Canadian Manufacturing

New CP Rail chief vows to smooth ‘ruffled feathers’ with fresh labour contracts

Previous CEO Hunter Harrison had implemented significant staff cuts during his tenure, which led to strained relations with workers

April 20, 2017  by Dan Healing, The Canadian Press

CP Rail reached a deal with 600 of its employees this week, in a deal the company’s new CEO said works to “right” labour relations. PHOTO: CP Rail

CALGARY—A new labour deal covering 600 administrative and intermodal employees in Canada announced April 19 represents success at smoothing “ruffled feathers” among employees at Canadian Pacific Railway, says CEO Keith Creel.

On a conference call to discuss the company’s first-quarter results, Creel said he has been busy over the past few months hosting town hall meetings and negotiating with unions to repair relations damaged through years of cost-cutting.

“Over the last four years, we’ve had some feathers that have been ruffled,” said Creel, who was president during the period before being named CEO in January.

“So part of my focus has been to reconnect with employees and also to reconnect with our … labour unions, to ensure the things we maybe didn’t get right in the past we can get right as we go forward.”


The five-year contract with the United Steelworkers Local 1976 provides for wage increases of two per cent per year along with the additional opportunity for 0.5 per cent to one per cent increases in the fourth and fifth years depending on gains in revenue-ton miles or RTM, CP said. It takes effect Jan. 1, 2018.

Creel said the company is working with the Teamsters Canada Rail Conference to replace contracts that expire at the end of the year for maintenance of way employees and train running staff in Canada and he’s “cautiously confident” he can avoid a strike.

Analyst Dan Sherman of Edward Jones in St. Louis, Mo., said he is impressed with Creel’s new emphasis on customer and employee relations as it will allow CP Rail to better market its services following a period of necessary restructuring.

He rated CP Rail’s first-quarter results as “solid,” noting volume growth was positive for the first time in seven quarters and seemed to be accelerating through the past two months.

Creel took over as CEO at CP Rail from Hunter Harrison, who implemented staff cuts and trained managers to run trains in case of labour disruptions during his reign as CEO starting in 2012.

Harrison left CP Rail five months ahead of schedule in January, giving up benefits and stock options worth up to $118 million to cancel his non-compete agreement. He is now the CEO of Florida-based railroad CSX.

CP reported Wednesday that revenue increased one per cent in the three months ended March 31 to $1.6 billion, thanks to higher volumes of potash, metals, minerals and grain.

Net income fell 20 per cent to $431 million from $540 million in the first quarter of 2016, due mainly to lower foreign exchange gains in the more recent period.

Adjusted first-quarter earnings were $2.50, slightly ahead of the consensus expectation of $2.49 as provided by Thomson Reuters.

CP Rail says its operating ratio—a measure of efficiency that balances revenue with expenses—improved by 80 basis points to 58.1 per cent from 58.9 per cent in the year-earlier quarter due to a $51 million recovery associated with Harrison’s departure.

But its adjusted operating ratio, which doesn’t include the gain, increased by 240 basis points to 61.3 per cent.