December 1, 2009 / 6:50 PM / 8 years ago

CN Rail makes new offer to striking workers

<p>Rail cars sit in the CN MacMillan Yard in Toronto February 10, 2007.J.P. Moczulski</p>

OTTAWA/VANCOUVER (Reuters) - Canadian National Railway offered a potential olive branch on Tuesday to striking Canadian locomotive engineers, who are angry about a change in the amount of time they have to work each month.

Canada's biggest railway said it would agree to binding arbitration on wage and benefit issues and roll back its demand for a higher cap on the number of miles the engineers must drive each month.

The offer is conditional on the union withdrawing unspecified work demands from the bargaining table.

"This is a good faith effort to reach a settlement and to end the strike," CN spokesman Mark Hallman said.

The engineers' last contract expired on December 31, 2008.

The Teamsters union, which represents the 1,700 striking train engineers, was not immediately available for comment. Hallman declined to say what the union's demands on rules about working conditions were.

CN's offer came on the fourth day of the strike by Canadian engineers -- the dispute does not affect CN engineers in the United States. Shippers reported mild disruptions to their operations so far, but warned that problems would grow the longer workers stayed on the picket line.

The strike started on Saturday morning in response to CN unilaterally imposing a 1.5 percent wage increase and raising the monthly mileage cap to 4,300 miles from 3,800 after 14 months of negotiation failed to produce a new contract.

CN has said the 3,800-mile limit was set in an era of steam locomotives, and a higher limit would improve productivity. The union says the higher limit would spell more time away from home for its engineers and cost jobs.

Meanwhile, the Canadian government's move to legislate a quick end to the strike got a boost earlier on Tuesday when a senior Liberal source said the party would likely back the bill. The Conservative government holds only a minority of seats in the House of Commons and needs the support of at least one opposition party to pass legislation.

"We're not going to let the Canadian economy be damaged by the strike," said the Liberal source, asking not to be identified.

Asked if that meant the Liberals, the biggest opposition party, would help the Conservatives fast-track the back-to-work bill, he said: "At the end of the day, most probably yes."

The government, worried that the strike could torpedo the country's fragile economic recovery, quickly stepped into the fray on Monday, unveiling its back-to-work legislation.

The bill could pass in a matter of days if the Liberals do agree to fast-track it despite the refusal of two smaller opposition parties to do so.

As momentum gathered in Ottawa to halt the strike, shippers of goods including grains, lumber and coal, said they could soon feel the pinch because the skeleton staff deployed by CN Rail to operate the trains would not be able to keep up.

CN has about 225 managers capable of filling in for the 1,700 locomotive engineers that are on strike, said Bob Ballantyne, president of the Canadian Industrial Transportation Association, a shippers' group, who said he met with CN management on Monday.

"I think CN would be very hard-pressed to maintain any comparable level of service after more than a few days," Ballantyne told Reuters.

CN has declined to discuss its contingency plans, saying they are confidential.

Miner Teck Resources Ltd said the strike has caused some congestion on the railway line shared by CN and rival Canadian Pacific Railway Ltd, which moves most of Teck's coal.

"To ease the congestion, we have sent two shipments eastbound instead of to the (British Columbia) ports," a Teck spokesman said.

CN's shares ended up C$1, or 1.8 percent, at C$56.30 on the Toronto Stock Exchange on Tuesday.

($1=$1.04 Canadian)

Additional reporting by Rod Nickel in Winnipeg, Cameron French in Toronto and Allan Dowd in Vancouver; editing by Rob Wilson

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