SHP 345

IN THE MATTER OF AN ARBITRATION

BETWEEN

CANADIAN NATIONAL RAILWAY COMPANY

AND

International Association of Machinists and Aerospace Workers

IN THE MATTER OF THE GRIEVANCE re ARTICLE 8.1

 

 

SOLE ARBITRATOR: M. G. Picher

 

 

There appeared on behalf of the Union:

Abe Rosner Executive Secretary, CCRSU

L. Biniaris Systems General Chairman, IAM & AW

S. Goulet Witness

R. Filion Witness

 

There appeared on behalf of the Company:

S. A. Macdougald Manager, Labour Relations, Montreal

L. F. Caron System Labour Relations Officer, Montreal

W. W. Wilson Director, Labour Relations, Montreal

S. Stamegna Works Accountant, Operations, Montreal

M. D'Amico System Engineering and Planning Officer, Motive Power, Motive Power and Car Equipment, Montreal

L. Gingras General Supervisor, P.P. & M.P., Montreal Shops

A. Prefontaine Assistant Manager, Motive Power Montreal Shops

 

 

Hearings in this matter were held in Montreal on March 13, April 4 & 10, 1991.

 

AWARD

This grievance concerns an allegation by the Union that the Company failed to apply the terms of the Employment Security and Income Maintenance Plan in respect of the layoff of 88 employees in the machinist's craft from the Pointe St. Charles Main Shop at Montreal on November 23, 1989. The Dispute and Statement of Issue filed by the Union are as follows:

Dispute:

Claim by the Union that it ought to have received a notice pursuant to Article 8.1 of the Employment Security and Income Maintenance Plan (The Plan) dated August 25, 1989, in connection with the abolishment of 85 Machinist positions and three Machinist Helper positions at Pointe St-Charles Main Shop, Motive Power Shop, Montreal, Quebec, on November 23, 1989.

Statement of Issue:

On November 10, 1989, the Company notified 85 Machinists and three Machinist Helpers at the Pointe St-Charles Main Shop that their positions would be abolished effective November 23, 1989.

The Union contends that these abolishments were the result of TO&O changes and that accordingly notices ought to have been issued pursuant to Article 8.1 of the Plan. The Union requests a finding to this effect and that all adversely affected employees be made whole.

***

The layoff was substantial in the numbers of employees affected. By the Union's account it reduced the prior complement of 400 machinists assigned to the Motive Power Department by some 21 percent. The Union submits that the layoffs were the ultimate consequence of operational and organizational change, and claims that it was therefore entitled to notice under the terms of article 8 of the Employment Security and Income Maintenance Agreement which provides, in part, as follows:

8.1 The Company will not put into effect any technological, operational or organizational change of a permanent nature which will have adverse effects on employees without giving as much advance notice as possible to the General Chairman representing such employees or such other officer as may be named, by the Union concerned, to receive such notices. In any event, not less than three months' notice shall be given, with a full description thereof and with appropriate details as to the consequent changes in working conditions and the expected number of employees who would be adversely affected.

8.4 Upon request the parties shall negotiate on items, other than those specifically dealt with in The Plan, with a view to further minimizing the adverse effects on employees. Such measures, for example, may be related to exercise of seniority rights, or such other matters as may be appropriate in the circumstances, but shall not include any item already provided for in The Plan.

...

8.7 The terms operational and organizational change shall not include normal reassignment of duties arising out of the nature of the work in which the employees are engaged nor to changes brought about by fluctuation of traffic or normal seasonal staff adjustments. Any permanent shutdown or permanent partial shutdown of an operation, facility or installation, shall be considered as a Technological, Operational or Organizational change. Any permanent Company-initiated changes, excluding changes which are brought about by general economic conditions) which result from the reduction or elimination of excess plant capacity shall also be considered as Technological, Operational or Organizational changes.

The application of the Employment Security and Income Maintenance Agreement to any layoff is a matter of obvious importance to the employees affected. Under Article 7 of the Agreement an employee having eight years of cumulative compensated service with the Company enjoys employment security and cannot be subjected to layoff through the application of article 8.1 of the Plan. Additionally, the Plan provides for substantial protections to employees such as provision for the maintenance of basic rates and the opportunity of early retirement allowance. Where a reduction in staff is the result of a fluctuation of traffic or the result of general economic conditions the Employment Security and Income Maintenance Agreement has no application, and employees may be laid off on shorter notice in accordance with Rule 23.16 of the collective agreement. While Rule 23 provides for the protection of employment security in that circumstance by the exercise of seniority, the employee ultimately affected or displaced into a circumstance of layoff does not have the protections of the Employment Security and Income Maintenance Agreement.

The Company maintains that the reductions of November 10, 1989 did not relate to any technological, operational or organizational change. It submits that the layoffs were caused by a number of factors, none of which can be characterized as technological, operational or organizational change. Firstly, it submits that in 1989 there was a general decline in rail freight, which caused the Company to require all departments to review their budgets for that year, based on the decline in business in the first quarter. It submits that that initiative resulted in a reduction in the budget of the Pointe St. Charles Main Shops for 1989 by some two million dollars, which represents some six percent of its 1989 budget.

The Corporation filed extensive evidence of administrative measures which it maintains resulted in the reductions in staff. Among these is the removal from service and storage of some 34 mid-range horsepower locomotives which it maintains were not needed because of the reduced traffic levels. Additionally, it cites the retirement of some 33 Bombardier (Alco) locomotives as well as 96 GM locomotives in 1989. Further, it submits that the number two scheduled overhauls of a number of Bombardier locomotives were postponed. The Company submits that these changes did not, however, immediately impact the bargaining unit because the Pointe St. Charles Motive Power Shop had contract commitments with outside companies which made up for the reduction in work. These contracts were, however, scheduled for completion in 1989 and early 1990, and represented a dwindling source of work. According to the Company's submission, by November of 1989 it became apparent that there would be insufficient work to sustain the machinists' workforce, and it was necessary to lay off employees because of the decline in business activity. The employment reductions also impacted other trades, although not as dramatically as the machinists. It appears that fifteen boilermakers and six labourers were also laid off.

The Company relates that an article 8.1 notice of technological, operational or organizational change was issued to some ten machinists, above and beyond the 88 machinists who are the subject of this grievance, on November 10, 1989. This, it submits was justified because their layoff was occasioned by a transfer of work from Taschereau Yard Motive Power Shop in Montreal to the Gordon Yard Motive Power Shop in Moncton. It appears that that change had occurred some time earlier, and ten machinists from the Taschereau Yard had been temporarily absorbed into the Pointe St. Charles Shops. When the layoffs of November 10, 1989 struck them, the Company acknowledged that they were in fact impacted by the earlier shift of work from Taschereau Yard to Gordon Yard. The balance of the machinists laid off by notice on November 10, 1989 who are the subject of this grievance received a two-week notice of layoff to be effective November 23, 1989.

The Company advances a number of positions to refute the Union's claims that the employees affected were entitled to an Article 8.1 notice under the Employment Security and Income Maintenance Agreement. It submits, in part, that certain of the contentions of the Union relate to the contracting out of work which affected at least five positions. In the Company's view contracting out is separately dealt with under the collective agreement, and cannot be construed as operational or organizational change. A central thrust of the Company's position, however, is that a substantial portion of the Pointe St. Charles Main Shop had been converted into a "contract shop", mostly in relation to the work of the car shop, although some Motive Power Shop work was also obtained from outside companies. An important segment of the contract work performed in the Motive Power Shop had historically been for VIA Rail Canada Inc., although other companies and industries were also serviced. For example, locomotives from the Helm Corporation, the Port of Montreal and the Montreal Urban Transit Commission had all been serviced or remanufactured in the Motive Power Shop on a contract basis. Tracing the volume of contract projects from 1987 through 1990 the Company points out that the total hours of locomotive service for VIA, as well as other companies, fell from 186,880 to 55,070, a figure representing the working time of all crafts. Similarly, during the same period work on CN's own equipment declined from 1,054,806 to 765,177 hours. The Company further submits that the purchase of 114 new high horsepower locomotives between 1987 and 1990 has reduced the demand for maintenance, as well as for parts and components from the Pointe St. Charges Main Shops. They maintain that an additional effect has been felt by virtue of their remanufacturing of another 114 locomotives during the same period.

A major point of contention in these proceedings is the decision taken by the Company in 1988 to transfer the scheduled repairs of all GM locomotives performed at the Pointe St. Charles Main Shop to the Transcona Main Shops in Winnipeg. The Union relies heavily on this development to support its argument that there has been an operational change which has negatively impacted the availability of work at Pointe St. Charles. The Company submits, however, that the transfer of GM locomotive scheduled repairs to Transcona did not ultimately have an adverse effect on employees at Pointe St. Charles. This, it maintains, is because the Pointe St. Charles Shop gained offsetting work, largely through the remanufacturing of locomotives. It credits the increase in remanufacturing work over the last four years with an addition of 13,631 machinist production hours, the equivalent of adding 11 machinist positions to the workforce at Pointe St. Charles.

The Company acknowledges another change which might, but for its view of the lack of any adverse impact, have constituted an operational change. As of September 1989 the Company ceased to perform repairs on track maintenance work equipment at Pointe St. Charles Motive Power Shop. That work was reassigned to the engineering department which now performs the repairs in its own shops, save for the occasional repair of components at Pointe St. Charles. The Company attributes the loss of three machinist's positions to this change but, as will become apparent below, argues that this loss has been offset both by an increase in other work and the effects of attrition at Pointe St. Charles, so that no employees were ultimately adversely affected.

The Corporation next points to store orders, comprised of both standing store orders (5/5/0) and regular store orders (R/S/O). It maintains that between 1987 and 1989 regular store orders caused a reduction in direct machinist craft hours from 40,323 to 16,063. During the same period standing store orders caused a reduction in machinist hours from 336,163 to 258,399, with further reductions still in 1990 to 180,504. It attributes the loss of 18 machinist craft positions to the reduction in R/S/Os and a further 125 machinist craft positions to the reduction in S/S/Os. Of the 143 machinist positions lost in total, the Company estimates that some 53 would be attributable to the reduction in store orders caused by the decline in demand for VIA components.

The Company accepts that a part of the reduction in standing store orders in Pointe St. Charles Motive Power Shops relates to the transfer of GM traction motor work from Pointe St. Charles to Transcona. It estimates the adverse impact of that change, which it concedes is an operational or organizational change, to equate to the loss of seven machinist's positions. Again, it submits that those are counterbalanced by attrition and the increase in other forms of work such as remanufacturing.

Further, the Company estimates that the decline in demand for VIA components, and in particular those related to repairs of compressors utilized in VIA Rail locomotives, also contributed to the decline in available work at Pointe St. Charles. It estimates that this change would have resulted in the elimination of three machinist's craft positions while the elimination of work on other small mechanical components related to VIA work, such as small motors for VIA locomotives, would have eliminated an additional 16 machinist's craft jobs. Finally, the Company estimates that four machinist craft positions can be linked to the decline in demand for air brake components from VIA rail as well as the decrease in demand for steam gauges utilized in steam generators. When the entire ledger is reviewed it would appear that a total of 123 machinist trade positions were eliminated because of the elimination or reduction of service and parts work previously done on behalf of VIA Rail Canada Inc.

The Company submits that a reduction in work for other outside contractors, albeit less dramatic than the reduction in VIA work, was nevertheless a contributing factor in the job reductions of November 10, 1989. It notes that the percent of total production hours performed in 1987 devoted to contracts other than VIA in the Motive Power Shop fell from 15.1% in 1987 to 6.7% in 1990. The Company estimates that this translates into the loss of approximately 40 machinist craft person years.

In total, the Company submits that when the five categories of service to locomotives, work equipment, the production of store orders, the service of VIA locomotives, and contract work for other Corporations is totalled, a net loss of 184 machinist's positions was realized over the period reviewed between 1987 and 1990. The Company states that that figure was offset by the normal attrition and turnover of employees totalling 71 machinist craft employees in 1987 through 1989, to which can be added 23 more employees who left the work force in 1990. On that basis it estimates a final surplus of 90 employees caused by what it characterizes as a reduction in available work brought on by a decline in business, and not attributable to operational or organizational change.

The Union takes an entirely different view. It starts with the premise that historically the number of machinists employed at Pointe St. Charles has been equal to the number employed at Transcona Main Shops in Winnipeg. It submits that prior to the closure of the Main Shops at Moncton, the three main shops in Canada had traditionally divided the national workload on the basis of 40% being performed at Pointe St. Charles, 40% at Transcona and 20% at Moncton Main Shops. The Union notes that initially the closing of the Moncton Shop was expected to bring additional work to Pointe St. Charles in the form of service to Alco locomotives which had previously been done on a relatively exclusive basis at Moncton. It appears that it was soon discovered that servicing the Alco locomotives in Montreal did not go as smoothly as anticipated and work on Alco locomotives was effectively ended at Pointe St. Charles in the spring of 1989. The Union submits that, in the result, the Pointe St. Charles Main Shops made little or no practical gains insofar as the scheduled maintenance of locomotives is concerned, arising out of the closure of the Moncton Main Shops.

The Union takes strong objection to the characterization of the declining freight traffic data argued by the Company. In particular, it submits that the statistics available for mid to late 1989 starkly contradict the Company's position that freight volumes were decreasing. Its representative notes that in July of 1989 the Company hauled 10,302,021,000 gross tonne-kilometers of freight. That figure increased monthly through August, September and October, when it reached a one-year high of 11,961,585,000 gross tonne-kilometers. In the Union's submissions that represents a traffic increase of 16% in the months immediately preceding the decision to implement the layoff at Pointe St. Charles. Its representative submits that even if one includes the slightly lower figure registered for November, the overall traffic increase from mid year remains 9.6%. While the Union's representative does not deny that the figures for gross tonne-kilometers of freight did decline as between April of 1989 and November of that year, the overall decline was on the order of less than 1%. The Union's spokesperson submits that no different results are indicated when one examines available figures for distances travelled in the form of train-kilometers, or the alternative figure for car-kilometers. All of the figures, he submits, confirm a negligible difference between the first quarter of 1989 and the date of layoff and show a clear increase in rail traffic between July and November.

The Union's representative further questions the validity of the Company's assertion that the November layoffs were caused by a decline in traffic by examining the months subsequent to the layoff. Noting that traffic rose by approximately 12% between November 1989 and April 1990, without any recall of employees at Pointe St. Charles, he argues that there is little reason to believe that there was a causal link between volumes of rail traffic and the complement of machinists employed at Pointe St. Charles either before or after the layoff of November 10, 1989.

The principal argument of the Union is that the layoff of November 10, 1988 was the result of several operational and organizational changes made in the years and months before. The principal change relied on was the decision, communicated to the Union in a letter dated July 6, 1988 that GM locomotive maintenance and repairs would be permanently transferred to Transcona Main Shops. The letter of that date delivered to the system general chairman from Mr. V.H. Mizrahi stated, in part:

On a number of occasions, the Company has advised the organizations that it would be realigning its work whereby all the General Motors locomotive scheduled repairs, traction motors (G.M.) rebuilds, air brake component repairs and repair and turning of wheels (rolling stock), including locomotive wheels, would in the future be done at Transcona, so as space at Point St. Charles Shops could be available for the schedule repairs and overhauls for Bombardier locomotives that were transferred from Moncton Shop.

There are 15 G.M. locomotives scheduled for repairs this year, with approximately the same number for next year to be performed at Transcona rather than Point St. Charles. The manpower required to perform these repairs equates to 45 man years of work.

The Union maintains that the transfer of regular scheduled GM locomotive maintenance from Pointe St. Charles to Transcona, which represents a cessation of work which had been performed on a longstanding basis at Pointe St. Charles, was an operational and organizational change which, should it have negative impacts upon employees, required notice under the terms of Article 8.1 of the Employment Security and Income Maintenance Agreement. The Union's representative submits that the impact of the transfer of the GM work was not immediately felt at Pointe St. Charles, largely because of a flow of extra contract work which provided a compensating volume of maintenance assignments for the machinists who would have been negatively affected otherwise. The Union's representative submits, however, that when the contract work finally declined in the latter part of 1989 the surplus of employees originally caused by the transfer of the GM work to Transcona finally asserted itself.

The Union submits that an intrinsic aspect of the operational and organizational change underlying this grievance is the disappearance of regularly scheduled locomotive maintenance from the Pointe St. Charles Main Shops and the conversion of that facility to a contract shop which performs remanufacturing and other locomotive maintenance, other than regularly scheduled overhauls, for CN as well as for VIA Rail and other companies. While the Union does not dispute the Company's right to make the change which it did, it submits that a fundamental change in the source of work for machinists at Pointe St. Charles is an operational and organizational change. Additionally, it argues that the positive flow of external contract work for a period of time prior to November of 1989 masked the adverse impact of that change, causing it to be deferred in time. A delayed impact, the Union argues, is nevertheless a negative impact for the purposes of the Employment Security and Income Maintenance Agreement, as indeed was acknowledged by the Company in its treatment of ten machinists laid off at Pointe St. Charles pursuant to the notice of November 10, 1989. As noted above, those machinists had earlier transferred from Taschereau Yard Motive Power Shop in Montreal when work which they normally performed was moved to the Gordon Yard Motive Power Shop in Moncton. They were temporarily placed at Pointe St. Charles, with the Company acknowledging that should they be subject to a subsequent layoff at that location they would nevertheless be entitled to an Article 8.1 notice because of the original and continuing impact of the operational and organizational change which occasioned the loss of their work at Taschereau Yard.

The Union's case does not rest solely on the loss of 23 machinist positions which relate to the performance of scheduled no. 2 repairs on GM locomotives transferred to Transcona. Its representative places equal emphasis on the related loss of work in relation to the repairing and fabricating of components related to diesel locomotive service. Additionally, the Union's spokesperson points to the Company's decision to alter the maintenance schedule of diesel locomotives at running points such as Taschereau Yard.

According to the evidence of Mr. Michael D'Amico, System Engineering and Planning Officer for Motive Power, the Company determined that there was a previously degree of unnecessary service, and use of component parts, because of the frequency of routine line point inspections and repairs. This aspect of the facts was elaborated by the Union's witness, Mr. Ronald Filion, a machinist at Taschereau Yard since 1979. He relates that in 1985 all locomotives were regularly inspected and given spot repairs every 45 days, and that the schedule was then changed to 90 days. He related that by 1988 the routine was to give a locomotive a light inspection every three months and a major inspection once yearly. That was further changed, however, and thereafter a number of part replacements were only done on an "as needed" basis. By way of quantifying the change Mr. Filion relates that at Taschereau Yard three machinists used to be assigned to the inspection and repair of each locomotive, and now that has been reduced to one and a half machinists. By way of further example he relates that air brakes used to be fully changed every two years up to 1987. Thereafter the Company reverted to a system whereby they were fully serviced every three years. Additionally, valves which were changed every two years are now only serviced as required.

The Union submits that the reduction of regular service routines, and the resulting reduced demand for parts and components at the running points shops has further impacted the volume of work available to machinists at Pointe St. Charles, particularly in relation to the manufacture of parts and components which previously originated at Pointe St. Charles for use in running shops such as Taschereau Yard.

In summary, the Company submits that a number of factors conspired to reduce the work available at Pointe St. Charles, none of which consisted of a technological, operational or organizational change. Among them it cites the decline in rail traffic, the reduction of available work on VIA passenger equipment, the completion of outside contract work, the introduction of certain new machines and equipment into Pointe St. Charles, the closing of the toolroom at that location, the reduction in work available on Alco locomotives, the retiring of a number of older locomotives which required frequent service, and the acquisition of a number of newer locomotives, including higher powered locomotives, which require less service. While it acknowledges that the scheduled service of GM locomotives was transferred to Transcona, it submits that no adverse impact on employees is disclosed by that change because attrition has more than compensated for it.

Additionally, the Company acknowledges that it has contracted out some work but maintains that those changes do not justify an Article 8.1 notice. The Union, on the other hand, submits that the contracting out of any work which adversely impacts employees is, quite apart from the collective agreement provisions dealing with contracting out, constitutes an operational or organizational change. It further submits that the conversion of the Pointe St. Charles Shop to a contract shop which no longer does regular locomotive maintenance is an operational or organizational change. So, too, it argues, was the Company's decision to reduce the frequency of service and part changeouts at running points, a change which adversely impacted the manufacture and repair of components at Pointe St. Charles - a consequence which the Union characterizes as a further adverse impact caused by an operational change. It also submits that the reduction of work for machinists at the running points has effectively had an impact on the machinists laid off at Pointe St. Charles, to the extent that less work is available to them at other locations.

I turn to consider the merits of these competing positions. Firstly, it is well established that the transfer of work from one location to another, resulting in a reduction in work available to employees at a given location constitutes operational or organizational change within the meaning of Article 8.1 of the Employment Security and Income Maintenance Agreement. This was the clear finding of Arbitrator Weatherill in SHP-225, a grievance between these same parties concerning the closing of the Moncton Main Shops. At page 6 of that Award he made the following observations:

As may be noted from the above passage, it is not sufficient for the Company to show a coincidence in time between a reduction in volumes of traffic and the layoff of employees to prove that the layoffs were not occasioned by operational or organizational change. The entirety of the evidence must be examined, and where it appears that certain work continues to be performed, albeit at another location, jobs lost because of that change will be viewed as having been impacted by the kind of change contemplated in Article 8.1 of the ESIMA.

As was further noted in SHP-334, where the Union establishes a prima facie case for the adverse impact of an operational or organizational change, it is incumbent upon the Company to adduce clear evidence establishing a causal link between the layoff and the exceptions found in Article 8.7 of the ESIMA (fluctuation of traffic, normal seasonal staff adjustments, changes caused by general economic conditions) and the abolishment of the positions in question. it is also clear that the loss of a regular customer can amount to a "fluctuation" of traffic within the meaning of Article 8.7 (see CROA 849).

In view of the ultimate disposition of this grievance it is unnecessary to resolve, in a conclusive way whether contracting out can constitute an operational or organizational change which triggers the protections of the ESIMA. That issue vas broached, but not conclusively decided in SHP-262, as no adverse effects were disclosed. That decision, however, cannot be taken as having accepted the Corporation's position that contracting out can never amount to operational or organizational change. It would appear to the Arbitrator that there might, in principle, be circumstances where contracting out is not part of an operational or organizational change, and conversely there may be some where it is. If, for example, the Company were to close an entire shop pursuant to a decision to contract out all of the work performed within it, resulting in the layoff of all of the employees involved, it would be difficult to conclude that the facts do not fall within the contemplation of Article 8 of the ESIMA. In assessing that question, however, regard must be had to the circumstances of each particular case.

In assessing the merits of this grievance the Arbitrator finds it difficult to fully accept the submissions of either party. As a matter of first principle I accept the Union's argument that Company decisions such as the permanent transfer of GM locomotive scheduled repairs from Pointe St. Charles Main Shops to Transcona Main Shops in Winnipeg is, in and of itself, an operational and organizational change within the contemplation of Article 8.1 of the ESIMA. I would likewise conclude that permanent changes in the scheduling of running point locomotive maintenance would be an operational and organizational change impacting a Main Shop, at least to the extent that the production and repair of parts and components at the Main Shop would be reduced which, in turn, could adversely affect the employment security of employees at that location. Additionally, the permanent cancellation of a type of maintenance work, as for example, the repairs performed on track maintenance equipment which was cancelled at Pointe St. Charles, resulting in the loss of three jobs, would constitute operational and organizational change. It is not disputed that in the instant case that work was permanently transferred to the engineering department. Additionally, the transfer of the repair and maintenance of GM locomotive traction motors from Pointe St. Charles to Transcona Main Shop, resulting in loss of seven machinist positions must likewise be characterized as operational or organizational change.

Lastly, I am satisfied that the decision of the Company in the instant case to cease all scheduled CN locomotive maintenance at Pointe St. Charles Main Shops, converting that location entirely to a contract facility which nevertheless performs some CN locomotive maintenance was, in and of itself, an operational and organizational change.

Much of the difficulty in the instant case arises from the confluence of a great number of events, some great, some small, spread over a period of two or three years. From an evidentiary standpoint, it becomes extremely difficult to separate and analyze a substantial number of overlapping factors. In these circumstances an arbitration cannot achieve scientific precision. It can, however, identify the principles to apply as well as the parts of the evidence which are most conclusive of the issues in dispute.

One point of principle which the Arbitrator accepts, apart from those related in the jurisprudence cited above, is that the Company is entitled to take into account attrition in its complement of employees in determining whether an operational or organizational change can be said to have adverse impacts on employees. If a group of 100 employees is affected by the abolition of ten positions, while at the same time ten employees quit, retire or are discharged for cause, it can be said that the operational change has impacted the work force in that it has reduced the complement of employees from 100 to 90. To the extent, however, that no employees are laid off, it cannot be asserted that there has been an adverse effect on employees caused by the operational change. On that basis the Arbitrator accepts the position of the Company. In considering whether any change which it has implemented might be an operational or organizational change, requiring a notice under Article 8.1 of the ESIMA, it must be found that no such notice is required where the job abolishments are offset by contemporaneous attrition in the bargaining unit. Article 8.1 of the ESIMA is concerned with operational or organizational change "... of a permanent nature which will have adverse effects on employees ...". Where it is established that attrition has cushioned the blow of any particular job abolishments, to the extent that any particular job abolishment can be matched with an identifiable incidence of employee attrition, article 8.1 of the ESIMA has no application.

In assessing the evidence in the instant case the Arbitrator has initial difficulty with the position of the Company that the job abolishments of November 10, 1989 were necessitated by a decline in traffic. In the Arbitrator's view the figures, reviewed in some detail above, do not sustain that view. Firstly, as the Union points out, there was an actual increase in freight volumes experienced by the Company in the latter part of 1989. While it is true that there were some declines in the early part of the year, year to year comparisons do not disclose those declines as being substantially out of proportion with the kinds of fluctuations experienced in years prior which, it appears, did not necessitate job abolishments of the kind and scale involved in this case. In fact, based on the figures for gross tonne miles tabled at the hearing, it would appear that the total registered for 1989 exceeded the gross tonne miles recorded in 1980, 1981, 1982, 1983, 1985 and closely approximated the figure shown for 1986. Moreover, if one accepts the Company's position that projected figures for 1990 must also be taken into account, the gross tonne miles registered in that year reveal themselves to have been not substantially different.

A second aspect of the evidence leaves some lingering doubt about the Company's claim with respect to the layoffs of November 10, 1989 being necessitated by declines in rail traffic. As the evidence discloses, much of the work performed at Pointe St. Charles has shifted from being regular scheduled CN locomotive maintenance to contract maintenance for both CN and outside companies. Some of this work involves remanufacturing and, for many years, it involved routine maintenance performed on VIA Rail locomotive equipment. In 1989, at the time of the layoff notice giving rise to this grievance all scheduled number two repairs on CN locomotive equipment was being performed at Transcona Main Shop in Winnipeg. If, as the Company submits, the Employer was struck by a reduction in the need for locomotive maintenance caused by fluctuations in rail traffic, it would be expected that that impact would be spread, at least to some extent to Transcona. There is, however, no evidence before the Arbitrator to suggest that any jobs were abolished at the Transcona Main Shops at or about the time of the layoffs at Pointe St. Charles which were attributable to a decline in rail traffic (see SHP-334). In the Arbitrator's view the absence of that evidence does little to bolster the Company's assertion that the layoffs at Pointe St. Charles were caused, at least in substantial part, by a reduction in rail traffic.

There are, however, a substantial number of aspects of the Company's submission which the Arbitrator accepts. Firstly, there has been a dramatic decline in the volume of contract projects performed at the Pointe St. Charles Main Shops. These cannot be entirely disregarded, as the Union suggests, on the purported basis that the Company's decision to convert the Shops to a contract operation is fairly recent, and that contract work such as the work being done for the Helm Corporation served to mask the impact of the operational change involving the transfer of GM locomotive service to Transcona. The evidence establishes, beyond controversy, that since the inception of VIA Rail, Pointe St. Charles was the principal location for the servicing of VIA Rail locomotives and other passenger equipment. That represented a continuation of work which had previously been performed when CN itself was in the passenger business. As revealed in greater detail below, the reduction in available work relating to VIA Rail Canada equipment did have a substantial impact on the amount of work available to machinists at Pointe St. Charles. That change occurred most dramatically between 1988 and 1989, and continued still more into 1990. Between 1987 and 1990 the volume of locomotive service work at Pointe St. Charles attributable to VIA declined from 32% to 1.5%. That change, in addition, occasioned secondary effects in relation to work related standing store orders, regular store orders, compressors, small motors, air brakes and steam generators.

The Arbitrator also accepts that the purchase of new high powered locomotives and the retirement of substantial numbers of aging locomotives and related locomotive equipment in the period between 1987 and 1989 did have an impact on the amount of work available at the Pointe St. Charles Main Shops. This would be true in relation to the direct maintenance of locomotive equipment as well as the reduced need for parts and components. These facts do not involve operational or organizational change, although they might prompt the kind of reassignment of duties arising out of the nature of the work in the Shops, as contemplated in article 8.7 of the ESIMA.

The part of the Union's case with which the Arbitrator has the greatest difficulty is its virtual discounting of the substantial impact on the volume of work available to machinists by the near disappearance of VIA related maintenance and repairs. As noted above, that work has been performed at Pointe St. Charles continuously since the inception of VIA Rail Canada, and it is common ground that Pointe St. Charles carried a substantially greater volume of VIA equipment repair than did Transcona. The Arbitrator accepts, on the material filed, that in 1985 some 82 machinists were assigned to VIA related work at Pointe St. Charles Main Shops while at Transcona the number of machinists so assigned was 28 and that that ratio was relatively constant over the years. In light of those figures, it seems undeniable that the dramatic reduction in VIA related maintenance and repair work had a much greater impact on the machinist's workforce at Pointe St. Charles than it did at Transcona.

The Arbitrator is impressed, however, with the logic of the Union's submission based on the historic relationship between the complement of employees at Pointe St. Charles and at Transcona at the time when both locations were involved in performing scheduled CN locomotive maintenance. What used to be a constant balance in the complement of machinists at both locations shifted substantially in favour of Transcona over the last few years. The Arbitrator finds it difficult to reject the submission of the Union that the change in the proportion of machinists regularly employed at Pointe St. Charles and Transcona from one of relative equality, which held consistently over the years, to the present circumstance which favours Transcona is indicative of an operational and organizational change which has involved, at least in part, a permanent shift of work from Pointe St. Charles to Transcona which has adversely impacted machinists at Pointe St. Charles. It seems to the Arbitrator that that position is particularly compelling in light of the unchallenged evidence of the shift of scheduled locomotive maintenance work and G.M. traction motor repairs from Pointe St. Charles to Transcona. I am also satisfied, however, that part of the present imbalance is plainly attributable to the impact of the substantial reduction of VIA related work at Pointe St. Charles.

How then is the dispute to be resolved? In the Arbitrator's view in the instant case the most reliable approach is to firstly compare the relationship between the number of jobs now available at Pointe St. Charles and those at Transcona, since the principal part of the Union's case is based on its assertion that the Company has transferred work from one to the other. Secondly, the impact of the reduction in VIA maintenance and repair at Pointe St. Charles, a type of work which long predated the conversion of that location to a "contract shop", must be factored in, with account also being taken of attrition. Lastly, consideration must be given to those jobs which have been eliminated at Pointe St. Charles for reasons other than fluctuations in traffic and the effect of general economic conditions. These would include jobs lost by technological change involving the introduction of new equipment and job abolishments caused by operational and organizational change which predated the November 10, 1988 notice, but whose ultimate adverse impact on employees was only felt at that time.

The material establishes that following the November 10, 1989 job abolishments there were 484 machinist positions at Transcona and 359 machinist trade positions at Pointe St. Charles Main Shops. This represents a difference of 125 machinist craft jobs at Pointe St. Charles, a substantial change from the position of parity which existed as recently as 1987 when Transcona employed 539 machinists, helpers and apprentices while Pointe St. Charles employed 538. On a purely mathematical basis, therefore, the two locations shared the CN equipment maintenance work fairly equally, with Transcona doing a slightly greater amount of CN work that offset the extra VIA work at Pointe St. Charles. It is, therefore, arguable, at least in rough terms, that the figures reflect a transfer of some sixty-three positions from Pointe St. Charles to Transcona, which would constitute an operational change contemplated under Article 8.1 of the ESIMA to the extent that it might adversely impact an employee at Pointe St. Charles Main Shops.

In the Arbitrator's view, however, there are other important elements to take into account. As noted above, I accept the Company's position that the reduction in VIA related maintenance and repair work at Pointe St. Charles had a significant impact. I am satisfied that the reduction of that work, which was not within the control of the Company, is not operational and organizational change within the meaning of Article 8.1 of the ESIMA. I therefore consider that jobs eliminated for that reason must be taken into account. Under the VIA Rail ledger, the evidence establishes to the satisfaction of the Arbitrator that after 1987 47 jobs were lost in respect of locomotive service, 38 for standing store orders, 15 for regular store orders, 3 in relation to compressors, 16 for small motors and 4 on air brakes and steam generators, for a total of 123. The evidence also establishes, however, that during the same period 71 machinist craft employees left the bargaining unit. If the attrition figure of 71 is applied to offset the jobs lost by the reduction of VIA Rail related work, it would appear that 52 of the 88 positions which were subject to the notice of November 10, 1989 can be said to have been caused by the reduction in VIA related work at Pointe St. Charles. With the positions compensated for by attrition fully accounted for, there would remain 36 jobs abolished effective November 10, 1989 which must be attributable to other reasons. Having regard to the totality of the evidence, and in particular to the shift from scheduled CN repairs to contract work and the transfer of locomotive service related work from Pointe St. Charles to Transcona, as further evidenced by the discrepancy in the number of employees in the two locations which occurred between 1987 and 1990, I am satisfied that all 36 positions so identified are, on the balance of probabilities, attributable to operational or organizational change within the meaning of Article 8 of the ESIMA.

The Arbitrator has given close consideration to whether positions abolished in the tool room, which could arguably be characterized as occasioned by operational and organizational change, as well as the three job abolishments resulting from the transfer of work equipment repairs and the one further job lost in 1986 by virtue of the introduction of the Mazak lathe should also be added to the figure of positions lost by technological, operational or organizational change effective November 10, 1989. In my view they cannot be. As 88 positions were abolished on that date, and I am satisfied that 52 of them were lost solely by reason by the decline in VIA Rail related work which had been a regular part of operations at Pointe St. Charles, the inescapable conclusion is that the loss of no more than 36 positions can be attributed to all technological, operational or organizational change which may have occurred earlier and whose adverse impact came to bear on November 10, 1989. To take any other approach would be to resort to double counting in a manner clearly prejudicial to the rights of the Company. The Arbitrator's observations with respect to the loss of positions in the tool room is obviously without prejudice to the Union's pending grievances which allege violations of the contracting out provisions of the collective agreement.

For the foregoing reasons the Arbitrator finds and declares that the Company violated Article 8.1 of the ESIMA by failing to provide to the Union notice of an operational or organizational change in respect of some 36 employees adversely affected by the job abolishments in question. The employees affected are entitled to the protections of the ESIMA, and the Arbitrator retains jurisdiction in the event of any dispute between the parties with respect to the determination of their rights pursuant to its provisions.

DATED at Toronto this 29th day of May, 1991.

(sgd) M. G. Picher

Arbitrator