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A Canadian Pacific Rail maintenance worker climbs onto a locomotive at the company's Port Coquitlam yard east of Vancouver, B.C., in a file photo.

Darryl Dyck/The Canadian Press

Canada's two major railways are expected to remain in negotiations on Saturday with unions representing locomotive engineers and conductors as they try to fend off strikes that would halt freight traffic and cost the Canadian economy more than $550-million a week.

Canadian Pacific Railway Ltd. is facing a strike deadline after midnight Saturday as it bargains with two unions: Teamsters representing about 3,000 train crews and Unifor, which represents 1,200 mechanical inspectors.

At Canadian National Railway Ltd., talks are being held with Teamsters representing 1,800 engineers and 4,800 Unifor workers who inspect rail cars. The Teamsters have also set a deadline for Saturday after midnight, but have not issued a strike warning nor said if they have a strike mandate from members.

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But for both railways, the negotiations with the Teamsters are key. Although the companies are prepared to run some trains with management at the controls, they would not be able to move most freight, and producers of everything from potash to consumer goods would be stuck. If CP train crews walk out, it would halt half of Montreal's commuter trains and could cause delays to Via passenger rail service in Northern Ontario.

Manufacturers and commodity producers have few options if the rails shut down. The trucking industry is facing a labour shortage and would be unable to respond to new demand from producers of bulk commodities such as coal or potash.

While auto makers and other companies work on contingency plans for the potential CP shutdown, a labour dispute at ports in Los Angeles is already causing disruptions to vehicle production.

Honda Manufacturing of Canada plans to halt output at its assembly plant in Alliston, Ont., two days next week and on Feb. 23 because transmissions and some electronic parts are sitting on ships sitting off Los Angeles.

Toyota Motor Manufacturing Canada Inc., which operates assembly plants in Cambridge, Ont., and Woodstock, Ont., has cut back overtime and is preparing to ship some parts from Japan by air so the plants can continue producing.

CP's talks with the teamsters late Friday were stuck over the rest periods.

The company is trying to reach an agreement that would give it more flexibility in scheduling workers and running trains, the source said. The company has agreed to 48-hour rest periods, up from 24 hours, after four shifts. But it wants to make the time off mandatory, in order to know when and where it needs crews. The union wants members to be able to take some or none of the time off before returning to work, said a source familiar with negotiations.

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"At this point, discussions are very difficult and it is unlikely a negotiated settlement will be achieved," the source said. "But the situation remains fluid."

As the likelihood of a strike has grown, the company has also offered a 90-day cooling off period, during which everyone works while talks continue. It has also offered to take the dispute to an arbitrated settlement.

A spokesman for the Teamsters declined to comment on the negotiations with CP, other than to say talks are continuing. On Thursday, the union said fatigue management and installing crew-recording devices in train cabs were the main issues in the way of an agreement. The union said grievances over work conditions have soared, and that budget cuts have forced crews to work harder and longer.

In 2012, 4,800 CP engineers, conductors and yard workers walked off the job for nine days before being sent back to work by then-labour minister Lisa Raitt.

CP said it could take several days for the government to pass legislation that would end the strike. Monday is a statutory holiday in some provinces, but Parliament is sitting and could begin the process of introducing legislation.

With files from Greg Keenan

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