December 2, 2009 / 1:11 AM / 8 years ago

CN Rail, union reach tentative deal to end strike

VANCOUVER/OTTAWA (Reuters) - Canadian National Railway said on Wednesday it had reached an agreement with striking locomotive engineers to end their walkout, as the government prepared to step in with back-to-work legislation.

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

Canada’s largest railway said the two sides had agreed to return to the bargaining table and continue negotiations on wages, benefits and other work rules. No timetable for a final contract deal was announced.

“CN is pleased that an agreement has been reached to end the strike by the Teamsters Canada Rail Conference immediately,” CN President and Chief Executive Hunter Harrison said.

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

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

As part of the deal, the company agreed to roll back both the imposed monthly mileage cap and the wage increase.

If the two sides can’t reach an agreement, the wage and benefit offers will be sent to final, binding arbitration. Work-rule issues can also go to binding arbitration, but only if both sides agree, the company said.

Union officials were not immediately available for comment.

CN had been attempting to maintain service by using some 225 managers trained to operate locomotives to replace the 1,700 engineers represented by the Teamsters.

The dispute did not affect CN engineers in the United States, northern Alberta and northern Quebec.

GOVERNMENT PRESSURE AND UNION SPLIT?

News of the tentative deal was first announced in Parliament by Labor Minister Rona Ambrose, who later credited the threat of back-to-work legislation with pressuring the company and union into a settlement.

“It’s good news for the country that we have an agreement. This strike has come to an end and there will be no further economic consequences to a slowdown in the rail system,” Ambrose told reporters in Ottawa.

Lumber and wheat markets, spooked this week by worries over the impact of the strike on supply and prices, had already begun to relax in advance of Wednesday’s agreement, because of the proposed back-to-work legislation.

“(Shippers) will be very, very relieved. There was real serious concern about the damage the strike would do if it lasted any length of time at all,” Robert Ballantyne, president of the Canadian Industrial Transportation Association said in reaction to Ottawa’s announcement.

Ottawa also forced an end to a strike by CN’s conductors and brakemen in 2007, after workers rejected a tentative contract. Settlement of that dispute, however, had also been hampered by bitter infighting in their union.

Wednesday’s agreement may also cause a split within the engineers’ union. A letter from union leaders in Western Canada that was posted on an employee website said they opposed ending the strike but were overruled.

The mileage cap is part of a somewhat Byzantine wage system for CN engineers, in which pay is tied to the distance a train travels. The cap was designed to prevent crews from being overworked.

The railway said the current cap was set during the days of steam locomotives and a higher limit was needed to reflect current conditions and improve productivity. Workers said the change would raise safety issues and cost jobs.

CN’s shares ended off their session lows but were still down 15 Canadian cents, or 0.3 percent, at C$56.16 on the Toronto Stock Exchange.

Additional reporting by Nicole Mordant, Louise Egan, and Rod Nickel; editing by Rob Wilson

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