Rail shutdown: Ottawa imposing binding arbitration on parties

The federal government will intervene to try and bring an end to the labour dispute that brought Canada’s rail network to a grinding halt Thursday, Labour Minister Steve MacKinnon said.

Speaking in Ottawa less than 24 hours after thousands of unionized workers at the country’s two main railway companies were locked out, McKinnon said he will use his powers under the Canada Labour Code to “secure industrial peace” and impose final, binding arbitration.

He said he has also directed the Canada Industrial Relations Board to extend the term of the current collective agreement until a deal is reached, and to order a return to work.

Shortly after MacKinnon’s announcement, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) said they were ending the lockouts they began at 12:01 a.m. Thursday to prepare for the resumption of rail operations once the board delivers its final order.

However, the Teamsters Canada Railway Conference (TCRC) union made clear that picket lines will remain in place across the country and will “determine the next steps” once that order arrives.

The minister said the action will help CN, CPKC and the TCRC settle outstanding terms in their negotiations for a new collective agreement that he said have reached a “fundamental impasse.”

“These collective bargaining negotiations belong to CN Rail, CPKC and TCRC alone – but their effects, and the impacts of the current impasse, are being borne by all Canadians,” MacKinnon told reporters.

“I assume that trains will be running within days but again, I want to be deferential,” MacKinnon said, referring to the process that will play out at the industrial relations board.

Asked if he would impose back-to-work legislation if the work stoppage continues despite the binding arbitration, with reporters referencing the recent example of the WestJet strike, MacKinnon said he would.

The rail shutdown has sent shockwaves through the Canadian economy, with provinces, economists, business groups, the agriculture sector, exporters and retailers voicing concerns about the potential for massive losses and supply chain disruptions in different industries that rely on the rail networks.

“While CN is satisfied that this labour conflict has ended and that it can get back to its role of powering the economy, the company is disappointed that a negotiated deal could not be achieved at the bargaining table despite its best efforts,” CN said in a statement.

CPKC president and CEO Keith Creel similarly said in a statement it “regret(s) that the government had to intervene.”

The Canadian Manufacturers & Exporters trade organization applauded MacKinnon’s announcement and called on the industrial relations board to order a resumption of rail service as soon as possible.

“The wind down of rail services over the last several days culminating in the full stoppage this morning has inflicted significant supply chain and operational challenges for manufacturers across the country – issues that will take days if not weeks to resolve,” president and CEO Dennis Darby said in a statement.

Ottawa had dismissed calls to intervene leading up to Thursday’s lockout, with MacKinnon telling Global News late Wednesday it was important for the parties to find a solution at the negotiating table.

Speaking to reporters in Quebec’s Eastern Townships earlier on Thursday, Trudeau said his government is taking the rail stoppage “so seriously” and will remain engaged so that “the right solution is found quickly for the economy.”

“We are not taking this lightly, obviously, because Canadians across the country are worried,” Trudeau said.

The minority Liberal government would need the support of another party if it were to legislate an end to the shutdown, and its current supply-and-confidence agreement partner, the NDP, has been opposed to measures like binding arbitration.

“Justin Trudeau’s actions are cowardly, anti-worker, and proof that he will always cave to corporate greed,” NDP Leader Jagmeet Singh said in a post on social media Thursday. He reaffirmed in a statement earlier in the day that the NDP will not support back-to-work legislation or “any interference in the bargaining process.”

The Teamsters accused the government of allowing the rail companies to “sidestep a union determined to protect rail safety” in a statement from national president Paul Boucher that called the intervention “shameful.”

“The two major railways in Canada manufactured this crisis, took the country hostage, and manipulated te government to once again disregard the rights afforded to working-class Canadians,” Boucher said.

CN and CPKC said early Thursday that they had moved forward with their lockout notices and shut down services after negotiations with the TCRC failed to reach an agreement, which CPKC blamed on “unrealistic demands” from the union.

CN said in a separate statement that the union did not respond to another offer in a final attempt to avoid a labour disruption.

TCRC, which represents roughly 9,300 employees at CN and CPKC, said on Thursday that despite months of negotiations, all parties “remain far apart” and “the main obstacles to reaching an agreement remain the companies’ demands, not union proposals.”

Picketers were at Ogden Yards in Calgary overnight shortly after the work stoppage began, with more picket lines spreading across the country Thursday.

The main sticking points in the negotiations have been around relocation, rest periods and scheduling. The union has said the latter two demands are rooted in workers’ safety concerns.

This is the first time that a work stoppage has occurred simultaneously at CN and CPKC, which are responsible for the bulk of Canada’s freight train operations.

Grain Growers of Canada estimated that the initial impact of the dual stoppage will cost farmers more than $43 million a day in the first week alone. If the stoppage continues, those losses were expected to increase to $50 million a day the week after and beyond, according to GCC, which represents more than 65,000 grain farmers across Canada.

“The total shutdown of Canada’s two national railways is an unprecedented crisis for the grain industry,” said Kyle Larkin, GCC’s executive Director, in a statement on Thursday, warning “our entire supply chain is at risk.”

The Canadian Chamber of Commerce and Canadian Federation of Independent Business called on the federal government to step in and impose binding arbitration.

The hit to Canada’s economy could snowball if the rail stoppage stretches on, according to an analysis from Bank of Montreal.

Senior economist Robert Kavcic said in a note to clients Thursday morning that another “supply shock” for the economy could, in the near-term, hurt growth and stoke inflation — just as price pressures are finally coming back under control.

The impasse also affects tens of thousands of commuters in Toronto, Montreal and Vancouver, whose lines run on CPKC-owned tracks. Passenger trains cannot run on those rails without the locked-out traffic controllers to dispatch them.

The CPKC rail network also runs through the United States and Mexico. Unionized rail workers in the U.S. who stand in solidarity with the Canadian Teamsters have been told not to cross any picket lines, meaning they won’t operate trains into Canada from the U.S., snarling imports at the border.

A spokesperson for Washington Gov. Jay Inslee said his office was tracking the shutdown and gathering information on potential impacts, but said it was “too early for us to speculate.”

The New York State Department of Transportation told Global News it was also working to minimize “any potential impacts to passenger and freight rail service in New York.”

MacKinnon said earlier Thursday he had spoken with his U.S. counterpart Julie Su about the shutdown.

He told reporters he has received “helpful advice (and) understanding” from American counterparts and businesses leading up to the shutdown, and that Canada remains a strong economic partner and investment destination.

—with files from Global News’ Craig Lord, Sean Previl, Uday Rana and Mackenzie Gray, and the Canadian Press

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