Employees at Canadian Pacific Railway Ltd. returned to work Monday after only a day and a half on the picket lines, agreeing to binding arbitration before the federal government tabled its planned back-to-work legislation.
Labour Minister Kellie Leitch announced the agreement Monday afternoon, shortly after the government signaled its intent to force the approximately 3,000 striking members of Teamsters Canada back to work.
“To the credit of the Teamsters and CP Rail, they’ve come to an agreement to go to mediated arbitration, and I think that’s in the best interests of Canadians and the Canadian economy,” Ms. Leitch said in a press conference.
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“We have not tabled this legislation. We have allowed the parties to meet, to talk and to come to what they think will be the best agreement.”
She added that there “are still numerous issues on the table,” but she expects the arbitration process to find a resolution. The arbitrator will be appointed by the federal government.
CP chief executive Hunter Harrison said he would have preferred a negotiated settlement with the striking locomotive engineers and conductors but acknowledged that “this is the right thing to do at this time.”
“This decision ensures both sides will get back to the table, and gets us back to moving Canada’s economy forward,” Mr. Harrison said in a statement.
Mr. Harrison has taken an aggressive stance on labour relations since he became CEO in 2012, cutting 4,500 jobs by the end of 2013 as he worked to cut costs and get the company’s operating ratio down to the mid-60s. (An operating ratio tracks a railway’s operating costs as a percentage of revenue. A lower number is better.)
It’s likely that Mr. Harrison will continue this aggressive approach as he works to double CP’s earnings per share by 2018.
The Teamsters blamed “dysfunctional working conditions” for the strike, including a lack of reliable schedules and the company’s alleged failure to enforce required rest periods.
CP, on the other hand, said it offered wage increases, improved benefit plans and changes to work schedules.
Shortly after the strike started on Sunday morning, Ms. Leitch tweeted that it would cost the Canadian economy approximately $205 million per week.
The short-lived walkout did cause some disruptions Monday, most notably in Montreal where some commuter rail lines run by CP were shut down, forcing as many as 19,000 people to take shuttle buses to work.
However, shippers expressed relief that it didn’t go on longer.
“I’m pleased to hear that they’ve ended the strike,” said Kevin Auch, vice-chairman of the Alberta Wheat Commission. “Having the rails down would have cost Alberta wheat farmers a very significant sum of money.”
“It’s good that they’re going to go to arbitration,” agreed David Lindsay, president of the Forest Products Association of Canada. “That means that the businesses that depend on the railway industry can continue to do their work and the employees that work for those businesses can too.”
Mr. Lindsay had warned that a strike lasting more than a couple of days would force pulp and paper mills to shut down and temporarily lay off workers.
CP’s chief operating officer Keith Creel said last week that a strike would reduce the railway’s earnings per share by a penny a day.
But Christian Wetherbee, an analyst at Citi Research, said the short-lived strike would be “largely immaterial” to the railway’s earnings.