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By Charles Grandmont
MONTREAL, Feb 17 (Reuters) - Canadian National Railway Co.'s largest union said on Tuesday it will go on strike on Friday if the railway does not come up with a better wage offer.
CN, Canada's largest railway and No. 5 in North America by revenues, said that if there is a strike it hopes to maintain freight services through the use of management personnel.
"We intend to keep as much traffic as we can moving, and certainly grain will be one of them," said CN spokesman Mark Hallman.
"Clearly, we would like to get a settlement, but if that proves impossible by the deadline, we're prepared to operate."
The Montreal-based railway, whose network stretches across Canada and through the United States to the Gulf of Mexico, is a major transporter of grain, minerals and automobiles.
The Canadian Auto Workers union, which represents 5,000 shopcraft, clerical and intermodal yard workers, said its members in each of those groups had rejected tentative agreements, mainly because of monetary issues.
"Wage is the real kicker," said CAW president Buzz Hargrove.
The proposed three-year contract deals offered yearly salary increases of 3 percent, the union said.
"People's expectations are much higher, Hargrove said. "The company announced the highest quarterly profit in the history of the corporation and the executives are taking big salaries and bonuses out of this."
Wages are the biggest expense at CN, which has turned itself over the last decade from a bloated state-owned railway into North America's most efficient railway.
The average union member makes about C$45,000 ($34,000) a year, the CAW said.
WEDNESDAY MEETING
Hargrove said the Canadian minister of labor has called the sides to a conciliation meeting on Wednesday, but said he doubted it could prevent a strike.
"I'm not at all optimistic that anything coming out of that meeting will avoid a shutdown of CN," Hargrove said.
The union members who voted down the tentative agreements include mechanics who maintain and repair locomotives and other rolling stock, customer service workers and employees who transfer intermodal traffic such as shipping containers to truck trailers.
"While CN noted that it has contingency plans in the event of a strike, we believe that a loss of 40 percent of employees is likely to cause a significant impact on operations," Merrill Lynch analyst Ken Hoexter said in a research note reiterating its "buy" recommendation on the stock.
The three contracts expired Dec. 31. Union and company negotiators reached tentative agreements on wages and benefits on Jan. 23, shortly before a strike deadline, with plans to iron out details later. But union members rejected the deals.
CN is in talks with six other unions representing about 8,500 employees, including locomotive engineers, conductors and signal technicians. No strike dates have been set in those talks, CN said.
CN shares fell C$1.56, or 2 percent, to close at C$79.24 on the Toronto Stock Exchange on Tuesday and were off $1.37 at $60.38 in New York.
The shares are up 28 percent over the past year and have risen nearly 1 percent in the past month.
(Additional reporting by Robert Melnbardis in Montreal)
($1=$1.33 Canadian)