CALGARY, Alta. — CP Rail plans to deploy trained management employees to maintain its operations during a strike announced Saturday by the union representing its maintenance of way workers.

The Teamsters Canada Rail Conference Maintenance of Way Employees Division served CP Rail with a 72-hour strike notice. The union plans to strike at 11:59 PM MDT May 15, 2007.

The union represents 3,000 employees at CP who are involved in the building, inspection, and maintenance of the tracks, bridges, and structures on the network. They do not operate trains. CP’s trains will continue to operate with regular personnel.

Of the 3,000 employees, roughly 1,200 of the positions are directly involved in track maintenance, with the remainder of the employee group involved in capital projects. Also, while the union represents 3,000 members, only 2,300 are currently on active duty (as capital projects have not yet been started in earnest).

To maintain operations during the strike, CP is mobilizing 1,300 trained management employees to fill in for the1,200 employees which directly maintain track. Capital projects will be deferred during the strike.

While the replacement management personnel will undoubtedly lack the experience of the striking workers, with 150 front line maintenance supervisors (according to the union) ready to guide the replacement workers, and given the non-operations nature of the employee group, we would not anticipate a material impact from the work action, commented David Newman, a well-known analyst of the rail industry with National Bank Financial. Newman added, however, that lengthy work action, which could delay important capital projects and impact management personnel’s ability to perform their regular duties, could begin to impact the Company, and perhaps the safety of the network.

The union was quick to raise concerns about safety during the strike. Union president William Brehl said he is worried for the public safety if CP Rail thoughtlessly continues to try to run trains over track that has not been properly inspected or maintained.

Everyday a trained and qualified TCRC MWED member finds a defect that has the potential for disaster. We fix or protect these defects to insure that the right-of- way is safe. All of us are extremely worried about unskilled, unqualified and inexperienced personnel out trying to perform these dangerous and necessary tasks, he said.

The unions current collective agreement expired on December 31, 2006. The parties had been bargaining since July, 2006 but wages, benefits, seniority, work rules, safety, quality of life and other issues have polarized the parties, according to Brehl.

CP Rail stated in a release that in addition to improved pension and benefits, its settlement offer calls for increases of 3%, 4% and 3% over the 3 year term (2007-2009), and is consistent with agreements ratified by other CP unions. These increases significantly exceed average settlements across Canadian industry, which are running just over 2.5% annually, it added.

The union is quoting different numbers.

We have been reasonable and have hit a brick wall. For example, we are asking for a 4% wage increase for 2007. The company is standing firm at 3%. The national average presently for wage increases on contracts settled in 2007, is at 3.4% and rising. CPRail is making huge, above average profits, yet they offer below average wage increases. And they want us to make massive concessions in seniority, work rules and our health and welfare benefits just to receive the sub standard wage increases that they put on the table. said Brehl.

Over the three-year term, the union is looking for a 13% pay hike (4.3% per year).

No further talks are scheduled but Newman says that it may not be a long strike.

Given the two sides have been diligently bargaining for several months, are not overly far apart in terms of demands, and given a large portion of the employees represented are seasonal in nature (e.g. capital project employees), and hence have likely been looking forward to recommencing work and a regular pay-cheque, we would expect a relatively short work action, he explains. in our view.

CP has renewed 99 collective agreements with 15 different unions over the last 12 years with just one strike 4 years ago.