OAKVILLE, Ont. - Premier Dalton McGuinty is accusing Ottawa of being complicit in the loss of hundreds of jobs at a London, Ont., locomotive plant.

Foreign companies shouldn't be allowed to take over Canadian factories, then shut them down and strip them of their equipment, McGuinty said today in a speech in Oakville, Ont.

His comments come in the wake of U.S.-based Caterpillar's announcement last week that it plans to close the Electro-Motive plant following a labour dispute.

"Eighteen months ago, when Caterpillar bought that plant, they had to get the approval of the federal government under an outdated law called the Investment Canada Act," McGuinty told the Oakville Chamber of Commerce.

"I believe there's something fundamentally wrong with a federal law when it allows a Canadian plant to be bought and stripped clean in short order, throwing Canadian families out of work."

McGuinty said the federal Tories have acknowledged the act is outdated but failed to do anything about it. He called on Prime Minister Stephen Harper to review the act.

A spokeswoman for the Prime Minister's Office said today that Harper's government is disappointed about the plant closure and sympathizes with the workers but there was nothing Ottawa could do.

"This issue fell entirely within the powers of the McGuinty government, there was no ability for the federal government to intervene," Sara MacIntyre said in an email.

The 450 Electro-Motive employees had been asked to take a 50 per cent pay cut to help keep the plant open. The CAW union members rejected the proposal, prompting the company to lock them out Jan. 1.

Caterpillar subsidiary Progress Rail Services said the cost structure at the London plant was unsustainable, even though Caterpillar last week reported a 58 per cent increase in its quarterly earnings with a record profit of nearly $5 billion.

McGuinty told reporters the province is responsible for labour relations issues but that was not the situation in London.

"This company ... had no sincere interest in a long-term presence in that community," said McGuinty.

"In 21 years I have never heard of a business, domestic or international, that said to an employee group, 'We're going to cut your wages in half, this is a take-it-or-leave-it offer."'

"That's a 'We're getting out of town' kind of an offer to me. So it's not a labour relations issue," he said.