* Caterpillar unit locks out CAW workers after talks breakdown
* CAW says it will return to bargaining table (Updates with details on Caterpillar's new decision to lock outworkers, company comments and CAW's response)
Jan 1 (Reuters) - Caterpillar Inc's Electro-Motive unit has decided to lock out locomotivemanufacturing workers in London, Ontario, after finding out theCanadian Auto Workers told members not to strike following thebreakdown of contract negotiations.
Electro-Motive said earlier on Sunday that it wasunilaterally imposing changes in wage and benefit terms for itsworkers in Canada after talks broke down, and that workers wereencouraged to show up for work.
But the company's stance changed after the CAWsurprised the company on Sunday afternoon by not calling astrike and instead instructing workers to report for duty.
The company said it "is seeking the assurance of aprompt ratification of the company's last offer and hasinstituted a lock out at the London facility until a ratifiedcontract is in place."
Caterpillar's Electro-Motive unit said the CAW's moveto send members to work indicated the union approves ofCaterpillar's new compensation terms.
"Given the union has indicated its members are willingto work under those terms, we are hopeful of a speedyratification allowing union members to return to work," thecompany said.
CAW officials, however, see the situationdifferently.
Bob Orr, a top CAW official, said late Sunday that theunion is not showing support for Caterpillar's Electro-Motivenew contract terms.
"The ball is still in the company's court," he said.
Orr said Caterpillar's offer -- which includes a morethan 50 percent cut in wages and health-care and an eliminationof pension benefits -- is not acceptable to the CAW. Orr saidthe CAW plans to return to the bargaining table, but he lacksconfidence in the ability of the two sides to make substantiveprogress.
Caterpillar's Electro-Motive Canada unit employs about450 hourly workers. It is unclear if the company will at somepoint bring in replacement workers to keep production going.Orr, from the CAW, said the company informed him that they wouldnot use replacement workers.
The lock-out follow several months of negotiations betweenthe Electro-Motive division and the CAW. Caterpillar has saidits new contract offer was designed to make the company morecompetitive.
Electro-Motive is part of Caterpillar's Alabama-basedProgress Rail Services division, which competes with GeneralElectric Co and Bombardier Inc. (Reporting By John D. Stoll in Detroit and Lynn Adler in NewYork; Editing by Dale Hudson)