(The Montreal Gazette posted the following article by Nicolas Van Praet on its website on February 18.)
MONTREAL — Shares in Canadian National Railway Co. fell sharply after the company said employees represented by the Canadian Auto Workers union rejected proposed contracts and threatened to strike as early as Friday.
The stock took its biggest tumble in three weeks in part over worries labour action could paralyze portions of the railway’s operations and drive customers to switch shipments to CN’s competitors. It shot down $1.56 to close at $79.24 in heavy trading on the Toronto Stock Exchange.
The share drop suggests investors believe a strike is a real possibility, said James David, who tracks CN for Scotia Capital in Montreal.
“Whether or not something happens remains to be seen.”
CAW national president Buzz Hargrove said he did not believe a solution could be reached to avert a strike. He said the union agreed to attend a meeting today that was brokered by the federal labour ministry.
“I am not at all optimistic that anything coming out of the meeting will avoid a shutdown of CN or a withdrawal of labour by our members come Friday at 12:01 a.m.,” he said at a news conference in Toronto.
The CAW said its members, representing 5,000 CN workers, rejected tentative agreements in votes by margins of at least 56 per cent. CAW leaders signed the deals with CN on Jan. 23. Each of the three agreements affects a separate employee group.
CN said it regrets the workers’ rejection of the agreements, noting they were reached after months of tough negotiations with union representatives.
“We want to reach a settlement with the union,” CN spokesperson Mark Hallman said. “But if that proves impossible, we have a contingency plan to operate without the CAW. And we intend to run what we can.”
The big concern will come if the workers are still on strike Monday morning, when the intermodal yards open, said Bob Fay, an analyst with Canaccord Capital Corp.
CN’s intermodal business, where truck containers are loaded and unloaded from trains, represented about 19 per cent of the company’s sales or $1.1 billion of business last year. Workers who do the unloading there are among those who could strike.
Some mechanics, clerical workers, and customer-service agents could also walk off the job. That could affect train repairs or billing. Labour leaders have vowed not to target passenger rail lines, on which Via Rail and commuter trains run.
Fay said the federal government would likely not allow a strike to drag on. “It would really cause a lot of problems throughout the economy.”
CN managers and CAW reps staved off a walkout last month when they negotiated past a strike deadline. The tentative deals voted down gave workers wage increases of three per cent and improved benefits. Hargrove said that wasn’t enough, arguing CN’s profits shouldn’t come on the back of workers.
“We’ve told the company there’s just not enough money there.”