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A CN locomotive makes its way through the CN Taschereau yard in Montreal. (Graham Hughes/THE CANADIAN PRESS)
A CN locomotive makes its way through the CN Taschereau yard in Montreal. (Graham Hughes/THE CANADIAN PRESS)

CN strike sparks recovery worries Add to ...

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 movement by 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.

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