By Allison Lampert, Abhinav Parmar, Jahnavi Nidumolu
MONTREAL (Reuters) -The Canadian government will announce soon how it plans to tackle a nationwide freight rail stoppage, Prime Minister Justin Trudeau said on Thursday, stressing the need for a quick solution.
Trudeau, speaking to reporters in Quebec, said the stoppage would soon have an impact across the country.
Canada’s top two railroads locked out more than 9,000 unionized workers on Thursday, triggering an unprecedented simultaneous rail stoppage that could cause billions of dollars worth of economic damage and roil North American supply chains.
The companies – Canadian National Railway (TSX:CNR) and Canadian Pacific (NYSE:CP) Kansas City – and the Teamsters union blamed each other for the work stoppage after multiple rounds of talks failed to yield an agreement.
Business groups and companies say they want the federal government to impose binding arbitration on the union and the companies, thereby ending the stoppage.
“We will have more to say shortly on what we’re doing to make sure the right solution is found, quickly, for the economy,” Trudeau said, but did not elaborate.
The rail companies say they were forced into the lockouts to avoid strikes at short notice. With lockouts telegraphed in advance, CN and CPKC had time to give clients advance notice to redirect their cargoes, ensure phased network shutdowns, and to ensure hazardous goods were not stranded.
“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” Teamsters Canada Rail Conference president Paul Boucher said, adding the talks were continuing.
The two railroads said they had bargained in good faith and had made multiple offers with better pay and working conditions.
“Despite our best efforts, it is clear that a negotiated outcome with the TCRC is not within reach,” CPKC said.
CN said it was forced to lock workers out as the union did not revert on its final offer ahead of the deadline.
The two railroads – that hold a duopoly on rail freight in Canada – had said that they would lock out workers at 12:01 a.m. ET on Thursday.
BINDING ARBITRATION
The Canadian government has so far asked the railroads and the union to work together and reach an agreement, choosing to ignore CN and CPKC’s appeals for the government to use its power to refer the disputes to binding arbitration.
Francois Laporte, president of Teamsters Canada, told reporters outside CN’s Montreal headquarters that he did not expect the government would force workers into arbitration.
“We believe that this thing has to be settled at (the) bargaining table,” Laporte said in front of picketing CN workers. “We don’t believe in letting a third party decide what’s going to be the working conditions of these people.”
Unions typically do not want contracts decided through arbitration as it removes their leverage from withholding labor to secure better terms.
The left-leaning New Democratic Party, which has traditionally received strong union support and that props up Trudeau’s government, has called on him to not intervene in the disputes.
But disruptions and pressure were mounting.
Tens of thousands of people who depend on certain commuter rail lines into Toronto, Vancouver and Montreal have been inconvenienced by the lockouts, as all train movement on these CPKC-owned lines has halted indefinitely.
“The rail shutdown at CN and CPKC is already costing workers, transit users and businesses across the country, and we cannot afford to let things get worse,” Ontario Premier Doug Ford (NYSE:F) said on social media platform X.
Business groups and industries have sounded alarm over a stoppage that they say would raise costs and lead to ‘devastating consequences’.
The stoppage is set to cripple shipments of grain, potash and coal while also slowing the transport of petroleum products, chemicals and autos.
Businesses in the U.S. are set to be harmed as well, as the two economies are highly integrated.
STALEMATE
The work stoppage that has thousands of workers, including conductors, locomotive engineers and yard workers, off the job across Canada is largely rooted in scheduling, availability of labor, and demands for better work-life balance, according to the union and companies.
It comes after the Canadian government introduced new duty and rest-period rules in 2023.
CN has said it wants workers to stay on the job for up to 12 hours, in line with government norms, a change that it said would improve productivity.
But CN workers now have shifts of up to 10 hours a day, and the Teamsters do not want to relax those conditions.
CN locomotive engineers on the picket line said they are concerned about longer work shifts and an effort by the companies to cut a current rest period of 24 hours after returning home roughly in half.
They said most younger workers at CN work on call and have to jump to assignments, packing days worth of food for the road, on two hours’ notice.
“What we want are working conditions that will make sure that the train operator, whether it is an engineer or conductor … gets their proper rest,” Laporte said.
Analysts have flagged a hit to profits at both railroads from the strike.
“Our rough calculations show that each day under a strike/lockout will negatively impact CN’s profit per share by about C$0.04 and CP’s by ~C$0.02,” Desjardins analyst Benoit Poirier wrote in a note this week.
Shares of CN and CPKC were roughly flat in midday trading.
($1 = 1.3587 Canadian dollars)
