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A strike by locomotive engineers and conductors would affect sectors ranging from commodities to manufacturing.Darryl Dyck/The Globe and Mail

Companies that depend on the railway to haul their goods to market are bracing for a possible strike at Canadian Pacific Railway Ltd.

Catherine Cobden, executive vice-president of the Forest Products Association of Canada, said the 21 companies she represents are "very concerned" about the possibility of a strike Saturday night by CP's locomotive engineers and conductors.

The Teamsters union that represents the 3,100 workers has told the company it will strike after midnight on Saturday if mediated talks in Montreal fail to resolve disagreements over rest time and shift scheduling.

A strike could hobble much of the Canadian manufacturing, retail and commodities sectors, which are served by two major rail carriers but often cannot choose between them. CP said its managers have been trained to run locomotives, but not all the freight will get moved if crews walk off the job.

Ms. Cobden said it takes three-and-a-half trucks to replace one rail car, and most lumber mills will not be able to find enough trucking capacity to replace trains. Many mills produce pulp and paper that cannot be stored outdoors, so they cannot stockpile while waiting for rail service to resume, she said.

"Our mills are very remote and so is the global marketplace, and so we rely on the rail system," Ms. Cobden said from Ottawa. "The options for us are very limited."

The forest products group is calling for the government to end any work stoppage with back-to-work legislation, given the importance of the railway to Canada's economy.

Labour Minister Kellie Leitch said in a statement that it would not be appropriate to speculate what steps the government would take if a strike happened.

"Our government has always said that protecting the Canadian economy is a top priority, therefore, we strongly encourage both sides to work together and reach an agreement that will ensure the continuation of rail services," Ms. Leitch said.

Wade Sobkowich of the Western Grain Elevator Association said commodity traders are unable to prepare for any strike by moving more crops to ports ahead of a possible strike, given the tight supply of hopper cars.

Grain companies that cannot fulfill customer orders face contract extension penalties, charges from ship owners forced to wait at port, and lost opportunity costs. "There's very little we can do to prepare," he said from Winnipeg. "We require the railways to keep operating so we can move product."

A spokesman for Toyota Motor Manufacturing Canada Inc., which makes vehicles in Cambridge and Woodstock, Ont., said CP is the company's only rail option, and the car maker is looking at unspecified alternatives to get its products to market.

Honda Canada Inc., also a CP customer, said its strike preparations include storing vehicles and finding shipping alternatives.

Keith Creel, CP's chief financial officer, said company management will be deployed across the country on Saturday and ready to run trains. "We won't be able to move 100 per cent of the business, but certainly we're going to protect the business as best we can," he said.

Speaking at an investors conference in Florida, Mr. Creel said a strike could last three to 10 days before the government would be able to end it with legislation.

The federal government last year responded to a threatened strike at Canadian National Railway Co. with talk of a legislated end. In 2012, Ottawa ended a strike at CP after just a few days.

Mr. Creel said the company could lose a penny a share in profit for each day of the strike. But given the costs of meeting the union's demands, Mr. Creel said, it is a better financial decision for the company to stand its ground.

Saturday at midnight is also the deadline for contract talks at CN. The Unifor union, which represents about 4,800 mechanical and clerical staff at the railway, is in mediated talks with the employer in Montreal this week but has not set a strike deadline, said Brian Stevens, Unifor's rail director.

CN is also in talks with the Teamsters for a collective agreement covering 1,800 locomotive engineers. A CN spokesman said he is confident the company will not face a labour disruption in either case.

With files from Greg Keenan

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:35pm EDT.

SymbolName% changeLast
CNI-N
Canadian National Railway
+0.17%131.87
CNR-T
Canadian National Railway Co.
-0.16%178.35
CP-N
Canadian Pacific Kansas City Ltd
+0.1%88.55
CP-T
Canadian Pacific Kansas City Ltd
-0.41%119.59
TM-N
Toyota Motor Corp Ltd Ord ADR
-0.15%251.78

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