Cost-cutting plan pushes CP stock up
CALGARY – Investors are welcoming a new plan by Canadian Pacific Railway Ltd. to drive down costs, while a union representing 5,000 of its employees is awaiting more details on major job cuts.
Shares in the Calgary-based company closed up about four per cent to $96.82 on the Toronto Stock Exchange, marking a 52-week high.
Shareholders are reacting to a presentation by new CP chief executive Hunter Harrison on Tuesday evening outlining his vision for the troubled railroad. The most striking change will be a 23-per-cent reduction in the railway’s 19,500-member workforce by 2016.
About 1,700 of the 4,500 cuts are expected to take place by year-end. Much of the reduction is expected to come through attrition as workers retire and aren’t replaced.
Canadian Pacific management has yet to meet with the Teamsters Canada Rail Conference, which represents conductors, yardmen, locomotive engineers and railway traffic controllers, the union said in a release Wednesday.
“It is difficult for us to evaluate the scope of the decision,” said TCRC president Doug Finnson. “We will wait to meet with management to find out the details, and will reserve comment until later.”
In May, that group of Teamsters workers, known as running trades, walked off the job for nine days before the federal government forced them back to work. The stoppage took place days after shareholders voted to oust then-CEO Fred Green after a bitter proxy contest launched by the railway’s biggest shareholder, Pershing Square Capital Management.
But it was about a month before Harrison, Pershing Square’s pick for Green’s replacement, was formally appointed CEO.
“We have good relationships with most of our organizations. I can tell you that the Teamsters, from a running trades standpoint, is not my favourite group right now,” Harrison said as he discussed his plans for CP with investors in New York on Wednesday.
“I wasn’t here then, but right before my arrival, as far as I’m concerned, they kicked this company when it was down.”