May 31, 2012 / 2:13 PM / 6 years ago

CP trains to start rolling Friday after government ends strike

OTTAWA/TORONTO (Reuters) - Trains will start rolling again on Friday at Canadian Pacific Railway Ltd after the Canadian Senate passed back-to-work legislation on Thursday evening, and the railroad expects operations to be back to normal within 48 hours.

Picketers stand at the entrance to the CP Rail yards in Coquitlam, British Columbia May 23, 2012. REUTERS/Andy Clark

“There will be a period to catch up on backlog and that is something we’ll be doing once we’re operating again. We’ll be doing that as quickly as possible,” CP spokesman Ed Greenberg said.

The Teamsters union launched their strike on May 23, shutting down freight along CP lines and forcing some customers to reduce operations. The government, concerned about the impact on the Canadian economy, pushed through back-to-work legislation on Monday to end the work stoppage.

The striking workers have been without a contract since December 31. The main disagreement is over CP demands to cut pension funding by 40 percent.

CP, whose operating efficiency is the worst in its industry, has said pension costs helped push its expense margins above those of its rivals and made it more difficult to compete with its larger rival, Canadian National Railway Co.

CP said it laid off more than 2,000 non-striking staff in addition to the 4,800 striking workers. It had said another 1,400 faced layoffs if the strike was prolonged.

Defending the government’s intervention in the strike, Labour Minister Lisa Raitt said a long CP rail stoppage would cost the economy C$80 million ($78 million) a day.

“With no prospect of resolution in sight, the Government acted to ensure continued rail services for businesses, families and the economy,” she said.

Teamsters lobbyist Phil Benson told the Senate that the precedent of legislation to end strikes meant CP had not negotiated seriously.

“There was an elephant in the room. That elephant was (past) back-to-work legislation that was heavy-handed and favored companies,” he said.

Transportation analysts at Wolfe Trahan & Co. estimated the impact of an eight-day strike on CP at 20 Canadian cents a share, assuming C$95 million in lost revenue.

CP’s stock closed up 1.3 percent at C$76.08 on the Toronto Stock Exchange.

The work stoppage came at a bad time for CP, which just two weeks ago concluded a bitter proxy battle. Its chief executive quit in the face of a boardroom coup led by the company’s biggest shareholder, hedge fund Pershing Square Capital Management, which demanded the company improve productivity.

The government’s bill makes provision for Ottawa to appoint an arbitrator, who has 90 days to work with the company and the union to craft a compromise contract, which will then be imposed.

Liberal and other opposition politicians have criticized the speed with which the government has brought in back-to-work legislation for CP and in previous disruptions at the Canada Post mail service and at Air Canada.

“Your government is getting a reputation for being labor interventionists,” Liberal Senator Claudette Tardif.

Raitt pointed out that there had been 400 negotiated agreements in areas of federal jurisdictions in 2011 but only 13 strikes, and the government only intervened twice.

A study by the C.D. Howe Institute, a Canadian think tank, found that a back-to-work bill triples the likelihood that in the next round of bargaining, legislation or arbitration will again be needed.

($1=$1.03 Canadian)

Editing by Jeffrey Hodgson and Janet Guttsman

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