CN Rail, union strike deal

MONTREAL — Canadian National Railway Co. (TSX:CNR) and the Teamsters union reached a deal on Wednesday to end a strike by locomotive engineers, avoiding a potential blow to the fragile economic recovery.

A CN Rail manager crosses the track after setting a switch in Dartmouth

MONTREAL — Canadian National Railway Co. (TSX:CNR) and the Teamsters union reached a deal on Wednesday to end a strike by locomotive engineers, avoiding a potential blow to the fragile economic recovery.

Teamsters Canada president Daniel Shewchuk said the engineers will get back to work as quickly as possible, but didn’t provide a timeline.

Federal Labour Minister Rona Ambrose said restoring full service quickly is critical to the economy.

“Canada is still at the early stages of a recovery from the global economic downturn and could not afford slowdowns and stoppages in such a critical component of the national infrastructure,” Ambrose said in a statement.

Officials with petrochemical plants in Central Alberta were happy to hear that the work stoppage had been resolved.

“It hadn’t impacted us yet,” said Ineos Oligomers site manager Barry MacKenzie.

Ineos uses CP Rail as its carrier, but loaded cars are moved off site by CN. This continued at a reduced rate during the strike, said MacKenzie.

Roxann Good, community relations officer at Nova Chemicals’ Joffre plant, said the impact of the strike on her company’s operations was “minimal” due to its short duration.

“We have been able to meet our customer needs, and obviously we’re very pleased.”

Shawna Bruce, a public affairs manager with Dow Chemical, pointed out that her company fills a rail car every hour at its Prentiss plant. The quick resolution prevented a backlog from forming.

“We’re seeing very little customer effect, if anything, at this point,” she said, adding that one concern Dow had was the need to move rail cars outside normally scheduled hours and the resulting impact on nearby residents.

MacKenzie, Good and Bruce agreed that the situation would have been far worse had the strike continued.

In 2007, a protracted strike involving CN Rail cost Nova an estimated $12 million.

“We had several days of lost production,” recalled MacKenzie, adding that even after rail service resumed, delays persisted.

“You get all these rail cars bottled up in certain places.”

Canadian Wheat Board chair Larry Hill also said that the strike ended before it could have a significant impact on the movement of grain to market.

“Certainly I’m pleased to hear it’s been resolved,” he said. “This is a prime shipping time with good weather. We need to make sure we make as much use of this as we can.”

Ambrose said the deal to end the strike, which began on Saturday, was reached as a result of “intense bargaining.”

Under the terms of the agreement, CN will not proceed with controversial work rule changes it announced last week including increasing the monthly mileage cap for the locomotive engineers.

CN and the union have also agreed to continue negotiations to resolve issues related to wages, benefits and work rules, but if there is no agreement any dispute over wages and benefits will be settled by binding arbitration.

The two sides may also agree to submit work-rule issues to binding arbitration, but only if they can agree on the ones that should be subject to arbitration.

CN president and chief executive Hunter Harrison said the deal gives both sides the flexibility to negotiate issues further, but also ensures the finality of binding arbitration for issues that remain in dispute.

“We have always sought, since starting negotiations 14 months ago, to achieve a settlement with the TCRC through negotiations or binding arbitration,” Harrison said in a statement.

Ambrose said she will appoint federal mediators and an arbitrator to help finalize the other outstanding issues.

The deal came after Ottawa introduced legislation Monday to end the strike.

CN is the country’s largest railway and the government cited worries about the weak economy to justify the strike-ending legislation.

“Continuing the strike for any further amount of time would have had grave consequences for our economy,” Ambrose said.

Managers have been running the trains since the walkout began.

Edward Jones analyst Brian Yarbrough said the deal looks positive for both sides.

“You never like to see people out there unemployed in this kind of environment and you don’t like to see the potential negative impacts this could have caused to the overall economic rebound,” Yarbrough said from St. Louis.

Since the strike was so short, there shouldn’t be any serious economic effects, he added.

The 1,700 engineers, members of the Teamsters Canadian Rail Conference, have been without a contract for almost a year.

CN shares closed down 27 cents at $56.03 on the Toronto Stock Exchange.

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