Electro-Motive: Harper, McGuinty play politics

OAKVILLE, Ont.—Premier Dalton McGuinty says Canada’s “outdated” foreign investment laws are to blame for the Electro Motive plant closure in London, Ont. last week.

U.S.-based Caterpillar, which is planning to close the Electro-Motive plant, never had any “sincere interest” in staying in London after it bought the factory, the Ontario premier said in a speech to the Oakville Chamber of Commerce.

“Eighteen months ago, when Caterpillar bought that plant, they had to get the approval of the federal government under an outdated law called the Investment Canada Act,” he said.

“I believe there's something fundamentally wrong with a federal law when it allows a Canadian plant to be bought and stripped clean in short order, throwing Canadian families out of work.”

The Harper government acknowledged the need for change a long time ago, “but they haven't done anything about it,” he added.

The premier struck a more conciliatory tone after the speech, insisting he's not trying to lay blame. Rather, Harper should draw a lesson from the experience and review the act.

“I think it's really time we did that and see if there is a better assessment we can bring to potential investors to determine the sincerity of their commitment in that business in that community,” he said.

But the federal government said a month ago the takeover was never looked at by Investment Canada because it fell under the $300-million threshold.

A spokeswoman for the Prime Minister's Office said the government sympathizes with the workers, but there was nothing Ottawa could do.

“This issue fell entirely within the powers of the McGuinty government, there was no ability for the federal government to intervene,” spokeswoman Sara MacIntyre wrote in an email.

That's not true, McGuinty said. What happened at Electro-Motive wasn't a labour relations issue, “and we shouldn't pretend otherwise.”

The 450 employees had been asked to take a 50 per cent pay cut to help keep the plant open. The CAW union members rejected the proposal, prompting the company to lock them out Jan. 1.

Caterpillar subsidiary Progress Rail Services said the cost structure at the London plant was unsustainable, even though Caterpillar last week reported a 58 per cent increase in its quarterly earnings with a record profit of nearly $5 billion.

It bought Electro-Motive for US$820 million in cash in 2010.

“In 21 years (of public service), I have never heard of a business—domestic or international—that said to an employee group, 'We're going to cut your wages in half, this is a take-it-or-leave-it offer',” said McGuinty.

“That's a 'We're getting out of town' kind of an offer to me.”