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Late Wednesday deal averts Strike at Canadian National Railway

Canadian National Railway
Canadian National Railway

UNDATED (Reuters) - Canadian National Railway Co reached a deal on Wednesday to avert a strike by conductors and yard workers after the Conservative government said it would use back-to-work legislation to keep the country's biggest railway operating.

The Teamsters Canada Rail Conference gave notice earlier in the day that it intended to strike as soon as Saturday after members voted against a tentative agreement with Canada's biggest rail operator.

A new three-year agreement is a modification of the tentative pact reached in October, union general chairman Roland Hackl said.

"I'm glad there's not going to be a strike," he said, shortly after the deal was reached. He said no details would be released until the deal is ratified.

A work stoppage by about 3,000 conductors, train and yard workers would have disrupted a vast cross-country network that ships goods ranging from lumber and crude oil to grains and automobiles.

What happens to CN has an impact on much of Wisconsin. One of their mainlines from the trans-Canada route to Chicago and south is the former Soo Line and Wisconsin Central tracks from Superior through Ladysmith, Marshfield, Stevens Point, Appleton, and Milwaukee. Canadian National operates most trains in northern, central, and eastern Wisconsin, and a work stoppage would have been a major inconvenience and expense for Wisconsin companies.

Kellie Leitch, Canada's labor minister, had said at a press conference in Ottawa that the government was preparing back-to-work legislation to "protect Canada's economy and Canadian grain farmers."

The Conservatives, led by Prime Minister Stephen Harper, have been quick to intervene in recent years to avoid major labor disruptions. In 2012, it legislated striking workers back to work at both CN rival Canadian Pacific Railway (CP) and Air Canada.

The swift government response came after the union told Reuters that CN said in a morning meeting it was "done negotiating" and workers must choose between an existing labor deal and walking off the job.

The union said its conductors, train and yard workers had voted down a tentative pact, negotiated in October, due to deep distrust of the railway because it didn't respect provisions for rest.

Members were angry that they are being made to work 12-hour shifts, despite asking to be relieved after 10 hours, Hackl had said, calling it a safety issue.

The union said that CN tried, but failed, to remove contractual rest periods from the agreement in talks last year. Following that, rest violations multiplied, the union said in a letter to CN, in many cases by 300 to 400 percent.

Montreal-based CN has said that extreme winter weather conditions have hampered normal operations and that it complies with statutory rest provisions.

GRAIN BACKLOG

Any service disruption would have exacerbated a severe backlog in moving western crops to ports that has racked up shipping penalties for grain handlers and left farmers with few buyers.

Record wheat and canola harvests have overwhelmed CN and CP, resulting in a combined backlog of some 40,000 grain hopper cars.

A walkout would also have affected crude oil being shipped by rail, which has surged over the last few years as oil production exceeds pipeline capacity.

CN said it shipped nearly 25,000 carloads of crude in its recently reported fourth quarter and 75,000 for the full year.

CP also shipped 25,000 carloads of crude in that quarter, and 90,000 carloads for the year.

Extreme cold and heavy snowfalls have already hampered operations this winter. CN issued a cold weather advisory for western Canada on Tuesday, saying that it was running shorter trains in the hardest-hit areas and detouring where required.

The labor dispute as rail safety is under scrutiny in Canada and the United States, following a series of derailments across the continent that have caused deaths and evacuations due to oil spills and fires.

Most notably, a runaway train carrying crude exploded last summer in Lac Megantic, Quebec, killing 47 people.

Last month, CN said its railroad's safety record in 2013 improved 9 percent, even as it dealt with a series of high-profile derailments, including two in New Brunswick in January. One train caught fire and burned for days.

CN shares ended 11 Canadian cents higher at C$59.43 on the Toronto Stock Exchange.

(With additional reporting by Euan Rocha in Toronto, Rod Nickel in Winnipeg, and Randall Palmer and Louise Egan in Ottawa; Editing by Ros Russell, Jeffrey Hodgson, Bernadette Baum and Amanda KWan)

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