Canadian Pacific Kansas City workers stop traffic into a CPKC rail yard in Vaughan, Ontario.Sammy Kogan/The Globe and Mail
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Update: Later on Thursday, the federal government ordered an end to the railway stoppage and sent the labour disputes for final arbitration. Read more here.
Canada’s two big railways shut down the country’s freight rail network early on Thursday morning after contract talks broke off, locking out much of their unionized work forces despite warnings of economic damage from business groups and politicians.
Canadian Pacific Kansas City Ltd. CP-T and Canadian National Railway Co. CNR-T said in separate statements that they took the steps after months of negotiations with the Teamsters union failed to yield agreements.
Contracts talks are set to resume on Thursday in Montreal and Calgary.
“Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout,” CN said in a statement.
CPKC and CN and the union, which represents almost 10,000 railway workers, have been in separate talks for several months. The Teamsters had issued a strike notice at CPKC but not CN.
“CPKC is acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period,” CPKC said in a statement.
The Calgary-based railway said binding arbitration was the only “responsible” way to end the impasse.
The Teamsters said the company offers did not address issues that included fatigue management and quality of life. The union said railways were trying to overcome a labour shortage by making employees work longer days and farther from home. The companies said they offered higher wages and scheduling changes that would let employees spend more time with their families.
“The main obstacles to reaching an agreement remain the companies’ demands, not union proposals,” the union said in a statement after the lockouts were announced.
“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” said Paul Boucher, president of Teamsters Canada Rail Conference. “The railroads don’t care about farmers, small businesses, supply chains or their own employees. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”
Locked-out CPKC employees gathered in front of the railway’s Lambton rail yard in Toronto’s west end on Thursday morning, holding Teamsters Rail picket signs outside the railway’s office while a security guard looked on. The men, who said they were train operators, declined to give their names or answer most questions because they said they would face repercussions for speaking to the media.
John Corey, president of the Freight Management Association of Canada, said the lockouts underline the need for the government to stop “sitting on its hands” and take action to end the disputes.
“Essentially, the Canadian supply chain has ground to a halt,” he said in an interview early on Thursday morning. “There are going to be no goods coming into the country through the ports and nothing’s going to go out.”
While the impact on shippers of commodities and other goods was evident days ago, the impact on consumers might not be seen right away. Mr. Corey predicted the flow of fruits and vegetables from California will be halted, and shoppers will eventually see fewer varieties of soft drinks and other items as manufacturers and suppliers focus on only the best-selling products.
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In 2023, the average CN conductor made $121,000, while an engineer was paid $150,000. Comparable CPKC workers typically make about $10,000 less.
Both railways have extensive U.S. operations and CPKC’s network includes Mexico. None of these routes are affected by the shutdowns. However, both railways imposed gradual shutdowns ahead of this morning’s move. This included refusing to handle any domestic or foreign cargo destined for Canada, reducing some volumes at U.S. railway companies.
Business groups representing a cross-section of the economy were urging the government to step in and keep the rail network running. They say the two freight haulers carry $380-billion in goods every year, and the loss of rail service will cause layoffs, plant shutdowns and shortages of consumer goods and raw materials.
The shutdown puts new pressure on Labour Minister Steven MacKinnon and the government to take steps to solve the crisis. The tools at the government’s disposal include back-to-work legislation and a referral to the Canadian Industrial Relations Board.
The Conference Board of Canada says a two-week stoppage at both railways would cause a $3-billion drop in Canada’s nominal gross domestic product for this year. Households would see a $1.3-billion loss in wages while business profits would fall by $1.25-billion.
“Mining, agriculture, manufacturing take the brunt of the hit among goods-producing industries, while wholesale trade and transportation suffer the bigger losses among service producers,” the think tank said in a press release.
Commuters at the GO Bus Terminal Aug. 22, 2024 in Hamilton, Ont. receive directions to a shuttle bus to the Aldershot GO Station where they can then board an eastbound train. Train service from Hamilton has been interrupted by the labour dispute with the two major Canadian railways, CN and CPKC. THE CANADIAN PRESS/Peter PowerPeter Power/The Canadian Press
There are no viable alternatives to freight trains, owing to their capacity and efficiency at moving bulk commodities and strings of cargo containers.
“Canada’s trucking industry is already struggling with congestion and a shortage of drivers, making it difficult for Canadian importers and exporters to find alternate transportation if rail stoppages occur,” the Conference Board said.
In the current rounds of talks the union represents almost 10,000 railway workers in three bargaining units, including engineers, conductors, dispatchers and yard workers. It is rare for train crews at both railways to be in simultaneous contract talks.
The CPKC dispatchers also work on commuter rail systems around Vancouver, Toronto and Montreal. The affected rail services will be suspended, forcing thousands of commuters to seek alternatives or stay home.
Chris White, head of the Canadian Meat Council, said a strike will cost some meat processing plants $3-million a week as deliveries to customers are delayed. Plants will close about a week into a rail strike, and it will take two to five weeks to resume normal operations.
Even before the work stoppage, the Port of Vancouver had revised its anchorage assignments and told vessel operators to slow down to avoid congesting the docks and surrounding waters.
The rail stoppage comes at a time Canada’s farmers and grain exporters are relying on railways to reach markets in North America and overseas. More than $50-million in wheat, canola and other grain is shipped by rail every day in late summer and the fall, said Wade Sobkowich, executive director of Western Grain Elevator Association, which lobbies on behalf of Richardson International and other big grain companies.
Under Section 107 of the Canada Labour Code, Mr. MacKinnon has the power to order the Canadian Industrial Relations Board to impose binding arbitration in the disputes. This could avert strikes or lockouts. Mr. MacKinnon last week refused CN’s request to do so, saying the bargaining teams needed to solve their own issues.
Mr. MacKinnon joined the CN negotiations in Montreal on Tuesday and in Calgary on Wednesday with the CPKC parties. He has declined to send the disputes to final arbitration or discuss back-to-work legislation, saying he wanted the groups to reach agreements at the bargaining tables.
Parliament is currently on summer break, so if the minority government were to introduce back to work legislation, they would need to recall the House of Commons and find support for such a bill from one of the opposition parties.
The Liberals have an agreement with the NDP for support but the New Democrats will not vote in favour of back-to-work legislation and do not support binding arbitration. This week the NDP released a statement calling on Prime Minister Justin Trudeau to pre-emptively declare that he won’t intervene on the side of the rail companies.
The Bloc Québécois meantime released a statement this week accusing the companies of manufacturing the economic crisis and of bad faith negotiations. Party spokesperson Julien Coulombe-Bonnafous on Wednesday declined to say what the Bloc would do if presented with back-to-work legislation but noted that the party has never supported such a bill in the past.
While in government the Conservatives used back-to-work legislation to end a strike at CP Rail in 2012, however, the party declined to say Wednesday whether it would support such a move in this case. In a Tuesday interview with Quebec’s Radio X, Conservative Leader Pierre Poilievre said he hopes there will be a negotiated settlement and that the companies will be generous with employees who have seen their paycheques diminished by inflation.