(Reuters) -- Caterpillar Inc is unilaterally implementing lower wage and benefit terms for locomotive manufacturing workers in London, Ont., after Canadian Auto Workers negotiations failed in the days leading up to a contract expiration.

Caterpillar's Electro-Motive Canada unit -- representing about 450 workers -- said in a statement it advised the CAW on Sunday morning that it intends on implementing the wage and benefit terms of its last offer. The CAW has said those terms are not acceptable.

The company said any employee who works for EMC after 11:59 p.m. of Dec. 31, 2011, will be deemed to have accepted the wage and benefit terms of EMC's last offer.

On a Web site dedicated to negotiations, Electro-Motive Canada said CAW workers commenced a strike, but a CAW official told Reuters that was untrue.

We're not on strike, Bob Orr, the official, said in a telephone interview on Sunday. We're asking our workers to report for duty on the next shift (and) we're asking the company to return to the bargaining table.

On Friday, CAW members in London granted CAW officials the authority to strike if Electro-Motive unilaterally implemented new employment terms. Orr said the union was not using that power at this point.

The contract expiration and implementation of new terms for workers follow several months of negotiations between Caterpillar's Electro-Motive division and the CAW. Caterpillar has said its new contract offer was designed to make the company more competitive.

CAW officials have said the offer is unacceptable because it includes a more than 50 percent reduction in wage and health-care benefits, and an elimination of pension benefits.

Electro-Motive is part of Caterpillar's Alabama-based Progress Rail Services division, which competes with General Electric Co and Bombardier Inc.