CN CUTS JOBS, WILL TAKE $160-MILLION FOURTH-QUARTER CHARGE

CN CUTS JOBS, WILL TAKE $160-MILLION FOURTH-QUARTER CHARGE    Canadian National said Tuesday it intends to cut 1,146 jobs and take a fourth-quarter, after-tax workforce adjustment charge of Can$79-million ($50.2 million).
   CN said the job cuts 'will occur in every corporate and operating function. About two-thirds of the reductions will occur in Canada, with the remainder in the U.S.' About 30 percent of the cuts will be achieved through attrition and retirement, 45 percent through early retirement and 25 percent through severance packages.
   Paul M. Tellier, president and chief executive officer, said 'labor and fringe benefit expenses account for roughly 40 percent of total operating costs, so anytime we are looking to control costs we must, by definition, look to control our labor costs.'
   The job reductions 'reflect efficiencies from large-scale information technology investments in administrative functions and a smaller asset base — we have fewer locomotives and freight cars to repair and maintain because of productivity improvements from our scheduled railway operations,' Tellier said.
   CN also said it is adopting an actuarial-based methodology to determine is provision for U.S. personal injury and other claims, such as hearing loss, carpal tunnel syndrome and asbestos-related charges. Under the approach, the cost of employee injuries and other claims will be charged to expense based on the actuarial estimate of the ultimate cost and number of incidents in each year.
   The new methodology is consistent with rail industry practices in the United States, where CN has a growing presence, and the railroad is 'susceptible to litigation involving employee work-related injuries and occupational claims' because of the Federal Employers' Liability Act, Tellier said. He called FELA, passed in 1908, 'an outmoded law.'
   CN will take an after-tax charge of Can$173 million ($110.0 million) for claims — about two-thirds of the charge is for asbestos-related claims.
   Combined, the two after-tax charges will impact CN's fourth-quarter results by about Can$252 million ($160.2 million).