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Canadian Pacific Railway Ltd. (TSX: CP) (NYSE: CP) came to an agreement with the union Teamsters Canada Rail Conference (TCRC) to enter binding arbitration, effectively ending a strike that began on Feb. 15. The arbitrator will be appointed by the federal government. Under the terms of the agreement, workers returned to work on Feb. 17 at 8 a.m. TCRC represents about 3,000 of CP’s active locomotive engineers and conductors, according to CP.
Keith Creel, CP’s COO, estimated that the strike would cost the railroad about 1 cent per day in per-share earnings, according to a recent Bloomberg story. Based on CP’s 166 million diluted shares outstanding as of the end of fourth-quarter 2014, Creel’s estimate means that the strike could cost the company about CA$1.7 million each day.
News of the strike came the same day that CP said it reached an agreement with Unifor, the union representing 1,800 members in 18 different locations, according to a statement from the union. Unifor members at CP conduct safety inspections, maintenance and repairs on all rail cars and locomotives.
The strike was announced on Feb. 14, after negotiations between CP and TCRC broke down without reaching an agreement. In a release, TCRC said the major issues underlying the strike, and that arbitration should address, include “fatigue management and the necessity to implement broad based and effective fatigue countermeasures for the rail workers,” as well as “the poor relationship CP management has adopted towards the workers, which has developed into massive numbers of outstanding grievances that need to be resolved.”
According to a statement from CP, the company proposed options intended to mitigate TCRC’s complaints, including wage increases, better benefit plans and changes to work schedules. CP also noted that “72% of all engineers and conductors do not take the time off they are entitled to. Furthermore, 60% of the conductors and engineers at CP make between $80,000 and $160,000, while working an average of 31 to 35 hours a week.”
With the strike ended while the two parties pursue an agreement through arbitration, the Canadian government halted plans for the back-to-work legislation it was considering to end the strike, Bloomberg reported. At a Feb. 16 news conference, Labor Minister Kellie Leitch said, “I’m incredibly happy that both sides put the interests of Canadians and the Canadian economy first. My expectation is that people return to work quickly.”
Both parties remain willing to work toward an agreement, with CP’s CEO E. Hunter Harrison stating, “This decision ensures both sides will get back to the table, and gets us back to moving Canada’s economy forward. While we would have preferred a negotiated settlement, this is the right thing to do at this time.”
Meanwhile, TCRC stated, “The TCRC remains available to achieve a negotiated settlement at any time should the employer chose to agree.”
CP is a transcontinental railway in the U.S. and Canada with direct links to eight major ports, including Vancouver and Montreal. CP serves the Bakken Shale, Marcellus Shale and Canadian Oil Sands regions, as well as major ethanol production areas in the U.S. Midwest.
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