The Toronto Star, has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.
Recession-ravaged London, Ont., needn’t lose its status as one of the world’s leading locomotive manufacturing centres.
Yes, that is the plan revealed Friday by U.S.-based Caterpillar Inc., owner of London’s 90-year-old Electro-Motive Diesel Inc. (EMD). Caterpillar has abruptly shut down the firm just 18 months after buying it. Cat is poised to ship EMD’s specialized equipment and technology — intellectual property developed in London over several generations — to low-wage jurisdictions outside Canada. Naturally, Caterpillar presents this outrage as a fait accompli.
Already there are calls for a government inquiry to determine how such industrial rape can be prevented in future. A good idea. But we also should and can quash Cat’s plans for EMD.
When it paid a bargain $820 million for EMD in 2010, Caterpillar appeared to be getting a mere factory. What it actually got its hands on is one of the global industry’s few major locomotive manufacturers. (EMD’s sole major North American rival is General Electric Co.) EMD is richly endowed with made-in-Canada technology and boasts the largest customer base in the world.
At every turn in this humbling saga for Canada, Caterpillar has acted in bad faith.
It stretches credulity to imagine that Caterpillar acquired EMD less than two years ago with no thought of ending locomotive manufacturing in Canada.
After all, the Peoria, Ill.-based Caterpillar, the world’s largest maker of construction and mining equipment, has for years been shifting jobs to lower-cost jurisdictions. That’s precisely its intention with EMD.
But if Caterpillar had even hinted at using that playbook with EMD, its planned purchase would have been rejected for lacking “net benefit” to Canada. Ottawa blocked the planned foreign takeover of Potash Corp. and a proposed U.S. acquisition of the aerospace division of MacDonald Dettwiler and Associates Ltd., maker of the iconic Canadarm.
Creating what it hoped would be a plausible excuse to kill one of London’s few remaining large private-sector employers, Cat soon after taking possession of EMD presented its London workers with a proposed new contract. EMD workers were asked to accept a 50 per cent cut in pay, to an average $16.50 an hour, and their benefits would be eviscerated.
To put this in perspective, when governments bailed out General Motors Corp. and Chrysler Corp, they also demanded workers accept pay cuts of roughly 50 per cent. Employees of the Detroit Three automakers are now paid about $42 an hour, or what Toyota Motor Corp. and Honda Motor Co. Ltd. pay their North American and Japanese workers.
By contrast, the relocated EMD jobs will pay $15 to $19 an hour for high-skill work akin to auto-making.
When EMD employees predictably balked at being stripped of a decent living wage, Cat made clear that its offer was take-it-or-leave-it. On New Year’s Day it locked out workers. Five weeks later, it fired them. Which meant that previous months of “bargaining” with the employees’ union, the Canadian Auto Workers, had been a farce.
In shutting down EMD, Cat didn’t tender the customary warning to the union or to local government, Queen’s Park or Ottawa — from which a Cat-owned EMD only last year received a $5 million federal subsidy hand-delivered by Stephen Harper during a factory visit.
For the rest of this column, please go to the Toronto Star website: http://www.thestar.com/business/article/1126643–olive-capitalism-s-ugly-face-in-london-ont