Rail strike in Canada may disrupt major industries across North America

Ontario

ABOUT 3,000 locomotive engineers and conductors at the Canadian Pacific Railway walked off the job Sunday morning in a dispute over wages and benefits.

Although the company said it would try to maintain some service by using managers, the strike is likely to disrupt major industries throughout North America, including carmakers, oil companies, paper businesses, lumber suppliers and agriculture and mining companies.

In a news release issued immediately before the strike, the Teamsters Canada Rail Conference suggested that disagreements on rest time and other scheduling issues had led to the breakdown in negotiations.

"We require sufficient fatigue countermeasures to protect our members' safety and health," the statement said.

Canadian Pacific said it had offered improved pay and benefits. It disputed the union's stance that its members needed more rest.

The union's leadership, the company said in a statement, "claims that lack of time off is at the heart of its reluctance to negotiate, yet 72 per cent of all engineers and conductors do not take the time off they are entitled to." Unifor, the union for about 1,800 maintenance and safety workers, said on Sunday that it had reached an agreement with the company minutes before its members were set to strike.

A prolonged shutdown would be felt in the United States as well as Canada. Producers in Canada's oil sands have been increasingly using Canadian Pacific, in addition to its rival, Canadian National Railway, for shipments to US refineries. The tightly integrated car industry is also a major customer.

All three Toyota vehicle assembly plants in Ontario use only Canadian Pacific for rail shipments. Greig Mordue, general manager of Toyota Motor Manufacturing Canada, said the company had acquired additional areas to stockpile completed cars, would add truck shipments and would take some production to other railways by truck.

"It's a challenge," Mr Mordue said. "We have storage spaces essentially for about five days outside of our normal routine." But those options are not economically viable or even practical for many of Canadian Pacific's customers.

David Lindsay, president of the Forest Products Association of Canada, said about three trucks would be needed to replace one rail car. A typical paper mill, he added, would need about 40 trucks a day to move its production.

"Getting that many trucks and drivers to replace rail cars is a physical challenge," Mr Lindsay said, particularly in the remote regions where most mills operate.

Although lumber producers can wait out the strike by storing wood outdoors, that is impossible for pulp and papermakers. In view of the lack of large warehouses at paper mills, Mr Lindsay said, most of them would have to stop production and lay off employees if the strike continued.

Service has also been cancelled on three commuter rail lines in Montreal that use Canadian Pacific tracks and engineers.

US retailers may also encounter product shortages. Many containers bound for the United States are unloaded at ports in British Columbia, then delivered by rail to Chicago and other US destinations by Canadian Pacific.

Labour relations at Canadian Pacific have been shaky in recent years. In 2012, activist investor William A Ackman won control of Canadian Pacific through a proxy fight. He then installed E Hunter Harrison as chief executive, with a mandate to cut costs and improve performance, steps he had previously taken as the top executive at Canadian National. Many of Mr Harrison's measures have not gone over well with unions.

The Canadian government, which has clashed with Canadian Pacific over delays in grain shipments apparently caused by the growth in its oil-shipping business, introduced legislation that ended a 2012 strike after nine days. It is expected that the government may introduce a bill to end this strike as soon as Parliament convenes on Monday.

On Friday, Kellie Leitch, the federal labour minister, joined in the labour talks, which were held in Montreal. NYT