuts costs and closes its Electro-Motive Diesel rail locomotive office in London, Ont.

Caterpillar said about 50 people at the Wellington Road site have been given layoff notices and the office will close by Dec. 31. The staff includes locomotive testers, design engineers and production planners who were spared the axe when Caterpillar closed the nearby locomotive factory in 2012 and fired hundreds.

"All remaining Electro-Motive Diesel employees in the London, Ontario area have been notified that their current office location is being consolidated with other facilities by the end of 2015," said a company spokeswoman in an e-mail, declining to elaborate.

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Canada's manufacturing sector, centred in Southern Ontario, has been hit by shutdowns of several factories and shed thousands of jobs in the past few years. London's jobless rate of 7.7 per cent is higher than the Canadian average of 7.1 per cent. Unemployment in nearby Windsor, once Canada's auto capital, is 9.9 per cent, Statistics Canada says.

Companies have cited the strong dollar, high operating costs and expensive labour as they shut their doors and moved production lines to the United States or elsewhere.

The Caterpillar closing marks the end of Electro-Motive Diesel's presence in Canada, other than a locomotive repair facility near Montreal.

In 2012, the company locked out 450 people who built locomotives at the factory in London and told them to take a 50-per-cent pay cut before announcing the plant would close for good and the work would move to Indiana.The plant, which was opened by General Motors in 1951, came into the Caterpillar fold when it purchased Progress Rail in 2010.

Caterpillar, which also makes machinery for mining, forestry and other heavy industries, posted a net profit of $3.7-billion on $55.7-billion in sales in 2014, but has seen a 7-per-cent decline in revenue since 2011.

Net profit for 2015 is forecast at $2.5-billion, according to Bloomberg estimates.

The company said the most recent London layoffs were part of "continued cost reduction actions." The company said in September that job cuts among its 111,000-strong work force could reach 10,000 by 2018 as it reduces operating costs by $1.5-billion.

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In 2014, Caterpillar closed its Toronto tunnel-borer factory and put 330 people out of work. Caterpillar had bought the factory from Lovat Inc. in 2008.

Recent plant closings in Southwestern Ontario include H.J. Heinz Co.'s Leamington ketchup factory in 2014, eliminating 740 jobs and gutting local tomato growers who supplied the factory for generations.

Cereal maker Kellogg Co. in 2014 shut its London plant and put 550 people out of work.

In 2011, Ford Motor Co. of Canada shut its plant in nearby St. Thomas, wiping out more than 1,200 jobs.

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