"Unfortunately, with this unnecessary strike by the Teamsters, more than 2,000 other unionized CP employees will not be required and are being laid off," said CP's Ed Greenberg.
"We expect this to grow by another 1,400 employees as their work, related to the operations of the railroad, is no longer required."
Greenberg said the layoffs could affect those who work in the yard, engineering and mechanical areas — essentially anyone who isn't needed when trains aren't running.
Earlier in Ottawa, Labour Minister Lisa Raitt said the government is prepared to introduce back-to-work legislation if CP and the Teamsters Canada Rail Conference can't reach a deal.
"We want to create the atmosphere where they can do a deal on their own," she told reporters.
"But they have to be aware of the fact that the Canadian government will step in on the basis of the national economy and the greater public interest at some point."
A prolonged strike would cost the Canadian economy an estimated $540 million a week, Raitt said, calling that figure "conservative."
She said some freight might be able to move by other means — by truck or on rival railroad Canadian National Railway Co.'s (TSX:CNR) network.
"But at some point in time there will be a grave economic effect and we're monitoring for that now," she said.
Tens of thousands of carloads a day of grain, coal, cars, lumber and other products aren't moving because of the walkout, Greenberg said.
"This will have dramatic impacts on our customers' business and Canada's economy," he said.
"If the Teamsters stay on strike for any length of time, we are told that significant collateral impact will occur to our customers with plant shutdowns or operational curtailment. This will take the economic impact and job loss far beyond the minister's estimates."
Opposition labour critic Alexandre Boulerice said he's concerned the threat of back-to-work legislation will skew the balance at the negotiating table in favour of the company.
"Once again the Conservatives are taking only one side and by threatening the union and the workers with back-to-work legislation, it removes a lot of pressure from the employer," said the Montreal NDP MP.
"It constitutes another attack against the rights of the workers to associate and to freely negotiate."
Both the union and CP have said the negotiations would continue Wednesday.
"We have made every reasonable effort to get a settlement," Teamsters vice-president Doug Finnson said in a statement posted on the union website.
"Every union member knows how important the outstanding issues are," Finnson added. "We will not walk away from the negotiation table."
Major points of contention are pensions, some work rules and fatigue management, he said.
A pair of western farm officials urged Ottawa Wednesday to end the strike as son as possible, saying farmers will face steep financial losses should the strike drag on.
"We’d simply like to see them order them back to work or deem rail service an essential service," said Kevin Bender, the president of the Western Wheatgrowers Association.
"It’s not just farming and agriculture, it’s a lot of industry that suffers when they go on strike. We’re held captive by the railways."
Norm Hall, the president of the Agricultural Producers Association of Saskatchewan, also called on Ottawa to rush through a back-to-work bill, saying grain exports are critical to the western economy.
"We cannot truck our grain to export positions," said Hall.
"We don’t have the trucks available, we don’t have the highway system available, the rail system is barely adequate, so we’ve only got railroads."
In a release, the Canadian Mining Association urged Ottawa to step in to end the dispute, as mining companies depend on rail to bring equipment and fuel to site and move their product to market.
"The shipment of fuel and other supplies to mine sites will be compromised as is the transport of mineral products," said association head Pierre Gratton.
The strike is also affecting Canadian farmers, and the companies that supply nutrients and other goods to them.
"Anything that interrupts nutrient movement to the grower in the middle of the season in Western Canada is not good news for the farmer," said Richard Downey, a spokesman for fertilizer producer Agrium Inc. (TSX:AGU).
Agrium, Potash Corp. of Saskatchewan (TSX:POT) and Mosaic Co. market their potash, a key crop nutrient, overseas through a company they jointly own called Canpotex.
Canpotex railcars move from Saskatchewan, where the nutrient is mined, along CP's tracks to the port of Vancouver for export.
"You see Canpotex cars going to the West Coast every single day, and demand has really picked up internationally for potash," said Downey.
"The perception of Canpotex from the customer side of things is a reliable supplier. That's one of the key benefits of Canpotex and anything that damages that is of major concern for all of us."
Agrium uses Montreal-based CN, Canada's biggest railway, for most of its other fertilizer shipments, but any disruption is likely to have ripple effects on the entire system.
Commuter trains in Montreal, Vancouver and Toronto that rely on CP infrastructure are continuing to run during the strike, after Raitt pushed CP to keep operating them as a "goodwill gesture" on Tuesday.
Two Via Rail routes in Ontario that use CP tracks are affected: between Sudbury and White River and the Brockville-to-Ottawa segment of the Toronto-Ottawa route. Via says it's providing alternate transportation on those routes.
The strike comes at a time of major changes at Canada's second-biggest railway.
A bruising months-long proxy fight with the railway's biggest shareholder culminated last week in Fred Green's exit as CEO.
New York hedge fund Pershing Square Capital Management argued the railway was lagging its peers under Green's leadership and that a change in CEO was necessary.
Green and five other board members stepped down hours before the company's annual general meeting last Thursday after it became evident shareholders had voted overwhelmingly for director nominees on Pershing's slate.
The Teamsters' Finnson said the union had not yet met with Green's interim replacement, Stephen Tobias, but added that the management shakeup had not affected the bargaining process one way or the other.
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