* Government readies back-to-work legislation for Monday
* Talks between CP, union resume Wednesday
* No impact on commuter trains in big Canadian cities
* Customers make contingency plans
* Strike follows last week’s CP boardroom coup
* CP shares add .09 pct to end at C$74.99
By Susan Taylor
TORONTO, May 23 (Reuters) – Locomotive engineers and
conductors at Canadian Pacific Railway walked off the
job o n W ednesday after contract talks broke down, shutting down
freight operations on Canada’s second-biggest railroad.
As some customers began seeking alternatives to move autos,
grain, coal and other goods, the Canadian government said it may
introduce back-to-work legislation as early as next Monday if
the strike drags on and harms the economy.
The company and the Teamsters Canada Rail Conference, whose
4,800 engineers, conductors and traffic controllers represent
nearly a third of CP Rail’s workforce, resumed talks o n
We dnesday morning after a fruitless late-night
session.
The Conservative government, quick to intervene in other
labor disputes over the past year, said it hopes legislation is
not needed, because the two sides are close a deal.
Labor Minister Lisa Raitt said a decision on when to
intervene would depend on how the strike affects the Canadian
economy. She projected that it would cost C$540 million ( $ 525
million) in economic activity each week.
Raitt said the two parties, who remain far apart on pension
issues, can keep negotiating or agree to enter a 120-day
mediation process with a federally appointed arbitrator.
“My sense is that it’s getting more difficult, more
constrained,” Raitt told the Canadian Broadcasting Corp.
Still, Raitt’s willingness to give the two sides more time
contrasts with the speed with which she acted to get Air Canada
employees back to work in their recent disputes with
the country’s largest airline.
That’s partly because CP’s larger rival, Canadian National
Railway Co, can pick up some freight that might
otherwise ship on CP Rail.
CP said it would immediately lay off more than 2,000
non-striking staff and expects to lay off 1,400 more workers as
the work stoppage continues.
RIPPLE EFFECT
CP’s operating performance is currently the worst in its
industry, and its chief executive quit last week in the face of
a boardroom coup led by the railway’s biggest shareholder, who
is demanding improvements.
CP’s rail network is mostly concentrated in western Canada
and in the United States, although U.S. operations are not
affected by the strike. CN’s network is bigger and broader.
“The suspension of CP’s freight network in Canada due to the
walkout means tens of thousands of carloads a day of a wide
range of products like grain, coal, automobiles, lumber and
other consumer and industrial products will not be moving,” said
CP spokesman Ed Greenberg. “This will have dramatic impacts on
our customers’ business and Canada’s economy.”
Customers were watching the situation with concern.
“The CP Rail strike will cause a shortfall of essential fuel
and supply shipments to mines across Canada,” the Mining
Association of Canada said in a statement. “It will also prevent
mines from delivering their products to their … destinations.”
Rail transport has grown more important to U.S. and Canadian
oil producers as pipelines have filled with surging production
from the Alberta tar sands and Bakken shale oil region of
Saskatchewan and North Dakota.
The railroad also transports grain, vehicles and auto parts,
as well as coal for Vancouver-based Teck Resources Ltd
, a diversified miner that is CP’s largest customer and
one of the world’s biggest exporters of steel-making
metallurgical coal.
“It is critically important that we try and get a resolution
to this as quickly as possible,” said head of external affairs
Marcia Smith.
The Canadian Wheat Board said the strike would delay at
least 162,000 tonnes of grain shipments.
Two of the Big Three U.S. automakers, Ford and
Chrysler Group, said they were seeking alternative
shipment methods, while General Motors Co and, said it
did not anticipate any impact on production.
Commuter rail services in Vancouver, Toronto and Montreal,
which operate along CP’s tracks, will continue without
disruption during the strike, CP said.
But Via Rail, a federally owned company that operates
passenger rail services, said the strike was affecting two of
its Ontario routes and it would offer alternate transportation.
PENSION FUNDING
A key stumbling block in the talks between the railroad and
the union is CP’s desire to reduce pension plan funding by 40
percent, the union said. Work rules and fatigue management are
also core to negotiations, the union said.
CP Rail, which says is offer is “fair and reasonable” has
said it needs to cut legacy pension and post-retirement benefits
to bring them in line with the rest of the industry.
The company said it has contributed C$1.9 billion to its
pension plans in the past three years due to funding shortfalls.
Employees have been without a contract since the end of last
year and have been in talks with CP since October 2011.
“We’re prepared to stay at the negotiating table as long as
necessary, said union vice president Doug Finnson in a
statement.
Officers from the Federal Mediation and Conciliation Service
are available to assist CP and its union in their negotiations,
Raitt said.
CP shares rose 7 Canadian cents to end at C$74.99 on the
Toronto Stock Exchange Wednesday, about the same as the broader
Canadian stock market. CP is about 60 percent higher than it was
Sept. 22, the day before hedge fund Pershing Square Capital
Management began buying shares in the railway.
