Troubles on the railroads in Canada

Canadian Pacific Railway Ltd. (NYSE: CP) maintenance workers have walked off the job in pursuit of a 13% wage increase over the next three years. This is the second strike this year against one of Canada's national railways and it affects approximately 3,000 rail workers. The previous strike in February involved engineers and yard workers. That dispute is currently in the hands of mediators.

Teamsters union leader William Brehl, indicated that for most of the workers involved in the current walkout, wages are the central issue. Union members are demanding a three year, 13% total wage increase, but the company has refused to agree to an increase of more than 10%. The deadlock indicates little promise for early resolution. The company has stated that the vacated work positions shall be immediately staffed with cross trained management personnel and it anticipates little effect to business operations.

At least one Canadian economist has indicated that this knot in Canadian logistics has the potential to push some would be Canadian rail traffic southward into the U.S. Jayson Myers, chief economist with the Canadian Manufacturers & Exporters, told CBC News, "We can't afford to see continuing series of strikes in our transportation sector, and then pretend that we have an efficiently working logistics system here in Canada."

Perhaps Warren Buffett is on to something.