CPKC and TCRC labour negotiations update

Rhea-AI Summary

Canadian Pacific Kansas City (CP) files Notice of Dispute with the Federal Mediation and Conciliation Service for collective bargaining negotiations with unions TCRC - Train & Engine and TCRC - Rail Canada Traffic Controllers. CPKC aims for fair agreements benefiting employees, customers, and shareholders.

Labor Relations Expert

From a labor relations perspective, the Notice of Dispute filed by Canadian Pacific Kansas City (CPKC) indicates a significant juncture in the collective bargaining process. The involvement of the Federal Mediation and Conciliation Service suggests that previous negotiations have reached an impasse, which is not uncommon in labor relations, especially in industries like rail transport where the workforce is unionized and the stakes are high. CPKC's history of requiring federal conciliation in the majority of its negotiations since 1993 reflects a pattern that stakeholders should be aware of, as it may imply entrenched bargaining positions or a complex labor environment.

For employees and unions, the appointment of a Federal Conciliation Officer could be seen as a neutral intervention that may help bridge gaps between the parties. For shareholders and investors, the potential for a prolonged dispute could pose risks to the company's operational efficiency and financial performance. The rail industry is a critical component of the supply chain and any disruptions can have wide-reaching effects on the Canadian economy and international trade. It is crucial to monitor how quickly and effectively the conciliation process can resolve the issues at hand to mitigate any negative impact.

Financial Analyst

Looking at the financial implications, the dispute between CPKC and the TCRC divisions could have material impacts on the company's operations and, by extension, its financial health. The mention of wage and benefit increases in the proposed agreement suggests that CPKC is facing increased labor costs, which could affect profit margins if not offset by operational efficiencies or revenue growth. Investors should consider the historical context provided, where CPKC has needed federal conciliation in most bargaining rounds, as a potential indicator of future financial risk. While labor disputes are factored into investment risk profiles, the specific dynamics of this situation, including the number of employees involved and the critical nature of their roles, could lead to significant operational disruptions if not resolved in a timely manner.

Moreover, CPKC's commitment to reaching an agreement that benefits all stakeholders, including shareholders, is crucial. The outcome of these negotiations will likely influence investor confidence and could affect the stock price. The emphasis on schedule predictability and quality of life improvements for employees may also have long-term benefits for the company by potentially reducing turnover and improving workforce stability, which can translate into operational cost savings.

Economist

From an economic standpoint, the dispute between CPKC and the TCRC has broader implications beyond the company itself. The railway sector is a backbone of the Canadian economy, facilitating the flow of goods both domestically and for international trade. Any disruption in rail services can lead to supply chain bottlenecks, affecting industries such as agriculture, manufacturing and retail. It is essential to consider the potential economic costs of delayed negotiations, including the impact on Canada's GDP and trade balance. The mention of CPKC's role in supporting the import and export of goods internationally highlights the global interconnectedness of this issue.

Additionally, the timing of the negotiations and the potential for a resolution are important economic indicators. Should the dispute lead to work stoppages or strikes, the immediate economic consequences could be substantial, influencing not only the company's performance but also national economic indicators. The long-term effects of a well-negotiated agreement could be positive, potentially leading to increased productivity and efficiency within the rail sector. It is important for economic stakeholders to track the progress of these negotiations closely, as they may signal broader trends in labor relations and their impact on the economy.

CALGARY, AB, Feb. 16, 2024 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) today filed a Notice of Dispute with the Federal Mediation and Conciliation Service requesting the appointment of a Federal Conciliation Officer to assist CPKC and both the Teamsters Canada Rail Conference (TCRC) – Train & Engine (T&E) division and the TCRC - Rail Canada Traffic Controllers (RCTC) division in reaching negotiated collective agreements.

The TCRC - T&E represents CPKC's roughly 3,200 locomotive engineers, conductors and train and yard workers, and the TCRC - RCTC represents approximately 80 rail traffic controllers, all in Canada. This is a process available under the Canada Labour Code to help employers and unions achieve negotiated collective agreements.

Since September 2023, CPKC has been negotiating in good faith with the TCRC - T&E and TCRC - RCTC. CPKC has offered both a fair and balanced agreement with wage and benefit increases and more schedule predictability and quality of life improvements for its T&E employees.

The latest collective bargaining negotiation session took place the week of January 29, 2024. Both CPKC and Union leadership remain far apart on the issues.

CPKC has an excellent track record of successful collective bargaining with its unions. However, Federal Conciliation has been required in nine of the 10 collective bargaining rounds of negotiations between the TCRC - T&E and CPKC since 1993.

CPKC is and will remain focused on, and committed to, arriving at a negotiated outcome that is in the best interests of its employees and their families, its customers, its shareholders and the overall Canadian economy. Everyone benefits when the railway can continue providing essential rail service, delivering goods across Canada and supporting the import and export of goods internationally.

While the two TCRC collective agreements expired on December 31, 2023, they remain in effect under Canadian labour law until the parties reach new agreements.

Forward looking information

This news release contains certain forward-looking information within the meaning of applicable securities laws in both the U.S. and Canada. This news release contains forward-looking information relating, but not limited to, collective bargaining between CPKC and its labour unions, potential work stoppage and CPKC's business, operations and service. This forward-looking information also includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance.  Forward-looking information may contain statements with words or headings such as "financial expectations", "key assumptions", "anticipate", "believe", "expect", "plan", "will", "outlook", "should" or similar words suggesting future outcomes. 

Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CPKC's forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CPKC; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. The foregoing list of factors is not exhaustive.  These and other factors are detailed from time to time in reports filed by CPKC with securities regulators in Canada and the United States. Reference should be made to "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information" in CPKC's annual and interim reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on forward-looking information. Forward looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CPKC. Except as required by law, CPKC undertakes no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.

About CPKC

With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of México to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR

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SOURCE CPKC

FAQ

What is the purpose of the Notice of Dispute filed by Canadian Pacific Kansas City (CP)?

CP filed the Notice of Dispute to request the appointment of a Federal Conciliation Officer to assist in reaching negotiated collective agreements with unions TCRC - Train & Engine and TCRC - Rail Canada Traffic Controllers.

How many employees are represented by TCRC - Train & Engine and TCRC - Rail Canada Traffic Controllers?

TCRC - Train & Engine represents roughly 3,200 locomotive engineers, conductors, and train and yard workers, while TCRC - Rail Canada Traffic Controllers represents approximately 80 rail traffic controllers, all in Canada.

What has been CPKC's approach to negotiations with the unions since September 2023?

CPKC has been negotiating in good faith since September 2023, offering fair and balanced agreements with wage and benefit increases, as well as schedule predictability and quality of life improvements for its employees.

How many times has Federal Conciliation been required in negotiations between TCRC - Train & Engine and CPKC since 1993?

Federal Conciliation has been required in nine out of the 10 collective bargaining rounds of negotiations between TCRC - Train & Engine and CPKC since 1993.

What is CPKC's focus and commitment regarding the negotiations with the unions?

CPKC is focused on arriving at a negotiated outcome that benefits its employees, customers, shareholders, and the Canadian economy by continuing to provide essential rail service and supporting the import and export of goods.

When did the two TCRC collective agreements expire?

The two TCRC collective agreements expired on December 31, 2023, but they remain in effect under Canadian labour law until new agreements are reached.