The company that owns the locked-out Electro-Motive plant in London, Ont., has decided to close the plant permanently.

Progress Rail Services Corp., a subsidiary of U.S. construction equipment conglomerate Caterpillar, announced "it is regrettable that it has become necessary to close production operations at the London facility," in a release on Friday.

The company locked out 450 workers from the facility on Jan. 1. Costs were the main factor in the dispute, with the company pushing certain employees to take a 50 per cent pay cut.

"The cost structure of the operation was not sustainable and efforts to negotiate a new, competitive collective agreement were not successful," the release said.

Acrimonious dispute

The company said it is in the process of notifying employees of the decision.

Politicians in Ottawa were quick to react to the move, with high-profile Liberal MP Ralph Goodale suggesting Ottawa needs to "get the best out of what is now a very bad situation."

"The government owes the workers here a substantial amount because … there were particular incentives and advantages offered to this company and the net result is that 450 jobs have been lost," Goodale said.

On the governing Conservative side, Shelly Glover, the parliamentary secretary to the minister of finance, said, "We do sympathize with those who have lost their jobs, but we are creating jobs."

The closure has sent shockwaves through the organized labour movement across Canada.

Rick Laporte is the president of Canadian Auto Workers Local 444, which represents nearly 5,000 unionized Chrysler employees in Windsor, Ont., about a 90-minute drive west of London.

"This is something that is certainly new to us in the labour movement. Here's a company that just made billions of dollars in profits — record profits," Laporte said.

"There is no reason to do what they did. They just arbitrarily decided, 'That's it, we're going to do what we're going to do,' which is crazy. Even more disturbing that the government sits on the sidelines and absolutely does nothing."

CAW President Ken Lewenza called the decision a "callous move," and blamed the federal government for failing to require that companies commit to Canadian jobs when making corporate takeovers.

'The cost structure of the operation was not sustainable.'—Progress Rail's press statement

"The Stephen Harper government is entirely in the pocket of the corporate elite and has shown absolute disregard for Canadian workers and their families," said Lewenza.

"I am disgusted at this government and its indifference towards the suffering of workers and the unemployed. The Harper government was elected by Canadians, but only seems able to represent multinational corporations."

Caterpillar revealed Jan. 26 it had record-high sales and a profit of nearly $5 billion US last year, up 83 per cent from $2.7 billion US in 2010. Profit per share was $7.40 US, up 78 per cent.

The move comes as Electro-Motive is preparing to host a jobs fair in Muncie, Ind., this weekend. Progress's website is advertising several open positions at the Indiana facility.

"The jobs will require specific skills/experience in welding, mechanical, electrical and/or general parts assembly for locomotives, as well as painting of locomotives," the website says.

Union locals in the London area had long feared Progress intended to move the locomotive manufacturing to a facility in the United States.

On Wednesday, Indiana Gov. Mitch Daniels signed a bill into law enacting so-called right-to-work legislation that effectively bans mandatory union membership.