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Canadian Pacific workers on strike, national freight service suspended


Just a week after Canadian Pacific (TSE:CP) saw major management and board changes, Teamsters Canada announced Wednesday that a strike against CP is now underway.

As a result of the strike, CP has suspended its freight service across the country, after the company and the Teamsters Canada Rail Conference (TCRC), have so far failed to reach new collective agreements.

"I am disappointed that the parties have not been able to reach agreements despite federal assistance and that strike action has begun," Canada's Labour Minister Lisa Raitt said.

"The government is concerned about the national economic significance this will have and we are prepared to act in the interest of the national economy."

The TCRC represents approximately 220 rail traffic controllers and 4 200 locomotive engineers, conductors, trainpersons and yardmen. The two sides were unable to reach an agreement despite talks that continued until the deadline.

The union has said that major points of contention are pensions, some work rules and fatigue management.

Both the union and CP spokesman Ed Greenberg have said that the negotiations will continue Wednesday. The TCRC’s collective agreement expired on December 31, 2011.

"We have made every reasonable effort to get a settlement," Teamsters vice-president Doug Finnson said in a statement posted on the union’s website.

The Federal Mediation and Conciliation Service has been made available to provide dispute resolution and prevention assistance to the unions and CP in their negotiations.

"The best solution is always the one that the parties reach themselves," said Minister Raitt.

"I urge the parties to resume negotiations and work diligently to reach negotiated agreements or agree to submit to a binding process to settle their disputes."

According to reports, the strike is expected to halt shipments of grain, fertilizer, coal and other goods CP moves along nearly 24,000 kilometres of track in Canada and the U.S. Commuter trains in Montreal, Vancouver and Toronto are expected keep running during the strike.

The strike will be the first test of the new management and board at CP.

After a months-long proxy fight with its biggest shareholder Pershing Square Capital Management, former CEO Fred Green and five other board members stepped down hours before the company’s annual general meeting last Thursday.

Shareholders then voted overwhelmingly for the director nominees made by Pershing, after the hedge fund’s manager William Ackman argued the railway was faltering under Green’s leadership.

Finnson has said that the union has not yet met with Green’s interim replacement, Stephen Tobias, but noted that the change of management has not affected the bargaining process.

Upon receiving notice of the strike on May 19, CP issued a statement saying that the company believes the offer it has presented the union is "fair and reasonable". 

CP said it has contributed approximately $1.9 billion of solvency deficit contributions to its pension plan over the past three years and requires changes to legacy pension and post-retirement benefits to make them industry-comparable.

Among the range of proposed amendments, some of the options provide guaranteed pension payment that is a multiple of average Canadian industrial pension payment and exceeds what the union has already agreed to for the majority of its members at another major Canadian railway, said CP.

"The offer on pension aligns with the industry and allows the railway to remain competitive as we invest in strategic infrastructure upgrades along our network," said executive VP and COO Mike Franczak.

Quick facts: Canadian Pacific Railway

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