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Canadian railways woo scarce workers with cold, hard loonies

Stock MarketsJun 07, 2018 01:20PM ET
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© Reuters. FILE PHOTO: A Canadian National Railway train travels westward on a track in Montreal

By Allison Lampert and Julie Gordon

MONTREAL/VANCOUVER (Reuters) - In a battle to unclog rail bottlenecks that left Canadian commodities trapped in landlocked western provinces this winter, the country's largest railways are offering C$15,000 ($11,566.93) signing bonuses for experienced workers who can hit the rails right away and get trains moving.

North America's transportation sector is struggling to hire staff amid rising demand from shippers and low unemployment, with some large U.S. railroads offering bonuses as high as $20,000 for experienced train crews in certain states.

The bonuses are a "new approach" for Canadian National Railway Co (TO:CNR), which is also bringing back recent retirees and has launched a new two-year management trainee program to deepen its pipeline of future managers, said spokesman Patrick Waldron.

Harsh weather and insufficient capacity snarled service this winter, leaving grain and other commodities stranded in Canada's landlocked prairies.

"The strengthening economy across the board makes the overall job market more competitive," Waldron said.

Montreal-based CN initiated the bonuses last year, which its smaller rival Canadian Pacific Railway Ltd (TO:CP) then matched, two sources familiar with the matter told Reuters.

Waldron would not say how many CN workers were hired through the bonuses which has not been previously reported.

CP declined to comment specifically on the bonuses.

CN is rolling out its largest expansion in decades, including a roughly 20 percent boost to its workforce over two years by the end of 2018.

CP, which said on Thursday it would invest C$500 million ($385.6 million) on grain transport cars, plans to hire 700 workers, although a spokesman did not specify a time period.

Calgary-based CP offered its engineers and conductors a 9 percent salary hike over four years as part of a tentative agreement reached last week. Experienced conductors earn over C$100,000 ($77,113), although salaries vary widely.

Since new recruits need up to six months of training before hitting the rails, attracting experienced conductors who can work immediately is worth the bonuses' expense, said Edward Jones analyst Dan Sherman, noting it amounts to less than 1 percent of labor costs. "The idea is to get them out there and get the trains rolling," he said.


But both railways could face stiff competition from the oil and gas sector, as rebounding oil prices push energy patch salaries back up to the six-figure mark, making those jobs far more attractive for workers, said recruiters. Railways hire from the same labor pool as many oil and gas firms.

The global oil benchmark Brent (LCOc1) charged past $80 a barrel last month for the first time since 2014, cheering executives in Canada's energy capital of Calgary, Alberta, where a shift is underway from survival mode to cautious expansion.

Oil and gas sector job postings have jumped 159 percent so far this year, compared with 2017, said Matt Munro, Canada manager for UK-based recruiter Petroplan.

Pay too is rising, with the average weekly salary for a Canadian oil and gas extraction employee in the first quarter rising 7.1 percent year-on-year to C$2,878.82 ($2,219.94), Statistics Canada data shows.

Railway employee salaries, by comparison, averaged C$1,337.98 in the first three months of the year.

Click here for a graphic on salaries:

While not everyone that exited the notoriously cyclical energy sector in the last downturn is ready to run back, "compensation will always play a significant factor in attracting and retaining top talent," said Kati Greenall, Canada Regional Director at Houston-based recruitment firm Airswift.

Indeed, some newly recruited railway workers are already ready to jump ship. "I would go back to the energy sector tomorrow if the opportunity came along," one recent CP recruit told Reuters.

($1 = 1.2968 Canadian dollars)

Canadian railways woo scarce workers with cold, hard loonies

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