Canadian National hit by first strike in a decade

Canadian National hit by first strike in a decade

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A Canadian National locomotive

A Canadian National locomotive in Chicago. (Image courtesy of Canadian National)

MONTREAL — Thousands of workers at Canada’s largest railway went on strike for the first time in a decade on Tuesday, disrupting the shipping of commodities and piling pressure on Prime Minister Justin Trudeau’s minority Liberal government.

About 3,000 unionized workers, including conductors and yardmen from Canadian National Railway hit picket lines, after both sides failed to resolve contract issues at a time of softening demand for freight service.

They will continue talks on Tuesday in Montreal amid union concerns over fatigue, safety and ensuring workers’ breaks aren’t reduced.

Canada, one of the world’s biggest exporters of farm products, relies on its two main railways, CN and Canadian Pacific Railway, to move canola, wheat and other commodities over vast distances from western farms to ports.

Crude oil shippers and the mining industry also depend on the railways for freight.

The strike comes at an awkward time for Trudeau’s government, which relies on smaller parties to pass legislation and faces criticism from western provinces about its failures to get new pipelines built. Trudeau has said he is not reconvening parliament until Dec. 5 and the government cannot start the process to force the workers back on the job until then.

But with executives and government officials warning the strike would have “serious consequences” for industry and the country’s resource-rich regions, Alberta Energy Minister Sonia Savage urged Trudeau on Twitter “to immediately recall Parliament.”

The Canadian mining industry, which account for more than half of annual rail freight revenues, depend on CN to transport both supplies to company sites, and products from their operations.

“This strike will result in a severe reduction or elimination of railway capacity and will trigger the closure of mines with concurrent lay-offs of thousands of employees beginning in a matter of days,” said Pierre Gratton, President and CEO of the Mining Association of Canada.

CN and CP also collectively handle nearly all grain movement in Western Canada, the country’s crop belt, split roughly evenly between the railways.

The stoppage “has an impact before it even begins because companies pull back sales in anticipation of a strike,” said Wade Sobkowich, executive director of the Western Grain Elevator Association, whose members include Cargill Ltd., Richardson International and Viterra Inc.

A strike may temporarily constrain CN’s volumes, but not likely have a meaningful long-term impact on the company’s earnings, Credit Suisse analysts said in a research note on Monday, adding that Ottawa has historically been quick to intervene.

Shares of Montreal-based CN were down 1.1%, while the benchmark Canadian share index was down 0.3% by midday.

Canadian Labor Minister Patty Hajdu and Transport Minister Marc Garneau said they are monitoring the CN strike situation closely after meeting with the two sides on Monday.

CN said in a statement that it was “disappointed” at the strike action. CN’s service in the United States will continue operating despite the strike in Canada.

Rail workers with the Teamsters held their last strike in 2009, when locomotive engineers walked off the job for five days, the union said.

Lampert reported from Montreal; Nickel, from Winnipeg. Additional reporting by Kelsey Johnson, David Ljunggren and Steve Scherer in Ottawa.

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