The Canadian government stepped in Thursday afternoon 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 to both the US and Canadian economies.
But only one of the two major railroads is back to work, as Canadian National (CN) has ended the lockout of its 6,000 unionized employees and returned to work Friday morning. The other, Canadian Pacific Kansas City (CPKC), has remained shut down, with a lockout of its 3,000 unionized employees by the management and a strike by the Teamsters union both still in effect.
And the Teamsters union served notice Friday that it is also preparing to strike CN, though that work stoppage strike wouldn’t be able to start until Monday morning if it isn’t blocked by further government action.
Prime Minister Justin Trudeau’s administration had refused to block a halt of rail operations ahead of the shutdown, which started at 12:01 a.m. ET on Thursday. But Canada and the United States were faced with possible disruptions to multiple industries, which include agriculture, automobiles, energy, lumber and chemicals. There had also been the halting of passenger rail operations that use freight railroad tracks and the threat that water treatment plants would run out of the chlorine needed for fresh drinking water.
On Thursday afternoon, Canadian Labor Minister Steve MacKinnon ordered the Canadian Industrial Relations Board (CIRB) to impose the binding arbitration and ordered the railroads and the union members to return to work. But as of midday Friday, the CIRB has yet to act. The shutdown at CN, the larger of the two railroads, began not through a strike by the Teamsters union but instead through a lockout of those unionized workers by CN management. That contrasts with the dual strike and lockout at CPKC.
The move by MacKinnon is a victory for CN and CPKC, which had been seeking government intervention. The two railways 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 Thursday 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.
CN said Thursday that it was pleased with the action by MacKinnon and that it was therefore resuming operations.
“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,” the company said in a statement.
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,” MacKinnon said at the press conference.
The union issued a statement Thursday 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.”
The union and railroad officials and representatives of the CIRB have continued to meet since MacKinnon’s order.
The union said Friday that despite MacKinnon’s referral, there is no clear indication that the CIRB will actually order an end to the labor dispute at CPKC.
CPKC said it is disappointed the Teamsters are challenging MacKinnon’s order, which it said will delay the resumption of its operations.
“While the minister directed that the CIRB proceed expeditiously, any decision by the CIRB on the resumption of service will be delayed,” CPKC said in a statement. “CPKC remains prepared to resume service as soon as it is ordered to do so by the CIRB.”
CN issued a statement criticizing the new strike notice from the union.
“While CN is focused on its recovery plan to get back to powering the economy, the Teamsters are focused on returning to the picket line and shutting down the economy, impacting people and jobs across the country,” CN said.
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-Canada 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 shortages of fertilizer and clean 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 CN in 2019.
This story has been updated with additional context and developments.
