IN THE MATTER OF AN ARBITRATION

AWARD OF THE ARBITRATOR

The Union grieves what it consider the improper contracting out of certain work with respect to the production of metallic venting screens which are installed on box cars dedicated to the shipment of pulp. It appears that the venting screens are necessary to reduce condensation which would otherwise form inside the pulp cars and drip harmfully on the pulp.

It appears that pulp car venting to resolve the humidity problem emerged in or around 2000. Walker Yard in Edmonton, Alberta was chosen initially as the location to perform the venting program modification work on pulp cars for Western Canada product. The method utilized was to install between twelve and sixteen vents on the side panels of box cars in dimensions of approximately 10 x 12 inches. Heavy gauge screening, cut to size by bargaining unit members, was applied over the holes and the vents were then welded to the screening. It appears that 46 box cars were so altered in 2001, 147 in 2001, 227 in 2002 and 148 in 2003, some of which work was also performed at Transcona, Manitoba. Eventually the Company went beyond adjustments to its own box cars, and established a condition for the owners of leased box cars that their equipment must also be adjusted to conform to the venting modification. By 2004 the commitment to the Company's major pulp industry customer was for some 600 box cars to be completed each year. With that increase other CN Mechanical Department facilities in Canada were also assigned to do the work, as a result of which modifications were also done in Vancouver, Prince George, Kamloops as well as Winnipeg. It appears, moreover, that in Eastern Canada, at Toronto, Sarnia, Belleville and Windsor, Ontario similar venting modification work was also done.

It does not appear disputed that at locations other than Walker Yard, as a general rule, the Company simply purchased the vents and screening material from an outside supplier. At Walker Yard, commencing with the pilot project, car mechanics constructed the vents from purchased sheets of metal using a press machine to shape the bends of the vents. The screening was likewise cut at Walker Yard by car mechanics using required screening taken from sheets of 10 gauge metal which yielded some sixteen screens per sheet. The unchallenged representation of the Company is that to produce one piece of screening of 10 inches by 24 inches, approximately 36 separate cuts, using an oxygen/acetylene cutting torch, was required. With each screen taking some fifteen minutes to produce, a sheet of screening could be completely utilized over a period of some fours hours.

As noted above, the situation at Walker Yard eventually became anomalous, to the extent that at all other locations the Company was achieving productivity benefits by simply purchasing pre-made vents and screening on the outside market and having bargaining unit employees install them. It does not appear disputed that no grievances were ever submitted at other locations where that process was followed. In or about May of 2004 the Company decided to change its practice at Walker Yard to conform to what it was doing elsewhere in the country, and thereafter purchased finished vents and screening from an outside supplier, Russel Metals Inc., which previously provided the sheet screening. Subsequently, in January of 2005, the Company's Supply Management Department contracted with International Steel of Montreal to supply some 8,000 venting assemblies for the year 2005. Its representative advises the Arbitrator that the units so obtained came at a price of $20.89 per assembly.

The Company raises a preliminary objection with respect to the alleged untimely inclusion of Rule 55.1 of the collective agreement and section 36 of Part I of the Canada Labour Code as part of the grievance. The scope of the issues is generally reflected in the ex parte union statement of issue and the ex parte company statement of issue filed before the Arbitrator. They read as follows:

DISPUTE – UNION:

Contracting out – Screening used in the venting of Pulp Cars at Walker Yard, Edmonton, Alberta.

EX PARTE UNION STATEMENT OF ISSUE:

On November 24, 2004, the Union filed a Step II grievance, in accordance with Rule 51.5 of the collective agreement, contending that the Union had become aware that, at Walker Yard in Edmonton, the Company was contracting out the cutting of the screening used in the venting of Pulp Cars. This work is work presently and normally performed by CAW bargaining unit members covered under collective agreement 12.

In its Step II Grievance, the Union contended that the Company had violated Rule 51.5, Rule 51.2, Rule 51.3 and Rule 51.4 of collective agreement 12.

In its Step II Grievance, the Union asked for all relevant information pertaining to the material used, the hours it took the Contractor to complete the work, and a copy of all bills between the Company and the contractor(s) from the beginning of the Pulp Car program, relating to the Contracting out concerned herein.

In the Company's Step II response, the Company stated: "Although not discussed with the Union, it was presented to the employees …" In the Union's view this action by the Company violates the Union's right as the sole bargaining Agent as prescribed in Rule 55.1 of the collective agreement and under the Canada Labour Code, Part I, Section 36.

On December 1, 2004, the Company responded to the Union, stating that in other Terminals the screening was purchased, that in the Company's view it was cheaper to purchase the screening than to have members of the CAW Local 100 bargaining unit to cut the screening panels.

In its Step II response, the Company did acknowledge that: "As per Rule 51.2, the Company failed to advise the Union in writing of its plan to have this work performed by a Contractor."

The Company also contended that: "Notwithstanding Rule 51.3 the purchased pre-cut material provided a timelier, cost effective solution to the Pulp Car Program."

As stated above in its Step II response to the Union's grievance, the Company also stated: "Although not discussed with the Union, it was presented to the employees …".

Based on the aforementioned, the Company denied the Union's grievance appeal.

FOR THE UNION:

(signed) JOHN BURNS

VICE-PRESIDENT, MOUNTAIN REGION

CAW LOCAL 100

DISPUTE – COMPANY:

The purchasing of screening used in the venting of box cars for the transportation of pulp shipments.

EX PARTE COMPANY STATEMENT OF ISSUE:

In order to meet the needs of our customers, the Company started to modify our box car fleet to control humidity in pulp shipments. The modification of the fleet was to provide several air vents in the box cars, which reduced the condensation and moisture that forms on the walls and drips onto the pulp.

At Walker Yard in Edmonton, the Company initially purchased large sheets of heavy gauge metal screening which Car Mechanics cut to the size required to cover the holes, prior to the vents being applied. At all other locations, except Edmonton, smaller heavy gauge metal screens were purchased in the proper size required by the Company. The Company found the method at Edmonton less efficient and changed it to match what was done elsewhere.

The Union contends the cutting of vent screening for the box cars in Edmonton is contracting out work normally and presently performed by Agreement 12 members and contends that the Company is in violation of Rules 51.5, 51.2, 51.3, 51.4 of Agreement 12. The Union requests the Car Mechanics at Walker Car Shop be paid a time claim equivalent to all hours worked by the contractor in cutting the screening.

The Company disagrees and has declined the Union's request.

FOR THE COMPANY:

(signed) P. PAYNE

FOR: DIRECTOR, LABOUR RELATIONS

The Arbitrator finds it unnecessary to deal with the preliminary objection, given the disposition of the grievance on its merits. Rule 51.1, which deals with contracting out, reads as follows:

RULE 51 – CONTRACTING OUT

51.1 Effective March 6, 2001, work presently and normally performed by employees who are subject to the provisions of this collective agreement will not be contracted out except:

(a) when technical or managerial skills are not available within the railway; or

(b) where sufficient employees, qualified to perform the work, are not available from the active or laid-off employees; or

(c) when essential equipment or facilities are not available and cannot be made available at the time and place required (a) from Railway owned property, or (b) which may be bona fide leased from other sources at a reasonable cost without the operator; or

(d) where the nature or volume of work is such that it does not justify the capital or operating expenditure involved; or

(e) the required time of completion of the work cannot be met with the skills, personnel, or equipment available on the property; or

(f) where the nature or volume of the work is such that undesirable fluctuations in employment would automatically result.

The conditions set forth above will not apply in emergencies, to items normally obtained from manufacturers or suppliers nor to the performance of warranty work.

Upon a review of the evidence the Arbitrator is compelled to agree with the submission of the Company that the widespread practice of purchasing the venting and screening material directly from commercial suppliers at other locations is evidence that the work in question, for the purposes of a national bargaining unit, cannot be said to fall within the exclusive jurisdiction of the Union under the collective agreement. At best what the evidence would disclose would be a concurrent jurisdiction, based on that fraction of the work which was performed at Edmonton from the initial pilot project commencing in 2000.

When regard is had to the language of Rule 51, it is difficult to escape the conclusion that the venting and screening equipment which is the subject of this grievance can fairly be characterized as "… items normally obtained from manufacturers or suppliers …", a matter in respect of which the contracting out restrictions described in Rule 51 does not apply. Further, if it were necessary to so conclude, I would agree with the Company's submission that, given the reality of the availability of the product on the commercial market, this is a situation where the nature or volume of the work does not justify the capital or operating expenditure involved, as contemplated in the exception under sub-paragraph (d) of Rule 51.1 of the collective agreement. The situation would, in my view, qualify as a "new or occasional venture" within the sense contemplated in CROA 1596. From the standpoint of the exorbitant cost to the Company of continuing to produce in-house at Walker Yard, the situation also falls well within the limits of prohibitive inefficiency and expenditure as contemplated by Arbitrator Weatherill in SHP 115. Bearing in mind that the Company anticipates that the program work of venting box cars will be completed at the end of 2007, the cost alone of purchasing a shearing machine, in the order of some $200,000.00, becomes highly questionable.

For the foregoing reasons the Arbitrator is satisfied that this is not a contracting out situation prohibited by the collective agreement. The grievance must therefore be dismissed.

Dated at Ottawa, this 15th day of May 2006

_________________________________

MICHEL G. PICHER

ARBITRATOR