Caterpillar, EMD, unions, and nonsense

Caterpillar bought EMD, the former General Motors subsidiary that is one of the world's foremost manufacturers of diesel-electric locomotives, back in July 2010. They immediately started construction on a locomotive plant in Muncie, Indiana, on the site of a former Westinghouse transformer plant that had a gigantic building with a rail spur already running through it (with doors big enough for the biggest of locomotives to go through it) and enough open land behind it to build sheds and tracks for testing of the locomotives. They had multiple reasons to do this:

1. Buy American mandates on the part of U.S. transit authorities, the same reason why Bombardier is forced to maintain a facility in Plattsburg, NY.
2. The fact that GM had sold off the LaGrange IL locomotive assembly facility (EMD's original U.S. assembly facility ) many years before to a trucking firm that had demolished the original buildings, so there was no ability to produce locomotives there,
3. The availability of this huge assembly plant for cheap -- it had been shuttered since 1998, and Westinghouse was eager to quit paying taxes on it.
4. The proximity of Muncie to existing Caterpillar and EMD parts suppliers
5. The extensive rail network coming in and out of Muncie from all directions, making it easy to get parts into Muncie and get assembled locomotives out to customers.
6. The availability of workers -- Muncie had long been a railroad center, and there were a large number of railroad workers in Muncie with experience in repair of EMD equipment who could easily be turned into assembly line workers
7. The obsolete nature of the London, Ontario plant, which could not be renovated to modern standards because it was EMD's only facility and was operating at capacity, due to its age and configuration it was very expensive to operate and could not be fixed short of shutting it down and rebuilding it entirely. Which could only be done by building a new facility capable of building as many locomotives per month as the London plant built.

The net result of all this was that a) the Muncie plant was built, taking approximately one year to build and with the first locomotives rolling off the end of the line in October 2011, and b) it had more than sufficient capacity to build as many locomotives as EMD needed to build. At which point the London, Ontario plant becomes surplus, with the inevitable result -- the plant is now closed.

Please note the *timing* on all the above. The Indiana "Right to Work" union-busting law was passed last month. Construction on the Muncie plant started in September 2010. So, uhm, what is the relationship between the two? Hint: None. Nada. Zero. Zilch. It had absolutely nothing to do with Caterpillar's decision to build in Muncie, because it hadn't even been proposed then. So the CBC even mentioning that law in conjunction with EMD is nonsense, the sort of thing I'd expect from a Faux News story, not a supposedly reputable journalistic outlet.

Now, the way Caterpillar set about closing the Ontario plant -- by proffering a union contract that they knew wasn't going to be accepted, so that the contract would expire and thus they could shutter the plant without having to pay out the severance pay required by the contract -- was pretty shitty. They should have just bit the bullet and taken the one-time cost of paying everybody the severance pay they were owed under the union contract. But that plant was toast, period, from the moment Caterpillar started work on the Muncie plant. It was simply too small, too run-down, and too expensive.

-- Badtux the Business Penguin