Caterpillar to close London, Ont. locomotive plant

Fri Feb 3, 2012 3:53pm EST
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(Reuters) - Caterpillar Inc has decided to close its Electro-Motive locomotive plant in London, Ontario, and lay off at least 450 workers following several months of unsuccessful contract negotiations with the Canadian Auto Workers union.

The move deals a tough blow to the Canadian labor market, which has been under pressure from a strong Canadian dollar and the struggle to persuade unionized workers to accept deep concessions in a relatively stable economy.

Peoria, Illinois-based Caterpillar said on Friday the closing is taking place because the cost structure of the operation is not sustainable. A contract with Electro-Motive Canada workers in London expired December 31, and Caterpillar had been looking for wage and benefit concessions from the CAW.

Electo-Motive was acquired by Caterpillar for $820 million in 2010 and is a part of its Alabama-based Progress Rail Services unit, which competes with General Electric Co and Bombardier Inc. Workers at the London plant have been locked out of the plant since the beginning of 2012 due to the contract dispute.

About 200 people are employed in salaried jobs at the London operation. Those employees are expected to help wind down operations following Friday's decision, but it is unclear how long they will continue working for the company.

The union is negotiating severance deals for the hourly workers, CAW President Ken Lewenza said Friday.


"It is regrettable that it has become necessary to close production operations at the London facility," Caterpillar said in a news release. "Progress Rail's global manufacturing network assures its customers that delivery schedules will not be impacted by this decision."

Electro-Motive makes diesel-electric locomotives, and has facilities in Mexico and Illinois, in addition to London.   Continued...