Hensall Global Logistics - Client Advisories

Monday, September 6, 2010

Client Advisories
Important Information For Hensall Global Logistics Customers

CN Labour Situation - Update Dec 1, 2009
2009-12-01

Priority:

Urgent

Please find following the latest article posted on Reuters Canada (Nov. 30th @ 5:32pm) regarding the CN Strike:

OTTAWA/VANCOUVER (Reuters) - Canada's efforts to speed through legislation to halt a strike by Canadian National Railway's locomotive engineers hit a political roadblock on Monday, preventing an immediate end to the walkout.

Two opposition parties, the New Democratic Party and the Bloc Quebecois, said they would oppose any attempt by the Conservative government to fast-track a bill that would force the strikers back to work.

With all-party support the strike could have been over on Monday night. But the legislation will now face additional debate and procedural hurdles that could take days.

Some 1,700 locomotive engineers at Canada's biggest railroad walked off the job at the weekend after CN last week unilaterally imposed new work conditions.

The government said it wanted to prevent the strike derailing Canada's economic recovery. Statistics out on Monday showed that Canada crept out of recession in the third quarter, but the recovery remains fragile.

"Shippers rely on CN. Farmers rely on CN. Companies from every province and territory in this country rely on the CN rail system," Labor Minister Rona Ambrose said after introducing the back-to-work bill.

"The CN rail system is an integral and vital part of our transportation system and at this time in Canada during a fragile economic period it is incredibly important that our government protect Canadian jobs and protect the Canadian economy."

The Liberal Party, the largest opposition party, declined to say what it would do until the government gave more detail on the issues dividing the company and union. The Conservatives have a minority of seats in Parliament, so the bill would fail if all three opposition parties vote against it.

If the Liberals back the government, debate on the bill could start on Wednesday night. As the only other party which has governed Canada, the Liberals have been careful not to let such strikes go on too long.

The dispute does not affect CN engineers in the United States, who work under different contracts, or Canadian commuter and inter-city rail services, which use CN tracks.

CN says it is using management and nonunion staff to keep trains running on a cross-Canada network that is heavily used by shippers of grain, lumber, consumer goods and metals.

But with no signs of an end to the strike, lumber futures on the Chicago Mercantile Exchange rose the daily limit of $10 per thousand board feet on Monday on fears lumber deliveries into the United States will slow and drive up prices.

Without shipments, paper and pulp mills will run out of raw material within days, said Andrew Casey, vice-president of public affairs at the Forest Products Association of Canada.

"This is one more problem we don't need," Casey said of an industry still shell-shocked from the U.S. housing crisis.

Ford Motor Co said it was using more trucks as transport because of reduced service from CN. Chrysler said it wasn't affected.

The Canadian Wheat Board said the strike has slowed grain shipments seriously during the busy post-harvest season and the costs of late shipping penalties could rise to C$1 million a day within a couple of weeks.

"It's a very serious situation, especially if it goes on for any length of time," Canadian Wheat Board spokesman John Lyons said.

The engineers have been without a contract for almost a year, and CN spokesman Mark Hallman said no talks were scheduled for Monday.

The last strike at CN began in 2007 when some workers walked off the job for 15 days. It ended with a back-to-work act, passed because of the importance of the rail service.

Under the conditions CN imposed last Monday, engineers will get pay increases of 1.5 percent. But their monthly mileage cap will rise to 4,300 miles from 3,800 miles, matching that of CN's train conductors.

CN says the 3,800-mile limit was set in an era of steam locomotives, and a higher limit would improve productivity.

CN's stock closed 34 Canadian cents lower at C$55.30 on the Toronto Stock Exchange on Monday. Shares in rival railroad Canadian Pacific Railway Ltd were down 48 Canadian cents at C$50.97.

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