Canada Tries to End Railway Lockout, Sends Dispute to Labor Body

(Bloomberg) -- Prime Minister Justin Trudeau’s government stepped in to try to end a work stoppage at Canada’s two largest railways that has brought rail traffic to a halt.

Labor Minister Steven MacKinnon asked the Canada Industrial Relations Board to impose binding arbitration on Canadian National Railway Co., Canadian Pacific Kansas City Ltd. and the Teamsters union, he announced Thursday afternoon in Ottawa. 

He also ordered the parties to extend their current labor contract, and said the railways should resume operations “forthwith.” MacKinnon said he’s “confident” the measures will get trains rolling again and end a lockout that began just after midnight Ottawa time on Thursday. But it’s not guaranteed. 

The industrial relations board — an independent tribunal — will now have its own process to follow. MacKinnon said the board will have to consult with both sides in the coming hours, and he hopes a decision will come “very quickly” that will send railway employees back to work.  

The two railways control about 80% of Canada’s rail network, and shutting them down swiftly causes economic harm. A two-week lockout would shave as much as C$3 billion ($2.2 billion) from the country’s nominal gross domestic product, including a C$1.3 billion hit to labor income and a C$1.25 billion loss to corporate profits, said the Conference Board of Canada. Moody’s put a higher price tag on the stoppage, saying it could reduce nominal GDP by as much as C$4.8 billion if it lasted two weeks. 

The companies and the railways remain far apart in negotiations, the labor minister said. 

“Millions of Canadians rely on our railways every day — workers, farmers, ranchers, commuters, small businesses, miners, chemists, scientists — the list goes on and the impacts cannot be understated, and they extend to every corner of this country,” MacKinnon said. 

Business groups in Canada and the US have been calling on the Canadian government to intervene, as the lockout disrupted the countries’ interconnected supply chain. Commodities like coal, wheat, fertilizer and lumber depend on the railways and there are few shipping alternatives. 

Last week, the federal government denied Canadian National’s request to seek arbitration and instead encouraged the parties to reach a deal at the bargaining table, but they couldn’t.

Teamsters, which represents over 9,000 workers at the two railways, said its members were negotiating provisions to address scheduling and crew fatigue. The previous collective agreements had expired on Dec. 31, 2023.

(Updates with more details beginning in the fifth paragraph.)

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