A strike by 3,200 Canadian National Railway Co. train conductors and yard workers has closed Canada’s largest rail freight network, triggering fears about the impact on farmers, mining companies and other pillars of the economy.
The CN employees, represented by Teamsters Canada Rail Conference, walked off the job at just past midnight on Tuesday after several months of mediated talks. Negotiations to replace an agreement that expired in July were scheduled to continue on Tuesday at a downtown Montreal hotel, said Christopher Monette, a spokesman for the Teamsters.
CN had already been winding down operations to avoid leaving loaded trains in storage or on tracks. The railway stopped picking up some hazardous goods and interchange cars from other railways in recent days. CN said in an internal memo that qualified managers will operate some trains, focusing on container shipments.
However, the grain companies, farmers, chemical makers, miners and retailers that rely on CN to get their goods to and from market have no real alternatives. Many are captive to CN, given their locations, and trucks are too small.
The Alberta government urged the federal government to enact back-to-work legislation immediately.
In a statement, Alberta Minister of Energy Sonya Savage said any disruption in oil shipments would “have serious consequences for an economy that is already dealing with severe bottlenecks owing to cancelled and delayed pipelines. Alberta cannot see further restrictions on our ability to export our product.”
Husky Energy Inc. said on Tuesday it uses CN to transport some of its product in Canada and has plans that will minimize the impact of the strike. Imperial Oil Ltd. chief executive Rich Kruger said last week his company was increasing its Canadian crude rail shipments after the recent Keystone pipeline outage.
The Mining Association of Canada, which represents companies that provide more than half of railways’ revenue, warned the strike will hurt the country’s reputation as a reliable trading partner.
Pierre Gratton, head of the mining group, said the lost rail capacity will “trigger the closure of mines with concurrent layoffs of thousands of employees beginning in a matter of days."
Wade Sobkowich, executive director of the Western Grain Elevator Association, said the rail strike will quickly cause the Prairie elevators to stop taking crop deliveries due to a lack of storage capacity. CN moves about half of the western grain crop to ports in Vancouver, Prince Rupert and Thunder Bay.
The ports have enough grain for a few more days, but by next week, the vessels could be sitting at anchor. This means grain companies will be forced to pay them to idle, and to pay to extend supply contracts, Mr. Sobkowich said.
He said timely rail service had been a bright spot lately.
“Producers are already in the midst of a really bad harvest,” he said. “It was wet and rainy almost every day in September, and some of the crop is still out in the field. The silver lining this year was rail service.”
Robert Lewis-Manning, head of the Chamber of Shipping of British Columbia, which speaks for the West Coast marine industry, said container-ship traffic is fairly low and fluid right now. This makes a short stoppage in rail service by one of the two major companies that serve the Port of Vancouver “manageable but not desirable.”
However, he said the mining and grain carriers and shippers will be more quickly affected.
“I think we’ll see ships start to anchor,” he said. “And as imports come in, particularly containers, they’ll start to take up dock space, which just makes it more difficult to recover from as service starts to resume.”
The strike could last longer than past rail walkouts because back-to-work legislation is unlikely, said Derek Holt, an economist at Bank of Nova Scotia. “This time, the economy could pay a price because it’s the first test of the Liberal Party’s efforts to court the further-left NDP as a coalition partner.”
This is the first strike at CN since 2009, when train engineers were off the job for three days.
Canadian Pacific Railway Ltd. has had three strikes by train crews since 2012. The 2018 walkout lasted less than a day, and the brief strikes of 2015 and 2012 were ended by legislation or amid the threat of legislation.
Today’s Liberal government has shown no interest in legislating ends to strikes. Patty Hajdu, the Labour Minister, said in a statement on Tuesday the government understands the importance of the rail industry and its workers, and hopes for a settlement. "The government of Canada supports and has faith in the collective bargaining process,” Ms. Hajdu said. A spokesperson for Ms. Hajdu declined to comment on the calls for legislation.
The union says the main issues are drug benefits, time off and remote-control train operations. Wages are not in dispute. A CN spokesman did not answer several questions sent by e-mail.
”We are disappointed that the [union] has initiated strike action, which will result in a significant disruption to service,” Janet Drysdale, CN’s vice-president of financial planning, said on Tuesday. “We apologize to our customers and appreciate their understanding that safety is always our first priority.”
The company and the same group of employees settled in 2015 after labour minister Kellie Leitch warned she would block any strike with legislation.
CN is laying off about 1,600 management and union staff as it faces declining freight volumes amid global trade tensions that have dampened exports. The world’s economies are also showing signs of slowing. Jean-Jacques Ruest was named CEO in July, 2018, taking the lead as CN was facing complaints from shippers and the government about poor service, and oversaw a period of increased capital spending and hiring.
CN, which employs about 24,000 people in Canada and the United States, made a profit of $1.2-billion in the latest quarter and posted a 4-per-cent rise in revenue to $3.8-billion, compared with the third quarter of 2018. CN reduced its profit outlook due to the weakening economy.
Ms. Drysdale said one measure of CN’s freight volumes has declined by 11 per cent in the current quarter, compared with a year earlier.
Via Rail, the passenger service that operates mainly on CN lines, said it is not affected by the strike. Commuter rail in Vancouver, Toronto and Montreal will also be unaffected.
With reports from Marieke Walsh in Ottawa and Emma Graney in Calgary
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