Rail shutdown possible in two weeks, as lockout warnings follow labour board ruling

The country’s two main railways warned Friday they will lock out their workers in less than two weeks unless the two sides can agree on new contracts, lending fresh weight to the threat of a work stoppage that would snarl supply chains nationwide.

As the negotiating clock ticks down, Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. both said lockouts on Aug. 22 are imminent, barring a breakthrough at the bargaining table.

The warnings came hours after the Canada Industrial Relations Board ruled that a work stoppage would pose no “serious danger” to public health or safety, opening the gate to a full-fledged strike or lockout. If either occurs, employees at CN or CPKC would not be compelled to continue hauling goods, including key commodities such as chlorine for water and propane for care centres.

The labour tribunal ordered a 13-day cooling-off period as part of the dual decisions Friday morning.

Some 9,300 conductors, engineers and yard workers at CN and CPKC have been bargaining on and off for months over a pair of new collective agreements, on top of a third deal for CPKC rail traffic controllers.

Canadian Pacific says it will lock out 3,300 members of the Teamsters Canada Rail Conference (TCRC) one minute after midnight on Aug. 22 — the earliest moment allowed under the tribunal’s timeline — unless a deal is secured.

“If no resolution is reached during bargaining through the extended cooling-off period, and the TCRC continues to refuse binding interest arbitration, CPKC will have no choice but to take this action,” the company said in a release, citing supply chain stability.

CN called on the federal government to impose binding arbitration, saying it has “lost faith” in the negotiating process. A phased shutdown of its network would also culminate in an Aug. 22 lockout of 6,000 workers, it said.

“We have made four offers this year — offers that include points on wages and labour availability while maintaining safety, and the union has yet to make as much as a single counteroffer,” said CN spokesman Jonathan Abecassis.

The union said the lockout warnings amount to an escalation that was “unexpected and needlessly antagonizing.”

“Contrary to CN’s claims, the company has not shown any flexibility or willingness to compromise at the bargaining table,” said spokesman Christopher Monette.

Sticking points in the talks boil down to crew scheduling, fatigue management and safety, the Teamsters said. The union has rejected binding arbitration with both companies.

Shippers and producers say the potential stoppage at CN or CPKC — or both simultaneously — would halt freight traffic, clog ports and disrupt industries.

Federal Labour Minister Steven MacKinnon, who stepped into the role three weeks ago, said the two sides need to hash out a deal themselves rather than rely on state intervention.

“I call upon the parties to stay at the bargaining table and continue holding productive and substantive discussions that meet the needs of this moment. A negotiated agreement is the best way forward,” MacKinnon said in a statement Friday.

Federal conciliators remain involved in the talks.

In May, then-labour minister Seamus O’Regan asked the industrial relations board to review whether a work stoppage would jeopardize Canadians’ well-being after union members voted overwhelmingly to approve a strike mandate.

“There is no doubt that a work stoppage at CN would result in inconvenience, economic hardship and, possibly, as some groups and organizations have suggested, harm to Canada’s global reputation as a reliable trading partner,” the tribunal said in a unanimous decision.

However, the question of what constitutes an essential service under the Canada Labour Code is “very narrow,” it continued.

“The board is satisfied that, at this time, a strike or lockout at CN would not pose an immediate and serious danger to the safety or health of the public.”

The tribunal came to the same conclusion in a separate ruling concerning Canadian Pacific.

Domestic railways haul about $380 billion worth of goods and more than half of the country’s total exports each year, according to the Railway Association of Canada.

Anxiety over a strike by thousands of employees has already cost CN and CPKC some business after some customers started to reroute cargo following the union’s strike mandate authorization on May 1.

Shippers — the players most frustrated by Friday’s ruling — implored the prime minister on Friday to step in.

“We are writing to urge you to immediately intervene and do everything necessary to avert a disruption,” stated the joint letter from more than 70 industry groups and 40 chambers of commerce.

A prolonged stoppage would strangle the goods pipeline, drive up prices and aggravate affordability problems for businesses and individuals, on top of the risk of furloughs at companies forced to suspend operations, the organizations warned.

Commuters could feel the effects of a work stoppage as well.

Should one occur involving the 80 CPKC rail traffic controllers negotiating for a contract — distinct from CPKC’s main bargaining group — passenger trains that run on Canadian Pacific-owned tracks in Vancouver, Toronto and Montreal could shut down.

Factories would also face back-ups right away, said Dennis Darby, CEO of Canadian Manufacturers & Exporters.

“Then you pay penalties because you’re delayed delivery,” he said in an interview.

“Canadians don’t realize how integrated our manufacturing sector is and how small the inventories are. That’s why stuff is moving all the time.”

Bob Masterson, CEO of Chemistry Industry Association of Canada, called the tribunal decision “disappointing.”

“There’s no plan B,” said Masterson, whose organization represents plastic and chemical producers.

He said about 80 per cent of the sector’s $100 billion in annual shipments relies on rail transport, some of it bound for Canadian municipalities that need chlorine to disinfect drinking water.

“The government has asked us, ‘What about trucks?’ No. 1, what trucks? We already have a driver shortage,” he said in an interview.

One railcar amounts to three big rigs’ worth of commodities, he said. “And every day we move 530 railcars. So somehow, at short notice, we’re going to find 1,500 to 2,000 more trucks to carry our product, as well as everybody else trying to? That’s just not possible.”

This report by The Canadian Press was first published Aug. 9, 2024.