Canadian Government Orders Binding Arbitration to Restart Railroads

Reversing its earlier stance that the labor disputes between the Teamsters union and Canada’s two national railroads should be resolved at the bargaining table, Thursday afternoon the federal government intervened to impose final binding arbitration. As of Friday, CN is resuming operations while CPKC is waiting for government actions, but the union is saying it will look to challenge the decision in the courts.

The two national railroad systems moved to lockout nearly 10,000 Teamster members as of 12:01 a.m. on Thursday after a previously ordered government cooling-off period came to an end. It was a rare event as normally Canada’s two railroads negotiate contracts in alternating years but this year each was in disputes over a range of issues. CPKC said it had been negotiating for about a year while CN said talks had started about nine months ago.

Talks had continued during the day on Thursday and were due to continue Friday. However, Labor Minister Steven MacKinnon said in a statement “The economic risk was too great to allow the lockouts to continue.” He said it was the government’s assessment that the parties were “are a fundamental impasse.”

Canada, he said is a trading nation and the dangers were too great for the strikes to continue. Government figures show that more than US$700 million a day in goods move in the Canadian rail system. Last year the railroads handled more than 375 million tons of freight. Major exports including grain and timber were set to be impacted as well as imports and cross-border industries such as autos. In the U.S., the White House had convened a Supply Chain Disruption Task Force. 

Many shippers were scrambling to reroute their cargo but there were fears that Canadian ports would become quickly backlogged. Key industries were reported to have at most a week before the strike would impact operations.

The federal government last week had refused to step in repeating its frequent stance that labor issues are best resolved through negotiations. Industrial leaders were pushing for the government to become more directly involved.

MacKinnon said while the dispute was between the union and railroads, the effects and impacts would be felt by all Canadians. He invoked the Canada Labour Code saying it was in the interest of “secure industrial peace and delivery.” He directed the Canadian Industrial Relations Board to become directly involved again reviewing the case and imposing final binding arbitration. 

CN withdrew its lockout on Thursday evening and said operations would begin to resume on Friday. Teamsters are reporting for work but the restart is sporadic and expected to take into the weekend to complete. CPKC was waiting for an official order from the Board before ending the lockout. The Minister said he wanted operations to resume “forthwith,” while admitting it might take a few days. 

In addition to freight operations, more than 30,000 daily commuters were being impacted by the strike. The local lines share track with the two major railroads and were being forced to suspend operations.

The Teamsters Canada Rail Conference said it was taking down picket lines but later told Reuters it was going to challenge the minister’s decision. They are questioning the constitutionality of directing the dispute to the labor board. The union did not provide more details on its planned challenge and members are returning to work in the interim.