December 31, 2011 / 4:02 PM / 6 years ago

Caterpillar unit rejects CAW contract extension request

(Reuters) - Caterpillar Inc said a Canadian Auto Workers (CAW) labor contract that expires Saturday at midnight will not be extended despite the union’s request for two more months of talks and a mediator.

<p>Canadian Auto Workers (CAW) president Ken Lewenza speaks at a news conference after CAW reached a tentative labour agreement with Air Canada in Toronto, June 16, 2011. REUTERS/Mark Blinch</p>

Caterpillar’s Electro-Motive Canada subsidiary has been negotiating a new labor contract for locomotive production workers at a plant in London, Ontario with the CAW for several months, but the parties have run into a road block over terms. On Friday, union members authorized a strike against Caterpillar’s operation if the company imposes unilateral changes.

In a statement emailed to Reuters, Caterpillar’s subsidiary said it received a request for a two-month contract extension from the CAW in order to make time for mediation. Caterpillar said it already granted a six-month extension earlier in 2011 and “does not see the value of any further extension.”

It is unclear whether the dispute will lead to a labor stoppage or trigger the unilateral contract changes that the union has said it fears. CAW officials were not immediately available for comment.

Electro-Motive is part of Caterpillar’s Alabama-based Progress Rail Services division, which competes with General Electric Co and Bombardier Inc. Caterpillar said it has taken steps to ensure Electro-Motive can continue fulfilling orders regardless of what happens in negotiations with the CAW.

Electro-Motive said it “indicated to the CAW that while open to discussions with a mediator, any extension of the current collective agreement will not be considered.”

The CAW has flagged two major concerns in its dealings with Caterpillar’s subsidiaries.

The union has said the company wants to cut pay and benefits by more than 50 percent, and eliminate pensions. CAW officials also see Caterpillar’s move to bulk up Electro-Motive operations outside of Canada as a prelude to a reduction in the Ontario operations, including a potential plant closure.

The CAW represents more than 400 workers in London, Ontario.

“Throughout this negotiation process, which began seven months ago, Electro-Motive Canada has made it clear to the CAW that the company’s ability to be cost-competitive, enhance product quality and meet on-time delivery commitments is critical,” the company said in a statement.

The company said Electro-Motive Canada has offered proposals since May and said the CAW has “not addressed any of the market competitive issues” it faces. The CAW has only offered “conflicting positions,” including refusing any concessions and then allegedly shifting course by offering to consider some non-wage and non-benefit concessions.

The company said the CAW’s “allegations of a plant closure” and suggestion that there will be replacement workers utilized are “unfounded.”

Reporting By Lynn Adler and John D. Stoll

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