Canada’s Railroads Lock Out 9,000 Workers as Labor Talks Break Down
Government has declined to intervene in labor conflict that threatens to stem cross-border trade, upend North American supply chains By Paul Vieira/Wall Street Journal/ Aug. 22, 2024 OTTAWA—Canada’s two main railroads locked out over 9,000 employees Thursday after they were unable to reach new labor deals with a Teamsters union, the start of a work stoppage that threatens to stanch hundreds of millions of dollars in daily cross-border trade and upend North American supply chains. The simultaneous moves by Canadian National Railway <https://www.wsj.com/market-data/quotes/CNI> and Canadian Pacific Kansas City <https://www.wsj.com/market-data/quotes/CP> sent the country’s businesses and policymakers scrambling to limit the fallout, as they warned of serious harm to the world’s 10th-largest economy unless the railroads and the Teamsters Canada Rail Conference clinched new agreements. The companies had set a deadline of 12:01 a.m. Eastern time Thursday. Canadian National said early Thursday that the union didn’t respond to another company offer in a final attempt to avoid a labor disruption. “We urge the Teamsters to engage in these negotiations with the urgency and importance that this situation requires,” the railroad said. CPKC said the company bargained in good faith, “but despite our best efforts, it is clear that a negotiated outcome with the Teamsters is not within reach.” The railroads and the union had said talks were at an impasse, and developments over the past week had cast a pall on talks. Teamsters Canada said both railroads are demanding concessions, on scheduling and fatigue management, that would compromise worker safety. The union added it made several counteroffers, “none of which were seriously considered by the company.” A union official had said wages weren’t holding up an agreement. Canada’s labor minister, Steven MacKinnon, and other senior officials had repeatedly declined calls by business groups <https://www.wsj.com/articles/canadas-government-rejects-call-to-intercede-in-rail-dispute-63c50b86?mod=article_inline> to intervene, saying it is the responsibility of the union and railroads to negotiate a new agreement. A labor stoppage at both railroads could cost the Canadian economy up to $250 million a day, according to analysts at Moody’s. The threat of a work stoppage <https://www.wsj.com/articles/canadian-railroads-again-face-possible-strike-after-labor-board-ruling-4bc82ae1?mod=article_inline> was already reaching into Canada’s economy this week as the country’s two big railroads started to curtail operations <https://www.wsj.com/articles/canadian-national-railway-to-halt-intermodal-freight-headed-to-canada-b9782185?mod=article_inline> in anticipation that trains would stop moving. Experts warned the actions would throttle businesses from retailers to automakers and even reach into commuter trains that use tracks operated by the freight railroads. The Western Grain Elevator Association, whose members—among them commodities giant Cargill and Glencore <https://www.wsj.com/market-data/quotes/UK/XLON/GLEN> -backed Viterra—handle 90% of western Canada’s bulk grain exports, warned a labor outage would cost the sector roughly $36 million a day. “When we lose shipping, we don’t get it back,” said Wade Sobkowich, the association’s executive director. The risk, he said, is that deliveries may be delayed until early 2025, when the Australian harvest emerges and global prices tend to drop. “There’s limited capacity to store grain and so if we’re not moving grain by rail, we’re not bringing it in,” Sobkowich said. Both carriers stopped taking in hazardous materials shipments the week before the deadline, citing safety concerns about having potentially dangerous goods idled in their networks. That had an immediate impact on the country’s big chemical producers. Bob Masterson, president of the Chemistry Industry Association of Canada, said stockpiles of chlorine, which Canadian municipalities used in water-treatment plants, are “now depleting.” Canada is the world’s biggest exporter of chlorine, which kills bacteria and is used in consumer products such as bleach, paints and drugs. “If this isn’t addressed and the chlorine cannot flow again, you are talking about boil-water advisories to protect public health,” said Masterson, whose members ship over $20 billion of goods annually on Canada’s main railroads. The American Chemistry Council also raised alarms. The U.S. imports nearly $25 billion of chemicals from Canada, the council said. The Washington-based trade group said Canada supplies about 60% of the chlorine used in water-treatment plants in western U.S. states. Jeff Sloan, the council’s senior director of regulatory affairs, said U.S. chemical producers could throttle production due to the labor stoppage, given the integration between the U.S. and Canadian economies “You will have to start slowing down production pretty quickly if railcars aren’t being picked up or delivered,” Sloan said. Montreal-based CN operates about 20,000 miles of tracks, connecting Canada’s east and west coasts with the U.S. South, and carries about 300 million metric tons of cargo annually. CPKC’s network also runs about 20,000 miles, serving markets across Canada, the U.S. and Mexico, and in 2023 transported roughly 350 million metric tons of cargo. The two railroads also own tracks used by passenger rail operations in Toronto, Montreal and Vancouver, British Columbia, that could be curtailed in a labor outage. Roughly 7,500 commuters use one such line daily from the city of Milton outside Toronto as part of the region’s GO train services, for instance, said Andrea Ernesaks, a spokeswoman for GO operator Metrolinx. Both freight carriers have substantial business in the U.S. and connect to American railroads <https://www.wsj.com/articles/maersk-continues-to-accept-canada-cargo-as-operators-brace-for-rail-stoppage-5f3924dc?mod=article_inline> . The U.S. Bureau of Transportation Statistics estimates that, in 2023, rail accounted for about 16%, or $114 billion, of the freight that moved between the U.S. and Canada. The Canadian Chamber of Commerce said a simultaneous labor stoppage would affect the flow of about $730 million in goods a day, and reduce access to materials needed to build cars and homes, and provide heating for households. The U.S. Agriculture Department warned that imports of Canadian grains and oilseeds “would be heavily impacted” by a simultaneous railroad labor stoppage. The USDA estimates that in the first half of this year, Canadian agriculture producers shipped about $40 million a day of goods by rail to the U.S. “The economic repercussions of a rail work stoppage of this magnitude would be devastating locally, and given the interconnectivity, consequently impact the movement of goods in the United States and beyond,” the department’s foreign agricultural service wrote in a note. Canada’s beef and pork producers say they might have to close processing plants should the labor stoppage extend beyond a week. The Canadian Meat Council and Canadian Pork Council noted last summer’s two-week strike involving more than 7,000 workers at Canada’s Pacific Coast ports affected shipments totaling over $7 billion, and reduced Canada’s economic output by $730 million. “The impacts of two Class 1 railways striking at once will have even worse, unprecedented ramifications,” the councils said in a joint statement. Robb M. Stewart contributed to this article. https://www.wsj.com/articles/labor-turmoil-at-canadas-railroads-threatens-to-whipsaw-businesses-d45a0233 -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. View/Reply Online (#31759): https://groups.io/g/marxmail/message/31759 Mute This Topic: https://groups.io/mt/108050189/21656 -=-=- POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. #4 Do not exceed five posts a day. -=-=- Group Owner: [email protected] Unsubscribe: https://groups.io/g/marxmail/leave/8674936/21656/1316126222/xyzzy [[email protected]] -=-=-=-=-=-=-=-=-=-=-=-
