A race to the bottom

By Anne Jarvis
The Windsor Star 
January 11, 2012

If you worked for a gigantic and extremely profitable company, and that company, in the middle of negotiating a new contract with your union, abruptly and unilaterally took an axe to your wages, would you object?

Of course you would.

That's what Caterpillar Inc., which owns Electro-Motive Canada in London, did. Electro-Motive tabled its final offer. The Canadian Auto Workers rejected it. The company locked out the workers. On New Year's Day. Happy New Year.

The final offer: slashing wages by 55 per cent. The majority of the 465 workers, who manufacture locomotives, were making $34 an hour.

That would plummet to $16.50 an hour. Could you support your family on $16.50 an hour? You're darn right it would be hard.

And it doesn't stop there. Cost-of-living adjustments were eliminated. Retirement benefits were eliminated.

Health care benefits and pensions were cut.

It's so preposterous that the New York Times, Wall Street Journal, Chicago Tribune and even the Australian Herald have all carried the story. By the way, these workers' wages were frozen under the last two contracts. They haven't had a raise in six years. They took concessions in vacation and health care then, too.

Caterpillar, which acquired Electro-Motive in 2010, is the biggest manufacturer of construction and mining equipment in the world. It raked in record sales and profits in the third quarter - profit of $1.14 billion, a 44 per cent increase in quarterly profit. Backlogged orders were at a record high. It hired 4,800 people. And it predicted sales will grow up to 20 per cent in 2012.

"We're having a great year in 2011, and 2012 is shaping up to be better," Reuters news service quoted CEO Douglas Oberhelman.

Oberhelman made $10.6 million in 2010, according to Forbes.

Yet my colleague, Chris Vander Doelen, calls the CAW's reaction to Electro-Motive and to Chrysler CEO Sergio Marchionne's demand in November for concessions (Marchionne repeated this week that labour costs in Canada must fall to match those in the U.S.) "hard-line." He calls it "playing chicken" and "sabre-rattling," an "allor-nothing stance."

It is all those things - by the company.

This company has demonstrated monstrous disdain for workers.

Essex MP Jeff Watson joined the lecture against the union, calling it's reaction "insane."

Could Watson support his five children on $16.50 an hour? Fortunately for him, he doesn't have to worry. As an MP, he makes at least $157,000 a year. And when he's no longer an MP, he'll get one of the most lavish pensions in the country, indexed to inflation, paid for by taxpayers, including the very workers he thinks should shut up and accept a rich corporation slashing their pay in half.

Watson cites the European economy on the brink, the stilted and fragile recovery in the U.S. and weak consumer confidence.

There's also this: Employers have all the cards now. Membership in private sector unions has declined, high unemployment continues, and the federal government ordered or threatened to order back to work employees at Air Canada and Canada Post last year. With advantages like these, employers like Electro-Motive are going for the jugular. Like Marchionne, Caterpillar says wages and benefits at its U.S. plants are lower. This is starting to look like a race to the bottom. And with 9.6 per cent unemployment in London, who can afford to fight?

"It's not like we haven't bargained responsibly," Tim Carrie, president of CAW Local 27, which represents the workers, said in an interview. "We recognize there are difficult economic conditions. We're not living in a box."

Workers at Electro-Motive just want to hang on to what they've got, he said. Is that so outrageous?

What's outrageous is that Prime Minister Stephen Harper went to the plant in 2008 to announce $5 million in tax breaks for companies that buy Electro-Motive's locomotives and a $1-billion tax break on investment in industry. Low taxes are the best way to ensure jobs in Canada, the government says. Workers remember him shaking their hands and telling them they had a great future.

In 2010, when U.S.-based Caterpillar bought Electro-Motive, the government vetted and approved the acquisition.

Eighteen months later, it doesn't look like Caterpillar is much interested in keeping Electro-Motive here. And where is the government now? That's a good question.

The government doesn't intervene in the actions of private companies, federal officials have told the media. Except it did, last year, in the case of Air Canada, a private company.