MONTREAL, QC – CN Rail (TSX: CNR) (NYSE: CNI) has formally requested the Canadian government’s intervention in its ongoing labor dispute with the Teamsters Canada Rail Conference (TCRC), citing concerns over the impact on the national economy.
Despite renewed negotiations with the TCRC on August 7, 2024, CN reports no meaningful progress. The rail company has called on the Minister of Labour to invoke section 107 of the Canada Labour Code, which could lead to binding arbitration, to avoid prolonged uncertainty and disruption.
Potential Shutdown Looms
With negotiations at a standstill, CN is preparing for a potential phased shutdown of its network. The process would begin with embargoes on hazardous goods and could culminate in a full lockout starting at 12:01 a.m. Eastern Time on August 22. This move, according to CN, is necessary to protect supply chains and avoid the safety risks associated with an unpredictable labor disruption.
CN’s Efforts to Resolve the Dispute
Since the beginning of the year, CN has made four offers to the TCRC, addressing key issues like wages, rest periods, and labor availability. The company maintains that all its offers have adhered to government-mandated safety regulations. The most recent proposal included third-party arbitration, which the union rejected without presenting a counter-proposal.
CN argues that the lack of a cooperative approach from the TCRC has left them with little choice but to seek government intervention to prevent economic disruption.
Impact on the Economy
CN highlights that supply chains require stability to function efficiently. The potential for a labor dispute poses risks not only to the transportation of goods but also to industries and consumers across Canada. The uncertainty surrounding the situation could have far-reaching effects on the Canadian economy.
Background on CN’s Offers
- January 2024: CN proposed a modernized agreement aimed at improving work/life balance while maintaining safety. The offer was rejected.
- April 2024: An improved offer was made, focusing on better wages and job security. This, too, was refused.
- May 2024: CN presented a simplified offer within the framework of the existing agreement, which was also rejected.
- June 2024: CN offered to submit the dispute to binding arbitration, a neutral process to achieve resolution. The TCRC declined this offer.
Wages and Rest Provisions
- Conductors: Average earnings of $121,000 in 2023, excluding benefits.
- Locomotive Engineers: Average earnings of $150,000 in 2023, excluding benefits.
CN also points out that its conductors and locomotive engineers work approximately 160 days per year, considering existing rest and leave provisions.
About Embargoes
In the event of a labor disruption, CN may issue embargoes to prevent the movement of sensitive and dangerous goods on its network. These embargoes would be implemented within 48 hours of being issued and would remain in place until a resolution is reached.
CN emphasizes that it remains committed to resolving the dispute through negotiation or arbitration and will lift any embargoes if an agreement is reached.
