The other side of Hunter Harrison

Publish by Kristine Owram | | February 16, 2017
Trains are more frequently being driven by people who are primarily company office workers, a strategy that emerged under the management of one-time CEO Hunter Harrison. 

white-collar workers driving trains   

“This is very unusual. I’ve never seen anything like this before,” said Paul Cavalluzzo, a labour lawyer and senior partner at Toronto-based Cavalluzzo Shilton McIntyre Cornish LLP. “You sometimes see this in a strike, but you don’t see it in non-strike situations.”

An employee of Canadian Pacific Railway Ltd. was asleep in a small Prairie town hotel when a middle-of-the-night phone call startled him awake. He’d been called for the 4 a.m. train and a cab would be there shortly to pick him up.

The life of a railroader is not an easy one, with unpredictable hours, long shifts and plenty of nights spent in dreary small-town hotels.

“I could hear the rain thundering down,” said the employee, who asked not to be identified to protect his job. “It was so depressing.”

But this employee was different: He was an office worker who had been pushed into the railroading life against his will, just like hundreds of other white-collar CP employees.

These employees are being pulled away from their desk jobs on a regular basis to work as conductors and engineers, raising serious safety concerns and potentially putting themselves and others in harm’s way. They are often required to travel far from home on short notice, work gruelling hours with little training, and receive little to no extra compensation for their troubles.

Angry union workers say former chief executive Hunter Harrison is to blame. Significant job cuts during his tenure led to an “unsustainable” situation where non-unionized employees are forced to fill the gaps, said Doug Finnson, president of the Teamsters Canada Rail Conference (TCRC), which represents CP’s 3,000 unionized employees.

“Physically, you can’t run as many trains as they’re running now with the workforce they have. It’s structurally impossible,” Finnson said. “We have a chronic shortage of workers.”

CP cut its unionized workforce by 1,500 people or approximately one-third under Harrison, who ran the company from mid-2012 until he stepped down in January to pursue the top job at Florida-based railway CSX Corp.

Harrison is legendary in the industry for his operating method, known as precision railroading, which is designed to create a leaner company by introducing longer and faster trains, better service and lower costs. Including both unionized and non-unionized employees, CP cut its total workforce by 40 per cent, to 11,700 from 19,500, during his four-and-a-half-year reign.

The company’s operating ratio, which measures expenses as a percentage of revenue, significantly improved over the same time period, falling to 58.6 per cent in 2016 from 81 per cent in 2011.

Harrison’s reputation as a man who can turn around even the least efficient railroads — he’s worked his magic at Illinois Central Corp., Canadian National Railway Co. and CP — is the reason why CSX’s shares are up approximately 30 per cent since it was first reported that he’s attempting to install himself in the top job with the help of activist investor Paul Hilal.

But his critics say the downside of his obsession with efficiency is illustrated by CP’s growing reliance on white-collar workers to operate its trains.

According to a decision issued in 2015 by the Canada Industrial Relations Board (CIRB), CP used non-unionized workers for 0.32 per cent of all crew starts across its system in 2014, up more than 50 per cent from 2013. CIRB called on CP to stop replacing unionized workers with management trainees and to stop forcing union members to train managers.

But according to Finnson, things have only gotten worse since then. He believes the practice has “exploded,” judging by the number of complaints he receives from union members.

He cited one period where CP sent 60 managers to Vancouver to run trains because they didn’t have enough unionized workers to meet demand. The union has filed a second complaint with the CIRB, which will hear it on March 8-10 in Toronto.

CP declined to comment for this story because the matter is currently before the CIRB. However, the company said in a 2014 submission to the board that it is difficult to recruit and retain unionized crews in some locations, and it uses management crews “only as a last resort.”

All railroads have some white-collar employees who are qualified to drive trains, but that’s usually because they used to work in the running trades before they entered the management ranks. These managers are generally only used in rare circumstances, such as a strike.

At CN, training is not mandatory and managers are only used “periodically during unusual occurrences to meet service commitments, for example, during a service disruption,” said spokesman Patrick Waldron.

By contrast, all non-union CP employees have since 2012 been required to train as conductors or engineers unless they’re able to get a medical exemption. Those who successfully qualify are then placed in a regular rotation where they can be deployed into the field on a monthly basis for a week or more at a time.

“This is very unusual. I’ve never seen anything like this before,” said Paul Cavalluzzo, a labour lawyer and senior partner at Toronto-based Cavalluzzo Shilton McIntyre Cornish LLP. “You sometimes see this in a strike, but you don’t see it in non-strike situations.”

CP calls its management training program “Street-to-Seat,” and describes it as “the single best way for a management employee to learn what the business is truly about.”

A description of the program on an internal company website notes: “With the ever-evolving railway industry, a conductor or locomotive engineer qualification can help open doors for different potential advancement opportunities. No matter what your role is at CP, this experience will make you better at what you do.”

But the requirements have become increasingly onerous, said the CP office worker who was compelled by the company to start driving trains. He completed the Street-to-Seat training program with the expectation that he’d only be used in case of a strike, but said he now spends a quarter of his working hours on trains.

In one particularly exhausting stretch, he spent a month away from home, working shifts in excess of 12 hours each with a mandated maximum rest period of eight hours between shifts.

“It’s like living in a constant state of jetlag,” he said. “My steel-toed leather boots were soaked through, as well as everything else I was wearing, and my boots were not dry before I had to report for the next shift. I hadn’t slept enough, I hadn’t eaten, I didn’t have time to call my family and I had to be back out there to run another goddamn train.”

He said the time spent in the field seriously affects his ability to do his day job, and he feels like he is being prevented from pursuing professional development opportunities because he’s so frequently away from home.

“These deployments have also taken a heavy toll on my family,” he added. “It’s not easy for them to cope while I’m away. I think about them all the time when I’m deployed to run trains.”

But the potential impact of this practice goes far beyond the disrupted lives of CP employees. In a 2016 report, the Transportation Safety Board (TSB) raised safety concerns by noting that CP’s management employees are getting significantly less training than their unionized counterparts.

The TSB report was written after a train crewed by three CP managers travelled for five miles without authorization near Cranbrook, B.C. No one was injured in the incident, which occurred on March 11, 2015.

Before operating on a new route, conductors and engineers are expected to conduct familiarization runs with local crews who know the area. White-collar employees are supposed to decide for themselves when they’re sufficiently familiar with a route to begin working on their own.

The TSB said the management crew members in the Cranbrook incident were not familiar with the territory, raising concerns about the practice of self-evaluation.

“At Canadian Pacific Railway (CP), management employees who are qualified to operate trains as conductors or locomotive engineers are permitted to perform a self-evaluation of their level of familiarity with the territory before operating the train,” said the TSB report. “This self-evaluation would not necessarily require input and comments from a qualified trainer.”

The TSB added that most managers who operate trains only do it on a part-time basis and are unlikely to gain the same level of experience and familiarity as full-time unionized employees, increasing the risk of accidents.

“It seems to me that if these people are not properly trained and they’re being asked to do this work, then we’ve got various serious health and safety concerns, quite apart from grave public safety concerns,” said Cavalluzzo, the labour lawyer. “To suggest that someone can self-certify for that kind of position is absurd.”

The TSB also raised concerns about the less rigorous training required of white-collar workers, who have to conduct a minimum of 20 on-the-job training trips to qualify as a conductor compared to an average of 73 for full-time unionized workers.

Once qualified as a conductor, unionized workers must work a minimum of two years before they can start training as an engineer; for non-unionized employees, there is no prerequisite amount of experience.

“With shorter training periods, fewer on-the-job training trips and fewer prerequisites prior to starting training, it may be difficult for management employees to acquire the necessary knowledge and experience to become fully proficient with operating trains,” the TSB report said. “Trains can be crewed with management employees who are not sufficiently experienced or familiar with the territory, increasing the risk for unsafe train operations.”

Before implementing the Street-to-Seat program in 2012, CP submitted its management training plan to Transport Canada. However, because the railway didn’t consider the program an operational change, a risk assessment was not conducted.

For union president Finnson, CP’s practice of crewing a train with non-unionized conductors and engineers, who are in turn asked to train a third manager, is particularly concerning.

“He doesn’t even know what he doesn’t know and then he’s teaching another guy,” he said. “Now you have three people that are out of their normal working environment and most likely beyond their capabilities.”

However, both Finnson and the CP office worker expressed optimism that the situation will improve under Keith Creel, who replaced Harrison as chief executive on Jan. 31. Creel has been a protégé of Harrison’s for decades, but there are early indications that he’s taking a different approach from his mentor.

CreelThe CP employee said he received some shares in the company when Creel took over, along with a letter thanking him for his work.

“In the past year, your commendable effort in being a leader in the management crew area did not go unnoticed or unappreciated,” the letter said.

It was the first time the company had formally acknowledged his effort.

“I’m grateful to finally receive some recognition about how hard this has been,” he said. “It makes me feel more optimistic about the future with Keith.”

Finnson said he will give Creel a chance to prove himself.

“I’m hoping that he can improve things, get things where the workers are treated properly and the contracts are respected and the laws are respected,” he said. “But the honeymoon’s not going to last very long if he’s going to keep on treating people like Hunter Harrison does.”

Financial Post

Publish by Kristine Owram | | February 16, 2017 5:16 PM ET