Caterpillar: Key Policy Demands

Speaking Points

The disaster at Caterpillar reflects an all-around failure of government policy as it relates to protecting Canadian jobs, and protecting Canadian workers.

In addition to pursuing the company for fair treatment of its workers in London, and fair responsibility to the whole Canadian economy, we must also utilize this moment to push for important policy changes so that we don’t see this awful story repeated over and over again.

We are pushing for important changes in several areas: regulating foreign investment, promoting fair international trade, strengthening labour laws to reflect the painful new reality of labour relations, and making sure companies like Caterpillar make a fair contribution to our tax base.

Here are our key policy demands, which will be described fully in submissions to relevant government leaders in the coming days:
  1. Changes to the Investment Canada Act
    1. Close loopholes that allow many takeovers (like EMD) to avoid review entirely: foreign-foreign acquisitions, size threshold.
    2. Define the “net benefit” test better, so Canadian interests are truly measured and protected.
    3. Ensure more transparency in the whole process, including stakeholder input (from workers & communities affected by takeovers).
    4. Define the explicit power of government to attach & enforce binding commitments on foreign purchasers (including re-purchasers).
    5. In the Caterpillar case, ask the federal government to disclose the company’s 2010 application under the ICA for public inspection of the information and claims contained in that application; intervene retroactively to annul the sale if those commitments and information have been proven false.
  1. Impose Tariffs / Offsets on Caterpillar
    1. Caterpillar benefits from unfair trade subsidies in the U.S. & Mexico (including state & municipal subsidies to open the Muncie plant, right-to-work laws in Indiana which will suppress wages, Buy America supports which give Muncie an unfair advantage over London, and violent repression of trade unionists in Mexico—including the leader of the union at Bombardier’s locomotive facility there, who is currently in hiding in Canada for his own protection!
    2. These subsidies distort normal competitive decisions and relationships, to the detriment of Canadian facilities and jobs.
    3. The Canadian International trade Tribunal has power to impose countervailing duties in industries where trade and investment flows are distorted by unfair practices.  We petition the government and the CITT to impose countervailing duties on Caterpillar products.
    4. At the same time, government should simultaneously negotiate with Caterpillar on “offsets” that it could provide to the Canadian economy (starting with keeping the London plant open) in order avoid this tariff.
    5. Funds collected through the tariff should be used to support local economic development efforts in London (in effect, cleaning up the “mess” left behind by Caterpillar).
  1. Labour Law Reforms / Industrial Inquiry Commission
    1. Many Canadian jurisdictions (federal, Manitoba, Newfoundland, others) provide for government intervention (up to an including referral of disputes to binding arbitration) to settle long or destructive disputes.
    2. Such legislation could have altered the outcome of the Caterpillar dispute (even though it lasted only about one month), by preventing Caterpillar’s plan to “starve out” its Canadian workers through a long lockout.
    3. New provisions in the Labour Relations Act are also required to prevent companies from precipitating lockouts as a way of evading contract obligations, and allowing them to impose terms unilaterally on workers the day after the contract expires.  If a company does not want to abide by the terms of the previous agreement, it must lock out the workers.  And if it then takes actions during a lockout (such as workplace closure), it must be governed at least by the terms of the previous collective agreement.
    4. We also ask the McGuinty government to strengthen ESA provisions regarding severance pay: by providing more severance, and providing it from the first year of employment (instead of waiting 5 years)
    5. We also ask the provincial government to establish an Industrial Inquiry Commission as empowered under Labour Relations Act (similar to the recent Voisey’s Bay inquiry in Newfoundland, which reviewed that dispute, subpoenaed witnesses, and made far-reaching recommendations for changes in Newfoundland’s labour law).
  1. Demand Caterpillar Pay Back Tax Breaks
    1. Caterpillar/EMD has benefited from at least 5 federal government fiscal supports: accelerated CCA for locomotive purchases, corporate tax cuts, EDC/CCC support for exports, new business from stimulus projects, R&D tax credit.
    2. We will develop a simple financial model to estimate the cumulative value of those benefits
    3. We will call on Finance Minister Jim Flaherty (in a pre-budget submission) that he must find ways to recoup those benefits from Caterpillar, out of respect to the workers and taxpayers of Canada.