Canadian government forces rail lockout to end

New York (CNN) — The Canadian government stepped in to end a shutdown of the nation’s two major freight railroads less than 17 hours after it started, ordering binding arbitration to end the labor dispute that threatened severe disruptions in both the US and Canadian economies.

Prime Minister Justin Trudeau’s administration had refused such a move ahead of the shutdown, which started at 12:01 am ET on Thursday. But Canada and the United States were faced with possible disruptions in multiple industries across both countries, including agriculture, automobiles, energy, lumber and chemicals; halting commuter rail operations that use the freight railroads’ tracks of the freight railroads; and the threat that water treatment plants in both countries would run out of the chlorine they needed to provide fresh drinking water.

Thursday afternoon Canadian Labor Minister Steve MacKinnon ordered the Canadian Industrial Relations Board to impose the binding arbitration and ordered the railroads and the union members to return to work. The shutdown began not through a strike by the Teamsters union, which repesents about 9,000 workers at the two railroads, but instead a lockout of those unionized workers by the management of the two railroads, Canadian National and Canadian Pacific Kansas City Southern.

The move is a victory for CN and CPKC, which had been seeking government intervention. They said they had been forced to shut down their networks, despite the disruption it would cause, because there was no way to reach a deal with the Teamsters union.

But the government’s intervention is a setback for the union, which had argued the best and fairest way to settle the labor dispute was to have the two sides reach an agreement at the bargaining table. They blamed greed by railroads negotiators and management demands that the union argues would hurt rail safety and the quality of life of its employees, a charge the railroads deny.

MacKinnon said he assessed both parties were at a “fundamental impasse.”

“There is no question that we are at an impasse. The issues remain, the parties remain very, very far apart on these issues… it’s not my job to pick sides here,” MacKinnon said.

But with two national railways with suspended operations, “it is the government’s duty and responsibility to ensure industrial peace in this critically vital sector,” he said at the press conference.

The union issued a statement saying it was consulting with attorneys about the order and said it is “deeply disappointed” with the decision.

“By resorting to binding arbitration, the government has allowed CN and CPKC to sidestep a union determined to protect rail safety,” the Teamsters said in the statement. “Despite claiming to value and honor the collective bargaining process, the federal government quickly used its authority to suspend it, mere hours after an employer-imposed work stoppage. The two major railways in Canada manufactured this crisis, took the country hostage, and manipulated the government to once again disregard the rights afforded to working-class Canadians.”

CPKC did not immediately respond to a request for comment. CN said it was moving to resume operations as of 6 pm ET.

“While CN is satisfied that this labor conflict has ended and that it can get back to its role of powering the economy, the company is disappointed that a negotiated deal could not be achieved at the bargaining table despite its best efforts,” said the company’s statement.

Intertwined economies

Businesses groups, including the chambers of commerce in both Canada and the United States, had also been calling for government intervention, saying the economies of both countries could be damaged by the shutdown.

In the press conference Thursday, MacKinnon described the conversations with Americans as “helpful advice,” as they had also gone through similar processes with their own labor conflicts and work stoppages.

But ahead of the lockout that started early Thursday, MacKinnon had refused to use his powers to refer the matter to binding arbitration and keep the railroads on the job.

The shutdown demonstrated how closely linked Canada and the United States’ economies are, with many industries depending on the free movement of goods across the border for their efficient operations. About 30% of the freight carried by the two railroads cross the US-Canadian border, and without rail operations there is not nearly enough truck capacity to move the goods.

An extended labor stoppage threatened the US auto industry: some US auto plants could have been forced to temporarily shut down if they were unable to get engines, transmissions or stampings done at Canadian plants. US farmers might have found that shortages of fertilizer and US water treatment plants near the Candian border, and they could have run of out chlorine they use to purify water.

This was the first time that both major Canadian railroads have shut down at the same time due to a labor dispute. The most recent work stoppage in the industry was a 60-hour strike at Canadian Pacific in 2022. Before that, there was a nine-day strike at Canadian National in 2019.

This story has been updated with additional context and developments.

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