December 22, 2011

Union demands Industry Canada review Caterpillar acquisition of London, Ontario assembly plant

Citing concern over jobs at a London, Ontario locomotive assembly plant, the Canadian Auto Workers wrote Wednesday to Prime Minister Stephen Harper asking the federal government to review the acquisition by construction equipment manufacturer Caterpillar Inc. (NYSE: CAT) of Electro-Motive Diesel Inc .

Peoria, Illinois-based Caterpillar, which reported sales of US$4.9 billion of construction equipment in the three months ending Sept. 30, acquired Electro-Motive Diesel in 2010.

Although EMD is based in LaGrange, Illinois, a final assembly plant is on Oxford Street east of Clarke Road in London, Ontario.

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In a letter Dec. 21 to Harper, CAW president Ken Lewenza stated: “ under the Investment Canada Act, notification of the acquisition of Electro-Motive was filed with the Minister of Industry, which was reviewed and approved. A receipt was issued in September 2010 declaring the investment required no further review.”

However, Lewenza expressed concern that Caterpillar is opening other Electro-Motive assembly plants in the U.S.

In his letter, Lewenza wrote: “Will you instruct the Minister of Industry to use his powers under the Act to issue a demand and retroactively order a full review of this acquisition? Will you instruct your Minister to issue a demand to Caterpillar requiring them to declare their intentions for the London operations? Will your Minister negotiate investment and employment undertakings with Caterpillar to safeguard the future of these operations?”

Lewenza claimed: “Caterpillar is now coming to London workers demanding to cut wages in half and eliminate the pension, despite the workers’ offer of a status quo agreement.”

On its balance sheet for Sept. 30, recorded in its 10-Q filing with the U.S. Securities and Exchange Commission, Caterpillar recorded a "liability for postemployment benefits" of US$7.4 billion.

The letter is published on the Canadian Auto Workers website

“With a regional unemployment rate of 9.8 per cent, the second highest in the country, every job counts,” Lewenza wrote of the London, Ontario area.

For more analysis of the labour market in the Daily Commercial News, please see Canadian employment faltered in October while U.S. hiring continued by Alex Carrick, chief economist of Reed Construction Data Canada.

DCN DIGITAL MEDIA

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