The Canadian Auto Workers union is threatening to occupy the Electro-Motive plant in London, Ont., if parent company Caterpillar doesn't offer the out-of-work employees a severance package it deems reasonable.

Progress Rail, a wholly owned subsidiary of Caterpillar, announced the closure of the plant last Friday, putting nearly 500 workers out of a job.

The union occupied a Caterpillar plant in Brampton, Ont., in 1991 when it was closed by the company. CAW Local 27 president Tim Carrie said the tactic worked then and workers in London are prepared to take the same action now.

He said there are several locomotives still in the Electro-Motive plant and the company wants to get them out as soon possible. Carrie said the train engines are worth millions.

"If they want to play hardball the way they have since the beginning of this, we'll do what we have to do. If that means those locomotives aren't leaving that facility, that's what it means."

Carrie says Caterpillar will have to go well beyond the minimum severance requirements under Ontario law in order to satisfy the union.

"This is a multi-national corporation with billions of dollars of profits and they're going to leave some of it behind for this community and they're going to leave it behind for the workers."

Caterpillar closed its London plant just weeks after locking out its workers on Jan. 1. The two sides could not come to terms on a new collective agreement.

The provincial Conservative leader refuses to condemn Caterpillar for shutting down its London plant.

Tim Hudak said it's "heartbreaking," but he blames Caterpillar's decision to close the plant on the Liberal government.

"It's been Xstrata jobs in Timmins. It's been steel jobs in Hamilton. Navistar in Chatham. There's an unfortunate pattern of people picking up roots and moving out of Ontario. Why? Because Ontario is less attractive for business investments because the government spends too much, taxes too much, and is charging us way too much for energy. It's costing us jobs," Hudak said.

The Liberal government has cut the corporate tax rate each of the past two years and plans further reductions.

The NDP said the Caterpillar pullout shows corporate tax cuts don't help keep jobs in the province.