The local paper asked their online readers who they blamed for the closure of the decades old plant: Caterpillar, the union, or the politicians? I understand why the paper asked this, but I think the question deflects attention away from the real story.
I think the closure of the London plant was already in the cards before Caterpillar even officially entered the picture. CAT had shown interest in Electro-Motive Diesel for years but it was Greenbriar, Berkshire et al. that beat out CAT to buy the EMD division from the failing General Motors. The mix of private equity investors picked up the gem in the not-so-rough for $201 million in 2005.
EMD president and chief executive officer John S. Hamilton
appeared before a House Transportation Subcommittee looking at high speed rail in April, 2010, he boasted:
"EMD was a floundering subsidiary of GM, with a very questionable future. Today, EMD has witnessed record revenues, earnings, and investments. Exports have doubled. Factory productivity is up 20 percent."
He went on to say if EMD was given the chance they "would make most all of the critical technologies [in La Grange, Indiana]. We have the equipment. We have 1,600 American workers ready to do this work and we would recall workers currently on lay-off to meet the additional workload. In accordance with Buy America, we announced last week a search for a facility in which to perform final assembly." [This would be the Muncie plant opened in October 2011 but still only in limited operation.]
In 2010 the equity group sold EMD to Progress Rail, a wholly owned subsidiary of Caterpillar Inc., in a sale with a total value of more than $900 million. Hamilton stayed on as CEO for almost three months after the sale, leaving in late August. There was continuity in management during the transition to Progress Rail/Caterpillar control.
The new plant was almost perfect for assembling locomotives. With some 740,000 sq. ft.
of floor space, it is almost 50 percent larger than the London plant. At a glance, the former transformer factory looked as if it could be a replacement for the aging London operation.
When the contract expired in London, the company, according to Tim Carrie, President of CAW Local 27, surprised everyone "when they gave us an extension." The extension gave the union workers six more months of work at full wages and benefits, it allowed some to take advantage of early buyout provisions and allowed others to enjoy pension enhancements.
The extension also gave the company time to hurry the new Muncie, Indiana plant into production. The plant officially opened in late October of 2011. Although some dispute it, it appears the plant has already produced an engine or two.
What the six month extension didn't provide was any meaningful bargaining. According to Carrie the company's "approach was designed to destroy the collective agreement." Pat Polisak, who worked at the London plant for 23 years, said he faced a cut of about 65 percent when cuts to hourly pay, benefits and pension were all factored in. He said he simply couldn't agree to such draconian measures. He said Progress Rail and Caterpillar were threatening "to completely rape the workers' pensions."
The Electro-Motive workers faced a Hobson's Choice: a heads you lose, tails you also lose decision. They were damned no matter what they did. So, they didn't do a thing. They gave their union a solid strike mandate but the union refused to act. There would be no strike. The company responded by locking the workers out.
Now, five weeks later, just about a year and a half after Progress Rail entered the picture, the plant is closing. Many believe Caterpillar never wanted the London facility. They may not want the La Grange, Illinois facility either. Those workers are working without a contract at the moment. According to many, what CAT wanted was EMD's industry-leading technology, technology of great value to CAT.
Some of the EMD workers have already landed new jobs. Derek LeDuc, a welder at the plant for seven years, is moving his family to Edmonton, Alberta. There is little to keep LeDuc in London. His wife lost her job in August. He is taking his daughter and son and moving to where employers are "not afraid to pay their skilled trades what they are worth."
A lot of the EMD workers are not as lucky as LeDuc, if lucky is the right word. It's pretty certain LeDuc's 15-year-old daughter and his 12 year-old-son do not consider their dad, nor their move west, lucky. Ripping up one's roots is never easy but for young people it is especially hard.
But what of the workers in Muncie — the workers being offered jobs for reportedly as little as $12.50 an hour? Are they lucky?
Most think Mexico or China when they think of low paying places. Now, Muncie, Indiana is being added to the list along with many southern States. David Olive, of The Toronto Star, looked at this development in an article: America, the world's sweatshop
Now, for a quick look at some other companies closed or hemorrhaging jobs since being taken over by interests outside London. This is but a partial list.
• McClary appliances, founded in London in 1847, merged into Camco and moved to Hamilton. In 2005 was swallowed by Mabe, a Mexican company and Latin America's biggest manufacturer of home appliances.
• McCormick bakery, founded in London in 1858, closed by Beta Brands in 2008. The McCormick name now appears on candies made in Quebec.
• London Life, founded in London in 1874, taken over by The Great-West Life in 1997. Many jobs moved to Winnipeg.
• The London Free Press, founded in London in 1852, bought by Sun Media in 1997, which was bought by Quebecor Media Inc. shortly thereafter. Many jobs have been outsourced, some reportedly to Mexico.
• Canada Trust, with London roots going back to 1872, taken over by the TD Bank Financial Group in 2000.
If the London story was unique, it would not be worth much of a mention. But this story is far from unique. Take Bick's, the Canadian pickle maker that employed hundreds in Dunnville, Ontario. It fell into the hands of the American Smucker Corporation and has been closed, with production moved to the States.
In the States, a modern facility with the latest automated equipment, is allowing Smucker to cut jobs in the States as they increase production. Since 2001, Smucker has acquired Folgers coffee, Jif, Crisco, Pillsbury, Hungry Jack, Eagle Brand condensed milk and Europe's Best Inc., a private company headquartered in Montreal.
This is not a race to the bottom but a forced march at double time to the bottom.