- More than 9,000 workers are locked out of the railways after talks failed
- Railroads, Teamsters blame each other for union shutdown
- A shutdown could hurt the Canadian economy and cross-border trade with the United States
- Industry groups urged the government to block the ban
Item 1 of 4 shows the CN Macmillan yard in Vaughan, Ontario, following the failure of Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) negotiations with a major union in Vaughan, Ontario. Canada August 22, 2024. REUTERS/Carlos Osorio
[1/4]A drone view shows the CN Macmillan yard in Vaughan, near Toronto, after Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) evacuated workers following the collapse of negotiations with a major union, August 22, in Vaughan, Ontario, Canada. . 2024. REUTERS/Carlos Osorio Purchase license rights
Aug 22 (Reuters) – Canada's top two railroads have locked out more than 9,000 unionized workers, triggering an unprecedented train stoppage that could cost billions of dollars in economic damage and cripple North American supply chains.
Companies – Canadian National Railway (CN) (CNR.TO) and Canadian Pacific Kansas City (CPKC) (CP.TO) — and the Teamsters union blamed each other for the strike after several rounds of contract negotiations failed to produce a new agreement.
« Throughout this process, both CN and CPKC have compromised rail safety and been willing to tear families apart to make extra money, » said Paul Boucher, president of the Teamsters Canadian Rail Conference (TCRC).
Both the railways, in separate statements, said they had negotiated in good faith and had offered several concessions, including better wages and working conditions.
« Despite our best efforts, it is clear that a negotiated settlement with the TCRC has not been reached, » CPKC said in a statement on Thursday.
The company on Thursday reiterated its demand for a binding arbitration to resolve the disputes.
The Canadian government has so far asked the railroads and the union to come together to reach an agreement, choosing not to use its power to refer the dispute to binding arbitration.
Both companies said they would lock out workers at 1201 ET Thursday morning.
As that deadline approaches, trade groups and industry have warned of a possible shutdown that they say could drive up costs and lead to 'disastrous consequences'.
Ratings agency Moody's said on Wednesday that the stoppage would cost more than C$341 million a day.
Canada is the world's second-largest country by area and relies heavily on rail transport, carrying about C$380 billion ($277 billion) worth of goods annually.
The shutdown halted shipments of grains, potash and coal while slowing the movement of petroleum products, chemicals and autos.
As the two economies become more integrated, businesses in the U.S. will also suffer. Rail transport accounted for 14% of the $382.4 billion in total bilateral trade between the countries in the first half of this year, according to the US Department of Transportation.
CN and CPKC's coast-to-coast rail networks in Canada connect south of the border and serve as critical supply chain links to trade corridors and ports across North America.
Dead end
The union and the two companies have been in talks for months after the previous contract expired last year, but differed on terms such as transfers, rest periods and scheduling.
« The main obstacles to reaching an agreement remain company demands, not union proposals, » the Teamsters said Thursday.
In its latest offer, CN improved wages and aligned work hours with federally mandated rest provisions, which it said would mean employees would work fewer days a month. The union did not respond after making the offer, the company said.
The union has opposed CN's « forced relocation plan, » which would see workers ordered to move around the country.
CPKC said its offer to train and engine division employees includes competitive pay hikes and increased shift differentials.
The Teamsters said Thursday that they have made several offers, none of which have been seriously considered by either company.
Analysts say profits at both railroads will be hit by the strike.
« Our rough calculations show that each day under strike/strike would impact CN's earnings per share by ~C$0.04 and CP's earnings by ~C$0.02, » Desjardins analyst Benoit Poirier wrote in a note earlier this week.
Stephens analyst Daniel Imbro said on Thursday that the walkouts would raise the prospect of higher wages and benefits next year compared to the U.S. as Canadian railroads work to end the lockout.
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Additional reporting by Abhinav Parmar, Jahnavi Nidumolu and Nathan Gomes in Bangalore; Written by Abhijith Ganavaparam; Edited by David Lungren, Rod Nickell, Jamie Freed, Jacqueline Wong, and Sriraj Kalluvila
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