Electro-Motive plant shut by U.S. owner

[Canuckistanian]

The company that owns the locked-out Electro-Motive plant in London, Ont., has decided to close the plant permanently.

Progress Rail Services Corp., a subsidiary of U.S. construction equipment conglomerate Caterpillar, announced "it is regrettable that it has become necessary to close production operations at the London facility," in a release on Friday.

The company locked out 450 workers from the facility on Jan. 1. Costs were the main factor in the dispute, with the company pushing certain employees to take a 50 per cent pay cut.

http://www.cbc.ca/news/business/story/2012/02/03/electro-motive-plant-london-close.html

You might remember that this is Caterpillar, who wanted to slash unionized wages by 50%. The union said |Hell, NO| and drew their line in the sand.
So Caterpillar closed the factory and is moving the jobs to Muncie, Indiana, where the wages will be LESS than half.

Oh, and did I mention that Caterpillar is one of the most PROFITABLE corporations in the world right now, with over a billion dollars earnings in the past 3 months?
I heard a radio interview with an economist who said "Caterpillar hates unions more than they hate profits"

And yes, that's Stephen Harper, our glorious leader in 2008, announcing a $5 million TAX BREAK for Caterpillar when the plant was taken over by Caterpillar.

[baldguy]

1. Lock-outs should be illegal.

[Brickbat]

2. I'm so sorry to see this. Looks like those jobs are about to be outsourced to

-- where else -- Muncie.

[dmallind]

28. Strange - most people on DU always seem to want US companies to build in the US

Caterpillar is a US company.

[Brickbat]

30. Don't know what to tell you.

ETA: I will always object to U.S. workers being used to bust unions, lower wages and take away benefits, no matter where they are.

[joshcryer]

3. And this is where you occupy the factory.

But that would require the use of violence, unfortunately.

[Canuckistanian]

4. The mayor of Muncie sent condolences to the workers in Canada

But he welcomed the new jobs to his town. Probably with ANOTHER promise of tax breaks (until the jobs are ultimately outsourced to Mexico).

[carla]

5. Changing any system

as corrupt as the current one (disaster capitalism), will require the use of directed force; violence. Count on it and prepare for the worst.

[Katashi_itto]

26. I agree, as much as I hope OWS achieves it's goals. Its going to take more than nonviolence.

The 1% has to learn to fear us. The French revolution taught them to fear us for several generations. Looks like they (1%) have forgotten the lesson.

[dmallind]

29. It also lead to a war-mongering emperor.

[jschurchin]

6. I feel for my Union brothers and sister's at Electro-Motive.

More good paying job's down the shitter for profit.

I have to be honest though. I work for a large railroad, and have worked on both Electro-Motive and General Electric locomotives. GE makes a FAR superior product, and they are built with Union labor in Erie Pa.

Not that this is a put down against the working people who assemble the unit's. They do a fine job with what they are given. The problem lies in management, and engineering. They are still using the same engine they have used since the early '80's. And they wonder why the government forces the railroad's to buy their product.

Didn't know that, huh? It's true, GE would have put EMD out of business years ago, but the government stepped in and FORCED the major railroads to buy unit's from EMD. They were afraid that having only one manufacturer would monopolize the market, true that. However, it allows EMD to continue producing a inferior product and stay in business.

Again to my Canadian Union borthers and sisters, sorry about the loss.

[FarCenter]

7. It was General Motors Electro Motive Division until 2005

GM sold it to a partnership led by private equity firms Greenbriar Equity Group LLC and Berkshire Partners LLC.

Cat only acquired EMD in 2010, and moving the final assembly to Muncie looks like a good move.

It looks like they now use Cat diesels.

Progress Rail Announces Grand Opening of Muncie, Indiana Locomotive Assembly Operation
http://www.prnewswire.com/news-releases/progress-rail-announces-grand-opening-of-muncie-indiana-locomotive-assembly-operation-132773508.html

[Jazzgirl]

8. I work for a large railroad tgoo jschurchin.

Over the years I had heard the EMD units were pretty crappy but the GE units were quite good. I'm sure we still have a lot of these units but I think we are mostly buying GE now.

[iverglas]

9. because of this gawdawful stinking new board system

a search of DU did not produce this thread for me, so I started one myself.


I just wanted to reply to this post in that thread.

http://www.democraticunderground.com/101444479#post6

SadPanda
6. Why should an American Company pay Canadian workers twice as much as American workers?

"... The wage concessions the company was seeking from CAW members earning up to $34 hourly would have put pay levels on par with its American operations. "

Considering the equal value of the current currency exchange why should an American company pay twice as much for a Canadian worker to do exactly the same job? I'm sorry, I'd rather have 500 jobs in America paying $17-$25 an hour than the same company paying double in Canada.

your attitude doesn't surprise me, although perhaps it was intended to do so.

The problem for you is how your own ignorance hurts you.

Jobs like these in Canada are what provide a country's consumers and taxpayers, who are needed in order to maintain an economy -- a healthy(er) economy like Canada's, and a healthy population like Canada's.

The company -- the plant, the intellectual property, the jobs, the workers -- is CANADIAN.

Why should a company be abetted by USAmerican governments in buying a company in another country, stripping the company's assets out of that country, eliminating several hundred jobs in that country, and moving it all to the USA?

What difference does the nationality of the company doing it make?

Last month, Caterpillar reported annual profits rose 83 per cent to a record $4.9 billion.

The corporation can make more profits by looting Canada's economy ONLY because

(a) Indiana gave tax concessions

(b) Indiana has abolished labour rights

That isn't an economy in the state of nature, you do realize. That is an economy organized by a right-wing government for the benefit of a tiny fraction of the population, at the expense (through taxes and a low standard of living) of the rest.

Just in case you weren't understanding how these things work.

[sce56]

10. Had not followed the EMD's for quite some time used to be known as Electro-Motive Division of GM.

I used to operate the EMD's we had 4 skid plant that were 3 1.5MW units and the 4th skid was the control unit. I just heard a few weeks ago they took them out of the Army inventory but the SeaBees still have theirs. Here is a video of them being sold out of the Army Rail shop in Hill AFB Utah.

http://bcove.me/1tm2ceja

http://www.globalsecurity.org/jhtml/jframe.html#

[iverglas]

11. forgive me, but

Last edited Sat Feb 4, 2012, 10:22 PM - Edit history (1)

How did this become a thread about whose choo-choos are better?

Caterpillar obviously wanted what Electro-Motive had.

It got hold of the shiny toy it wanted, and it is taking it away, because it is bigger and badder than anybody else.


http://www.thestar.com/news/article/1125920--walkom-caterpillar-closing-part-of-a-coordinated-attack-on-unions?bn=1
"How Canada let Caterpillar strip a plant clean"

http://www.680news.com/news/local/article/327156--opposition-mps-calling-on-caterpillar-to-refund-tax-breaks-after-closing-london-ont-plant

[Honest Turtle]

12. The other thread was more on point

I agree the other thread was way more on point. This is about union busting and wage busting. I am currently looking at moving to Canada to work because our economy in Florida is in the toilet.

I appreciate quality as much as the next guy, but that is way off topic.

[iverglas]

13. that is exactly what the story is about ;)

And how it works more than one way!

Not all jobs are drained from the US to some other low-wage, anti-labour jurisdiction.

[cstanleytech]

14. My question is while caterpillar might be earning profits how was this specific plant doing?

Was it costing them money or earning them a profit?

[iverglas]

15. they're the ones that bought it less than 2 years ago

Would have been kind of moronic to buy a losing proposition.

I don't believe they've claimed they were losing money -- simply that once the bill was signed in Indiana, they could make a fuck of a lot more by going there and paying shit wages and getting more tax concessions.

Surely the idiocy of this -- the pure race to the bottom-ness -- is obvious.

Jurisdiction A eliminates labour protections and grants tax concessions to attract Corporation X (among others).

Corporation X says "Yes, please", and shuts down its operations in another jurisdiction and moves to Jurisdiction A.

Jurisdiction B eliminates more labour protections and grants bigger tax concessions ...

[FarCenter]

16. They bought the maintenance work and the customer list

Look at the history. It's a mismanaged business that GM has been milking and running into the ground. GM unloads it to some private equity partners. They start shutting and stripping the junk off the company. Meanwhile, they start buying Cat diesels instead of building their own engines. Then they sell the business to Cat.

As soon as Cat closed the deal, Cat started to build the Muncie plant. It's pretty clear they never intended to keep the Canadian plant open. It was done for as soon as Cat had Muncie open.

[iverglas]

17. I'm sorry, but this makes no sense to me

If the problem was that it was mismanaged by the previous owner, how would proper management not have solved the problem?

If the are, as they are, moving the plant physically to Indiana, as I understand it ... well, why? Why is it a good thing in Indiana and not in Ontario?

Yes, it was clear from very early that Caterpillar planned to close the plant.

The question (from your perspective) remains: why did it buy the plant?

To get the maintenance contracts and customers?

So in fact it was valuable as a going concern, if it had that work and those customers.

What reason are you proposing to have been the reason for closing the Ontario plant and moving the assets, tangible and intangible, to Indiana?

To some of us it seems rather obvious: tax concessions and absence of unions / labour laws.

[cstanleytech]

18. My question wasnt why they bought it but was it making them money or not?

If the answer is no it wasnt making a profit then I fail to see how any reasonable person can fault them for closing the plant or atleast trying to cut their loses by asking the workers to take a cut in pay.

[laundry_queen]

20. I simply cannot find that information anywhere.

If someone can find me financial statements for that plant I'll gladly look over them.

However, anyone who knows how these companies work, knows that it's likely that they were making a profit (hello, Caterpillar in general had record profits last year). It's equally likely that the bean counters didn't think it was a 'big enough profit'. Meaning, in large companies, they will open whole divisions with a goal of, say 40% gross margin, and if they only get 35% they will shut the whole thing down.

And THAT is why our current system is completely unsustainable without slave wages and continued exploitation of workers and resources.

It really doesn't matter that some jobs at half the wage are better than no jobs, or that Indiana needs the jobs more than London does. Big picture, people. The large companies are bleeding the 'little people' dry. They will play us against each other so they get that extra 5% in gross margin. They will destroy lives, close plants, move jobs overseas (where this plant is probably heading next) and in the mean time taxpayers have subsidized these assholes with tax breaks/incentives so they can pick up and move on to somewhere else (and bleed THOSE taxpayers dry) just as soon as they can make even MORE profit in the town next door.

Race to the bottom.

Until everyone - and I do mean everyone of the 99%ers - stand up against this shit, it will keep happening. Again, and again. And the more you spew crap like, "well, they have a right to move where there is more profit." you are enabling them - you may as well be helping them to lock out those workers.

[cstanleytech]

21. I agree with you that there is an issue with the companies not being paying most of the workers a

Last edited Sun Feb 5, 2012, 05:37 AM - Edit history (1)

fair, living wage however that doesnt mean a company should have to suffer with losing money if a specific plant, store or division isnt being productive and if its costing them more money to run than its taking in and its not an issue of enabling its an issue of basic economics as it only makes sense that if their losing money that they either close said plant, store or division or ask the employees to take a pay reduction because its hardly fair to expect the company to keep open something thats not productive.
I'm not saying that is the case here though of course because like you I do not know if it was losing them money or not but it would be an interesting thing to learn one way or the other.

[iverglas]

23. the question remains

If your suggestions were correct, why did they buy the bleeding thing in the first place??

Every informed observer believes that they bought it in order to aquire its assets and close it down in Canada and move the assets to the US.

It simply is not credible that a company would buy a going concern in 2010 and "discover" in 2011 that it was losing money or was not profitable enough for it.

It is glaringly obvious that it bought the company in anticipation of Indiana doing what it wanted -- the anti-labour legislation, and the tax concessions -- with the plan of looting the Canadian economy of those assets and jobs, all along.

[cstanleytech]

24. I'm not suggesting anything.

As for your questions they are all good ones to but we still dont know.
Though lets assume for the moment that they werent losing money from the plant..............was it illegal for them to close shop still and move to another location under Canadian law?

[iverglas]

25. you may want to look into the history

of foreign investment legislation in Canada. Situations like these are exactly why we used to have it, and the close connection between right-wing governments and the interests of transational corporations (or the 1%, if you will) are the reason we don't, for all intents and purposes, have it now.

Not that a Canadian owner couldn't have done exactly the same thing -- closed a Canadian shop and moved it over the border or offshore. But in this case, the foreign purchase was for that sole reason. Obviously, another danger is a foreign investor buying a domestic operation in order to close it and eliminate competition on the domestic or international market.

Foreign investment is a two-edged sword.

[FarCenter]

22. The Progress Rail susidiary of Cat bought EMD as a whole from the private equity group

Progress Rail had 147 facilities involved in providing maintenance, design, signaling, and other services to the rail industry.

It looks like the main viable business of EMD was servicing and re-powering locomotives at their LaGrange, IL and San Luis Potosi, Mexico facilities. Note that LaGrange was EMD headquarters and had 1.2 million square feet, while London, ON had 500 thousand square feet. Based on other comments on this thread, it appears that EMD locomotives had become uncompetitive, and that it is likely that assembly at London was running slowly. London was also an old facility, and it is unclear how much Cat would have to invest to bring it up to standards. Lastly, locomotives and cars assembled in Muncie can be sold to US publicly funded rail agencies which require equipment made in the US.

[truthisfreedom]

19. All I can say is, Jesus, I'm obviously in the wrong business.

Nuts!

[Posteritatis]

27. Whole lot of union-busting and attempts at same in that city lately. (nt)