(Bloomberg News circulated the following article by Doug Alexander and Greg Quinn on February 20.)
TORONTO — Canadian Labor Minister Jean-Pierre Blackburn said he’s “very concerned” about a strike by Canadian National Railway Co. workers, and will meet some of his cabinet colleagues to discuss “every option” to settle the 10-day dispute.
“We cannot see the situation going very far like this,” Blackburn told reporters today in Ottawa. The strike at Canada’s largest railway is hampering the shipments of grain and chemicals, and of food and fuel to some remote communities, he said. “We will have to take a decision pretty soon.”
A government-appointed tribunal determined today that the strike is legal, Sylvie Riverin, a spokeswoman for Canada Industrial Relations Board, said today in an e-mailed statement. About 2,800 conductors and yard workers represented by the United Transportation Union are on strike.
“CN is disappointed,” said company spokesman Mark Hallman in an interview. “We’re going to recommend a 60-day cooling-off period and a return to bargaining.”
United Transportation Union International spokesman Frank Wilner said in an interview the picketers would stay in place.
Ruling Requested
The Montreal-based railway had asked the Canada Industrial Relations Board to declare the strike illegal, arguing that UTU Canada General Chairman Rex Beatty failed to obtain required permission from the union’s Cleveland-based head office to start the strike. Beatty didn’t return calls today seeking comment.
The workers went on strike Feb. 10 after a deadline passed without agreement on a new pact to replace a three-year contract that expired Dec. 31. Managers have replaced the workers to keep Canadian National’s freight operations running.
“We’re working as hard and as fast and as safely as we can,” Hallman said. “I think we’ve been able to do a good job under the circumstances of maintaining freight services across our system.”
Canadian National shares fell 44 cents to C$53.75 at 4:10 p.m. in Toronto Stock Exchange trading. The stock has fallen 7.3 percent this year.
The strike at North America’s fifth-largest rail company by revenue threatens to disrupt the movement of goods across the continent. In 2005, C$77 billion ($66 billion) worth of shipments of auto parts, metals, lumber and grain crossed the Canada-U.S. border by rail.
Chemical Shipments
Nova Chemicals Corp. and Dow Chemical Co. said the strike is curtailing shipments, and a chemical group said a prolonged walkout by workers may “devastate” the industry.
Ford Motor Co., the second-largest U.S. automaker, shut down production at a plant in St. Thomas, Ontario on Feb. 16 after the strike delayed parts shipments. Canadian National has since delivered some parts to the plant, which makes Crown Victoria and Grand Marquis sedans, and relies more on rail shipments for parts than any other Ford factory in Canada.
“It’s up and running as of today,” Ford spokeswoman Kerri Stoakley said in an interview. “St. Thomas lost about half of its eight-shift week from the downturn.”
The Canadian unit of Ford “doesn’t see any significant impact for this quarter from the closure,” she said.
The union is demanding concessions on the amount of time workers are required to remain outdoors without breaks and other non-wage issues, Beatty has said. Talks broke down Feb. 9 over demands for “excessive wage increases” of 4.5 percent in each of the first two years and 4 percent in the third year, Canadian National said in a Feb. 11 statement. UTU-member employees earned an average of C$75,000 in 2006, said Canadian National.
“We still hope that people will go back to the table” and negotiate, Minister Blackburn said.
The union said today in a statement that Canadian National traffic “has reduced significantly” since the strike began. Hallman wouldn’t say what effect the strike has had on traffic or operations.
Vancouver Delays
Canadian National has committed more resources to improve traffic flow in North Vancouver, where the company handles train switching operations for Canadian Pacific Railway Ltd., the country’s second-biggest railroad, Hallman said.
Canadian Pacific declared a force majeure on Feb. 15 at the Pacific port and told customers that shipments in the area are being delayed, company spokesman Ed Greenberg said today in an interview. Traffic and co-production with Canadian National at the port is “not moving smoothly and we’ve been experiencing a slowdown in traffic,” Greenberg said.
The strike has also exacerbated a backlog of Western Canadian grain shipments already delayed in part by weather, Canadian Wheat Board spokeswoman Maureen Fitzhenry said today in an interview. The board, the world’s biggest seller of wheat and barley, is paying $300,000 a day in penalties as eight ships moored at Vancouver and Prince Rupert wait for shipments to arrive by rail, she said.
Alcan
The dispute hasn’t had a big impact on Montreal-based Alcan Inc., the world’s second-largest aluminum producer, according to Chief Executive Officer Richard Evans.
“We do use them, but we have alternative shipping means such as trucks and a little bit of ships,” Evans said today in an interview. “We have replaced rail by truck shipments within Canada and when we ship to the U.S.”