Caterpillar plant closes, 330 Toronto jobs lost
Facility bought 5 years ago made machines for TTC
A death blow has fallen on a worldbeating Toronto company whose tunnel-boring machines have burrowed beneath cities around the globe.
Caterpillar Inc. announced that its tunnel-boring machine facility near Pearson airport, which it bought just five years ago, will close, and 330 people will lose their jobs.
Until the acquisition it was called Lovat Inc. Lovat machines have tunnelled in Hong Kong and Singapore. They have added miles to London’s Tube. They drilled the Sheppard subway line.
Today they are chewing through the earth beneath Eglinton Ave. for the new LRT line, and tunnelling into Vaughan to push the Spadina subway northward.
But now the machines are nearing the end of the line, and there is no light at the end of the tunnel.
The Caterpillar tunnelling plant will cease operations by mid-2014, Caterpillar announced; parts and technical support will be available until 2016.
The work is not being transferred elsewhere. Caterpillar is simply exiting the business because it “no longer represents a strategic growth opportunity,” according to a company statement.
Selling the plant as a going concern wasn’t an option, according to Caterpillar spokeswoman Rachel Potts, who said it “significantly underperformed financially.”
“We evaluated selling the business, but determined it was not a viable option given the financial underperformance of the business and the landscape of potential buyers,” she said.
She wouldn’t say whether Caterpillar had asked for bids from potential buyers, nor would she say whether the operation was losing money.
Both the TTC and Metrolinx say that their tunnels will be complete by 2016, when Caterpillar’s support winds up.
The TTC used four of the Caterpillar machines, dubbed Yorkie, Torkie, Holey and Moley, on the 8.6-kilometre Spadina subway extension.
“What can I say? I’m disappointed to see that they don’t want to carry on.”
RICHARD LOVAT FOUNDER OF THE FIRM THAT WAS LATER BOUGHT BY CATERPILLAR
Metrolinx is also using four machines on Eglinton.
One has been delivered and is due to begin tunnelling this month at the west end of the line, with a second due to follow soon.
Two more, to work on the eastern section, will be delivered later this year.
“There is no impact on the schedule for Caterpillar to deliver the TBMs to Metrolinx based on their decision to phase out of business,” Metrolinx spokesman Jamie Robinson said in an email.
“However, Metrolinx will be working with Caterpillar to ensure that replacement parts and technical support remains available during tunnelling for the Eglinton Crosstown project.” Caterpillar came in for heavy criticism last year when it closed its Electro-Motive diesel locomotive plant in London, Ont. In that case, the company said labour costs were too high in Canada. It transferred the work to a plant in Muncie, Ind. In this case, Caterpillar is simply exiting the tunnelling business. Potts said labour costs were not a primary factor. News of the shutdown came as a shock to Richard Lovat, who founded the company in 1972 after moving to Canada from Italy. He and his son Rick ran the firm until selling it to Caterpillar for $49 million in 2008. At the time, it seemed like good news. “I’m over the moon!” Rick Lovat told Tunnel Talk, an industry publication, after the deal. “This secures our future without compromising our legacy.” Lovat said the company needed to expand, and Caterpillar was the ideal fit to help grow the business: “Instead of an amorphous venture capitalist or bank, interested primarily in asset stripping or maximizing profit without investment, we have a like-minded partner.” Nevertheless, this week Caterpillar decided to walk away. Friday, the elder Lovat was subdued, but refrained from criticizing Caterpillar. He said he’s had no role in the company since the sale and was very surprised to hear of the shutdown. “You build from scratch and then you sell it,” he said. “Then somebody else is running the business, and you’ve got no control.” “What can you do? They tried to do their best.” “It’s been a respected company worldwide. We delivered equipment all over the world, for any part of the globe. We’ve been very successful. But there’s a time and place for everything.
“What can I say? I’m disappointed to see that they don’t want to carry on.”
He said he was sorry that employees who had worked at the operation for 30 years or more are losing their jobs.
Potts said the company explained its decision to employees on Thursday.
“We explained to them we continually evaluate our businesses to ensure they do remain a strategic fit for our company,” she said. “That is no longer the case here.”
The plant appeared to be idle Friday.
The parking lot at the corner of Disco Rd. and Carlingview Dr. sat empty just after the lunch hour. It’s usually packed at that time. An employee who drove up to the front office took that as a sign something was wrong.
The worker, who asked not to be identified, said he’d heard there was a mandatory company meeting Thursday, but didn’t know the details. When informed of the news by a reporter, the worker just shrugged.
“Oh well. I can’t do anything about it. I don’t let this stuff (bother me)” he said, adding he’ll just go home and start looking for another job. With files from Donovan Vincent