Electro-Motive Diesel, which makes diesel-electric locomotives in London, Ont., has locked out more than 400 unionized workers after they refused to take a 50 per cent cut in wages and benefits.

The collective agreement between EMD and the Canadian Auto Workers Local 27 ran out at the end of 2011, and picket lines were set up at 6 p.m. Sunday.

EMD is owned by construction-equipment maker Caterpillar through its Progress Rail subsidiary. Caterpillar has a reputation for being tough on unions and waiting out long strikes.

Prime Minister Stephen Harper visited the Electro-Motive plant in 2008. (PMO)

"This is a case where our members have been locked out by corporate greed," CAW president Ken Lewenza said in a statement. "Caterpillar may be one of the richest corporations to ask for the deepest of cuts."

The CAW has called for the federal government to disclose any commitments made during the 2010 purchase of Electro-Motive by Caterpillar under the Investment Canada Act.

Union leaders fear Caterpillar will move production to a Progress Rail plant in Muncie, Ind., which opened on Oct. 28 and also produces diesel-electric locomotives, media reports say. It could benefit from any Buy American policies that might affect purchasing in the U.S.

Union officials told the London Free Press that the final offer would cut wages to $16.50 from $35 an hour, though the CAW has made it clear it rejects wage cuts as long as Caterpillar enjoys record profits.

Plant worker Brad Boufford compared the company's offer to "a huge slap in the face.

"I had never encountered something as arrogant as that in my life," he told CBC News. "It was a shock."

"For a profitable corporation to come in and demand a 50 percent wage and benefit cut is really quite unprecedented," said labour analyst Jason Russell.

Russell says it appears the company is trying to move the plant to the United States to take advantage of Washington's Buy American policy.

In a statement Sunday, the company said: "The union's changing positions have created an environment of uncertainty that is not in the best interests of the company's employees, customers, suppliers and owners."

Angry and betrayed

Ontario Federation of Labour president Sid Ryan said Ontario's labour movement is ready to mobilize to help the CAW stop replacement workers from crossing picket lines at the London plant.

"Workers across the province are angry and feel betrayed by their government and they are ready to fight together to defend good jobs," he said.

Ryan said corporations and all levels of government are being put on notice that 2012 will be marred by labour unrest if they continue to destroy the livelihoods of the middle class.

The OFL leader said the situation in London underscores the need for provincial legislation to ban the use of replacement workers during strikes and lockouts.

Ryan also had a message for Ottawa, saying Prime Minister Stephen Harper's corporate tax cuts are continuing to fuel record profits that companies are keeping instead of investing in new technologies and equipment that lead to job creation.

The OFL represents 54 unions and one million workers in Ontario.

With files from The Canadian Press