About 1,700 Canadian National locomotive engineers walked off the job and onto the picket line on Saturday over wage concerns at Canada’s largest national railway.

“For all intents and purposes, talks have broken down,” the government official, who asked not to be named, said in an interview Sunday evening. “To protect the Canadian economy, the government cannot allow this strike to continue. By (Monday), if the two sides cannot reach an agreement, the government is prepared to introduce back-to-work legislation.”

Earlier Sunday, the Teamsters Canada Rail Conference union said it was willing to let binding arbitration settle a dispute over wages — once the two sides settle the other outstanding issues.

But the offer was quickly rejected Sunday by CN officials.

Wages and the number of kilometres engineers can drive each month are believed to be among the issues dividing the two sides.

The union said early Sunday its offer could help resolve the dispute.

“CN must accept their responsibility in this dispute as well,” said union president Daniel J. Shewchuk.

“We do not feel our position on wages is excessive as they are in line with what CN has negotiated with other unions. Nevertheless, in an effort to move the process forward, we indicated that we are prepared to submit the issue of wage increases to final and binding arbitration.”

In its own statement, CN said it had carefully reviewed the union’s proposals but did not believe the offer was reasonable.

The company said the offer would not immediately end the strike, and was therefore unacceptable.

“If the TCRC (union) would enter into a binding arbitration agreement with us today that simultaneously ends the strike, we would be pleased to draft an offer for resolution,” CN spokesman Mark Hallman said in a statement.

“The union’s proposal continues negotiations, for an undefined period of time, over the same work rule issues we have been discussing for 14 months. Frankly, we do not see how further discussions on these same points will change the parties’ positions.”

The engineers, who CN said make an average of more than $100,000 a year, have been without a contract since Dec. 31, 2008.

CN has said passenger service will not be disrupted by the strike, and that freight service will continue, with managers taking up the slack.

However, a shipping industry group said this weekend that the dispute could have major repercussions on the nation’s economy, if it drags on.

“It will start to affect service very badly, very quickly,” said Bob Ballantyne, president of the Canadian Industrial Transportation Association.

“If it goes on for any length of time, it will start leading to layoffs and companies will have to shut down production because they can’t ship.”

The government official agreed, saying that the government was forced to step in to protect the Canadian economy.

“We’re seeing some economic progress but we’re not out of the woods yet,” he said. “CN is a vital part of our economy.”

The last work stoppage at CN was in 2007, at which time Parliament ordered more than 2,700 conductors back to work.

See also:

Canada railway workers strike for higher wages

AFP: November 29, 2009

MONTREAL — Some 1,700 mechanics working for state-owned Canadian National Railways (CN) went on strike this weekend for higher wages and lower workloads, as opposition leaders called for government mediation in contract talks.

The strikers, part of the Teamsters union, began their work stoppage on Saturday to protest the company's wage hike offer and its proposal to increase the minimum mileage at work.

Liberal Party leader Michael Ignatieff said Canadians deserve a transport system that works, and called on the government to resolve the labor dispute.

A CN spokesman said the strike would not affect passenger trains.

See also:

Rail strike sparks recovery worries

Globe and Mail: Nov. 30, 2009
BRENT JANG

CN Rail work stoppage by 1,700 engineers imperils fragile economic momentum and threatens already downtrodden companies with costly shipment delays

A strike by Canadian National Railway Co. locomotive engineers threatens a nascent recovery in freight shipments.

Canada's largest railway, which is seen as a barometer for the economy because the carrier hauls a wide range of goods, finally began to see signs of a turnaround in November.

But a strike that began Saturday by 1,700 engineers comes at a precarious time for farmers, manufacturers and other corporations dependent on CN to move cargo ranging from grain and chemicals to lumber and consumer products.

While the recession may be over for the broader economy, it continues to be a tough time for many companies, said Jean-Michel Laurin, a vice-president at the Canadian Manufacturers and Exporters.

"Everybody's fighting for every dollar, and we don't want to see any disruption in rail shipments," Mr. Laurin said yesterday. "We need everything to be working well."

Montreal-based CN has been gradually bouncing back from the recession. In early July, weekly carloads of merchandise were down 35 per cent from the same period last year, but for the week ended Nov. 21, they edged up 1.5 per cent year over year.

CN spokesman Mark Hallman said managers are doing their best to keep the trains on schedule. "We can't predict weather, but we're executing well on the plan that we have in place now," he said.

"This strike was entirely avoidable had the union agreed to our request for final binding arbitration. This unnecessary and damaging strike doesn't do the engineers any good, and it doesn't do our customers and indeed the Canadian economy any good."

While truckers are positioned to pick up some of CN's short-haul business, long-haul shipments are best suited to rail. The Hamilton Port Authority, which has developed its own strategy to win short-haul business that would otherwise go on rails, is touting the transport of goods by ship to take advantage of Lake Ontario and the St. Lawrence Seaway.

Joe Martin, director of Canadian business history at the University of Toronto's Rotman School of Management, said CN managers may be able to maintain deliveries for the first several days, but there are bound to be delays as the strike lengthens, especially if snowstorms hit.

In contrast to a strike at CN in 2007, the economy this time around doesn't have the resilience that it did during the previous labour dispute, Prof. Martin said yesterday.

Federal Labour Minister Rona Ambrose said she's disappointed by the breakdown in talks between CN and the Teamsters Canada Rail Conference. The last contract expired on Dec. 31, 2008.

"At a time when our economy is still recovering, our government will not support a disruption to such a vital component of Canada's economy," Ms. Ambrose said in a statement, adding that Ottawa favours the union accepting binding arbitration.

Federal Liberal Leader Michael Ignatieff urged the Conservative government to "get this dispute resolved."

Teamsters president Daniel Shewchuk said the engineers, who operate the locomotives and are responsible for train speed, are upset that CN management is proposing to increase work loads while only offering a 1.5-per-cent raise, with no retroactive pay increase and unsatisfactory health benefits.

The current monthly "mileage cap" is 3,800 miles, but CN wants to raise it to 4,300 miles - the distance travelled for work duties, which could translate into working at least an extra day every month, he said.

CN said the engineers make more than $100,000 a year for working an average of 15 to 17 days a month, but Mr. Shewchuk disputed the pay figures, emphasizing instead the long stretches of time spent away from family and friends.

The Teamsters say they are willing to return to the bargaining table while submitting the "wage portion of the dispute" to binding arbitration, but CN responded that the union's latest offer would unreasonably extend contract negotiations "for an undefined period."

The Teamsters also say CN has enlisted the help of people who have retired from the company to operate trains.

CN endured a 15-day strike in February, 2007, by 2,800 conductors and yard workers.

A wide array of industries urged Ottawa at the time to end the labour dispute, saying they couldn't afford any more costly delays to rail service.

Manufacturers, chemical producers, forestry firms and farming groups were among the angry rail customers. Despite a tentative pact in late February of 2007, workers later rejected the deal and staged a series of rotating strikes in the spring, forcing Parliament to pass back-to-work legislation in April. A federally appointed arbitrator subsequently selected CN's final offer.

CN Rail (CNR-T)
Close: $55.64, up 64¢

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CN'S WEIGHT

$1.27-billion Nine-month profit

4 per cent Decline in nine-month profit from year earlier

$5.48-billion Nine-month revenue

13 per cent Decline in nine-month revenue from year earlier

58 per cent CN's portion of container traffic (42 per cent moved by rival CP)