Strike action and lock-out cost Canada Post over $200m

Postal operations are now back to normal in most of Canada, following last month’s strike action and operational shut down at Canada Post. But, the disruption has had a major financial impact on the Crown Corporation, an impact which is not yet fully clear.

Canada Post told Post&Parcel today that its employees had made “tremendous progress” coping with the situation, for example processing more than 75m pieces of mail during the last weekend.

The backlog in items awaiting delivery during June’s shut-down was addressed as of July 1st, but a spokesperson said Canada Post is currently dealing with a one-day delay on mail overall.

“We have used overtime in our processing and our delivery where required to help us address the mail volumes, which remained high these past few weeks,” said Canada Post spokesperson Anick Losier.

Impact

The work stoppages began June 3, rotating through various Canadian cities for 12 days before Canada Post shut down its operations in response to a drop in mail volumes of as much as 50%. Back-to-work legislation brought in by Canada’s government forced a restart of operations on the evening of June 27.

The Canada Post spokesperson said that the latest estimations were that the disruption had cost it more than $200m, although the figure “needs to be revised”, particularly in the light that there may be long-term impacts from the nationwide shutdown of postal services.

Banks, telecommunications companies and utilities reported a surge of people switching to online billing last month, including 350,000 customers at ING Direct alone.

Losier said: “We do not know at this time the long-term impact as many customers – we hear anecdotally – may have migrated to digital alternatives. Certainly, we have seen our epost subscribers increase significantly during the month of June.”

The $200m cost of the industrial action could wipe out Canada Post’s profits for the year – in 2009, the most recent figures available, the Group made $281m total profit.

Contract

Last month’s industrial action resulted from Canada Post and the urban members of the Canadian Union of Postal Workers being unable to agree a new labour contract, with the Corporation looking to make cutbacks in the face of long-term declines in mail volumes, and the union demanding reward for its members for 16 consecutive years of profitability.

The back-to-work bill brought in by Canada’s Conservative government set in place a new collective agreement for the 48,000 members of CUPW’s urban unit, which extends back to February 2011 and runs until January 2015.

Although the legislation set in place annual salary rises for the agreement – 1.75% in the first year, 1.5% in the second year, and 2% each in the final two years of the contract – detailed conditions are to be decided by a formal arbitration process.