After a long period of difficult negotiations, the Teamsters Canada Rail Conference union this week said if a deal can’t be reached by midnight Saturday, Canadian Pacific Railway will face job action by 3,300 locomotive engineers, conductors, and train and yard workers across Canada.
In addition, Unifor, which represents 1,650 workers who perform safety inspections, brake tests and some repair and maintenance work, will be in a legal strike position with CP early Sunday morning.
Peter Edwards, VP Human Resources and Labour Relations at CP, said Wednesday, “The company is committed to finding a workable solution with the union and continues to bargain in good faith.”
He said if there is a strike, CP has a contingency plan to use managers to maintain a “reduced” freight service.
Teamster president Douglas Finnson suggested any disruption of rail service would have a widespread effect. “They could try and run some but they would never be able to provide the level of service that more than 3,000 professional railroaders provide.”
Keith Creel, CP President and CEO, said the company has been training its white-collar workers to run its trains in the event of a strike, but a slowdown in service would be inevitable, according to the Financial Post Wednesday.
“We’re in the process now of mobilizing officers,” Mr. Creel said at an industry conference in Miami, FL, “They’ll be in position on Saturday … across the entire network.”
North America
As if that situation didn’t seem dicey enough, Canadian National Railway is also in contract talks with the Teamsters for 1,800 locomotive engineers and with Unifor representing 4,800 other workers. Neither union in the CN talks has taken a strike vote, but a 21-day cooling-off period following conciliation ends Saturday at midnight.
Ongoing Talks
The Teamsters’ Finnson is in Montreal, QC, this week negotiating with CP, with the help of federal mediation, but says the union has not made headway on issues such as working conditions. He is particularly concerned about the company not complying with collective agreements that require train crews to stop operating and rest after 10 continuous hours of work.
Finnson said, “We want to make it very clear that there is a deadline and we would like to reach an agreement before that time to avoid any job action by our members.”
The core issue for the union remains the company’s scheduling model and the number of hours of rest that train crews receive, which does not comply with collective agreements.
The employer has said its offer includes unspecified wage increases and a new model that “will improve the scheduling of regular time off and quality of life while enhancing our service and efficiency.”
There is a chronic shortage of engineers, conductors, and trainmen at CP, Finnson said. Another union concern is the company’s push to install equipment on trains to monitor crews.
Even with its contingency plans the company will lose approximately one cent of earnings per share every day that the strike is in effect, but the alternative is worse, Creel explained.
Perhaps ominously he added, “Do we want it? No, but at the end of the day, given what the union has asked for, which are very unreasonable demands and expectations, it’s much, much better financially for this company to say no than it ever would be for us to consider saying yes,” he said.
CP recently reported strong fourth-quarter 2014 results, when it earned $2.63 a share, on the back of ongoing efficiency improvements.
Wayne Benedict, a former railroader and labour lawyer, said to the CBC that CP has been training office workers and managers to operate the trains, so the company would likely try to continue operations to some degree.
“If history is any judge we would expect to see back-to work-legislation from Ottawa,” said Benedict.
In 2012, the Teamsters Canada Rail Conference members were on strike for nine days before back-to-work legislation passed. But in that nine days, a huge backlog developed of freight such as grain and other commodities.
At the time, then labour minister Lisa Raitt said such a strike would cost the economy $540 million a week.
Jason Seidl, managing director at Cowen and Co, said to the Financial Post a strike at CP could create major disruptions across the entire supply chain, especially because shippers have been diverting goods to Canadian ports due to labour disruptions at US West Coast ports.
“The customers of the railroads are now going, ‘Uh oh, I just moved some of my freight to Vancouver as a contingency because of the [US] West Coast port slowdown and now I might have a slowdown up in Canada because of a strike,’” Mr. Seidl said in an interview Wednesday.
“ It takes three-and-a-half trucks to replace one rail car, and most lumber mills will not be able to find enough trucking capacity to replace trains. ”
– Catherine Cobden, Executive VP, FPAC
“ Commodity traders are unable to prepare for any strike by moving more crops to ports ahead of a possible strike, given the tight supply of hopper cars. “
– Wade Sobkowich, Western Grain Elevator Association
Elsewhere, Catherine Cobden, Executive VP of the Forest Products Association of Canada, said Wednesday to the Globe and Mail the 21 companies she represents are “very concerned” about the possibility of a strike Saturday night by CP’s locomotive engineers and conductors.
Cobden said it takes three-and-a-half trucks to replace one rail car, and most lumber mills will not be able to find enough trucking capacity to replace trains. Many mills produce pulp and paper that cannot be stored outdoors, so they cannot stockpile while waiting for rail service to resume, she said.
“Our mills are very remote and so is the global marketplace, and so we rely on the rail system,” Cobden said from Ottawa. “The options for us are very limited.”
Wade Sobkowich of the Western Grain Elevator Association said also to the Globe and Mail that commodity traders are unable to prepare for any strike by moving more crops to ports ahead of a possible strike, given the tight supply of hopper cars.
Grain companies that cannot fulfill customer orders face contract extension penalties, charges from ship owners forced to wait at port, and lost opportunity costs. “There’s very little we can do to prepare,” he said from Winnipeg. “We require the railways to keep operating so we can move product.”
As for negotiations with the CN, neither union has announced a strike deadline. CN Rail Spokesman Mark Hallman said to Reuters Wednesday the company is confident it can reach contract deals without labour disruptions.