May 28, 2012 / 2:13 PM / in 6 years

UPDATE 5-Canada aims to restore CP Rail service Thursday

* Govt introduces back-to-work bill

* Teamsters union walked off job on May 23

* Pension changes is major sticking point in talks

* CP Rail stock drops 2.1 pct in Toronto

* Bill to come into force 12 hours after becoming law

By Randall Palmer and Nicole Mordant

OTTAWA/VANCOUVER, May 28 (Reuters) - The Canadian government will force striking workers at Canadian Pacific Railway back to work with fast-track legislation aimed at restoring rail service by Thursday, Labour Minister Lisa Raitt said on Monday.

The government introduced the legislation in the House of Commons on Monday to end a work stoppage by 4,800 locomotive engineers, conductors and rail traffic controllers at CP Rail, Canada’s second-biggest railway.

“From past precedent, we’d like CP Rail continuing to roll on Thursday. But we’d like it sooner, quite frankly, and that’s the message today,” Raitt said in Ottawa, flanked by Canada’s ministers of transport, energy, agriculture and industry.

The unionized employees have been on strike since May 23 over pension issues and work rules, shutting down CP Rail freight operations across Canada for nearly a week. The latest round of mediated talks between the company and workers broke down at the weekend.

The government fears the strike could hurt an economy still recovering from recession. Raitt has said a strike would cost C$540 million ($530 million) in economic activity each week.

“It is very clear that the government of Canada must act now to resume rail service at CP Rail, as the prospect of ratified agreements in the short term is highly unlikely,” Raitt told the House of Commons earlier in the day. “Simply put ... the strike can’t go on. We need to get the trains running again.”

An accelerated back-to-work bill will become law shortly a fter it passes the House and Senate a nd will take effect 12 hours later.

The majority Conservative government has resorted to legislation to end strikes at Air Canada and the Canada Post mail service, an d the two main opposition parties were harsh in their criticism on Monday.

“If employers know they can count on the government to intervene on their side to put an end to collective bargaining, then there is less need for them to have good-faith negotiations at the bargaining table,” said Peggy Nash, a member of Parliament from the left-leaning New Democratic Party.

Kevin Lamoureux, a Liberal Party legislator said: “Today we are seeing the shafting of the CP workers, and I say shame on the government for not believing in the importance of free collective bargaining.”

The CP Rail union said the two sides could likely reach a deal if CP backed down on its pension plan demands.

“They don’t want to do that because they want to take the money from our pension plan and they want to give it to the shareholders,” Teamsters chief negotiator Doug Finnson told reporters in Ottawa.

CP wants to reduce pension funding by 40 percent, the union says. CP has said it needs to cut legacy pension and post-retirement benefits to bring them in line with the industry. The railroad says it has contributed C$1.9 billion extr a to its pension plans in the past three years due to funding shortfalls.

While the bill is being enacted, CP Rail will prepare for a ramp-up in operations, it said. B oth sides said they would comply with the legislation.


Companies across a range of industries have scrambled to find alternative ways to ship their grain, coal, fertilizer, autos and other goods while CP trains sit idle, and some industry groups have urged the government to step in.

The Canadian Vehicle Manufacturers’ Association said on Monday its members, which include General Motors of Canada, Ford Motor Co of Canada and Chrysler Canada, were incurring extra logistics costs of C$100,000 a day due to the strike.

The strike is also frustrating grain handlers. Companies such as Cargill Ltd, Richardson International Limited, Archer Daniels Midland Co and Bunge Ltd are crushing canola at a record pace, producing vegetable oil and meal to feed strong global demand.

“It’s causing some anguish because we need all the rail capacity we can with the larger crush volumes and larger rates of export,” said Bob Broeska, president of the Canadian Oilseed Processors Association.

The Canadian Wheat Board, which holds a monopoly on marketing wheat and barley from the 2011/12 crop marketing year, has said the strike affects up to 162,000 tonnes of grain shipments per week.

Miners wh ich produce potash, a globally sought after crop nutrient, mostly use CP for exports. Canpotex, jointly owned by producers Potash Corporation of Saskatchewan Inc , Mosaic Co and Agrium Inc , ships some 40,000 to 50,000 tonnes of potash by rail each day.

But Agrium spokesman Richard Downey said the company was not yet contemplating any slowdown in potash production at its Vanscoy, Saskatchewan, m ine. “If the strike is for a week or two, it’s not a big issue. If it goes beyond that, it becomes an issue for all the potash producers.”

Potash Corp has also not slowed production at this stage, a company spokesman said.

Teck Resources Ltd, a diversified miner and CP’s single largest customer, said i t was still shipping coal from its stockpiles at port.

Raitt said CP’s larger competitor, Canadian National Railway , has tried to help CP customers but it was “too much” for the bigger railroad.

CP’s routes are mostly in western Canada and in the United States. The U.S. operations are not affected by the strike, although any freight destined for Canada is being held up.

CP’s stock price closed 2.1 percent at C$75. 52 on the Toronto Stock Exchange on Monday.

The strike comes at a difficult time for CP, whose chief executive and chairman quit 11 days ago after losing a boardroom dust-up with the company’s largest shareholder.

The shareholder, Pershing Square Capital Management, has vowed to improve CP’s operating performance, which is the weakest in the industry.

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