The organization has been dealing with multiple workforce disputes over the past year, and another is impending.

November 25 CN clerks and mechanics approved a strike mandate. According to their union, Unifor, the two groups voted 97 and 96 per cent in favour of job action, respectively. They are calling for improved compensation, job security and working conditions.

This would affect around 2,500 workers.

At Canadian Western Agribition’s Grain Expo, Sandra Ellis, CN’s vice-president for bulk, spoke briefly about the vote for job action, saying CN is actively in negotiations.

“We continue to be at the table. Both parties have agreed that we’re going to negotiate, and we have dates booked, we’re at the table this week already,” Ellis said.

Despite the overwhelming majority of workers voting in favour of job action, Ellis said she is optimistic that they can come to an agreement.

“We are hopeful and are working on it together to come to an agreement,” she said.

This follows CN’s challenging contract talks and the labour stoppage with railroad workers earlier this year. The Teamsters Canada Rail Conference union contract expired at the end of 2023, which put them into negotiations. By the summer, negotiations and offers had been tabled and binding arbitration had been requested by CN. Before the workers could strike, CN locked out its employees for one day on Aug. 22. While Ellis says that was done to protect the economy, the company faced criticism for it at the time, with the union saying the lockout was antagonizing.

“What this meant was that we could shut down the railroad in a planned way, which put us in the best situation to start up as quickly and as efficiently as possible,” Ellis said at Grain Expo.

The situation ended with the federal government mandating binding arbitration, which is scheduled to take place in 2025.
Now, CN’s Unifor workers could strike by Jan. 1 if no agreement comes to fruition.

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12:01 AM EDT on August 22, after negotiations that began last year failed to bring about a resolution to the dispute, CN and CPKC announced at that they would lockout their employees who are members of the Teamsters Canada Rail Conference (TCRC). The move affects roughly 9,000 employees at the two companies.

“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” said Paul Boucher, President, Teamsters Canada Rail Conference, in a release issued shortly after the lockout was announced.

In its announcement of the lockout, CN said that they had been committed to avoid the work stoppage right up to the deadline and that the union did not respond to a last-minute offer by the railway to bridge the gap.

“This offer improved wages and would have seen employees work less days in a month by aligning hours of service in the collective agreement with federally mandated rest provisions,” read the announcement released shortly after midnight. “Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout.”

For their part, CPKC said they had bargained in good faith in the months since the TCRC contract expired late last year, but a negotiated outcome appeared out of reach.

“The TCRC leadership continues to make unrealistic demands that would fundamentally impair the railway’s ability to serve our customers with a reliable and cost-competitive transportation service,” read the announcement.

The CPCK release went on to say the only way forward is for the parties to engage in binding arbitration.

Both railways had previously requested binding arbitration. Most recently, CN made a formal request to Minister of Labour Steven MacKinnon on August 9, but the government rejected the request a few days later.

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“The impact of a strike would be particularly severe on bulk commodity exporters in both Canada and the United States as trucking is not a viable option for many agricultural shippers,” the letter said, citing large volumes and vast distances.

Unless last-minute labor agreements are reached, both Canadian National Railway and Canadian Pacific Kansas City, an effective duopoly, will shut nearly all freight rail services in Canada for the first time at midnight on Thursday.

Canada is the world’s top exporter of canola, used in food and biofuel, and of potash fertilizer, as well as the No. 3 wheat exporter. While a lockout or strike would directly involve 10,000 Canadian employees of the railroads, not those in the U.S., it would have knock-on effects on the U.S. economy due to the countries’ crisscrossing rail lines.

The rail operators have said lockouts will begin on Thursday. The Teamsters union, which is demanding better wages, benefits, and crew scheduling, has issued a Thursday strike notice to CPKC.

The stoppage will halt shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export, said Max Fisher, chief economist at the National Grain and Feed Association.

CPKC ships grain from the Dakotas and Minnesota to west-coast export terminals via Canada, according to the U.S. government.

U.S. farmers still have nearly two-thirds of the spring-wheat crop to harvest, the U.S. Department of Agriculture said on Monday. Soy, corn and canola harvests are still a few weeks away in North America.

Canada’s prairie elevator network would run out of storage capacity within 10 days of a stoppage, said Mark Hemmes, head of Quorum Corp, which monitors Canadian grain handling and transportation.

Shippers are also concerned about U.S. corn products heading to Canada. In 2023, Canada was the top destination for U.S. ethanol exports, and almost three-quarters traveled by rail, according to USDA.

“We just can’t have the railroads not operating,” Fisher said.

The U.S. exported $28.2 billion of agricultural products last year to Canada, its third-largest destination for agricultural exports behind China and Mexico, USDA said.

The U.S. imported $40.1 billion of Canadian agricultural products last year, making Canada the second-largest origin of U.S. agricultural imports behind Mexico, the agency said.

About 85 per cent of the 13 million metric tons of U.S. potash imports last year came from Canada, nearly all of which crossed by rail, according to USDA.

‘No good time’

U.S. corn farmers apply fertilizers in fall and spring, but potash imports from Canada are consistent throughout the year, said Krista Swanson, chief economist for the National Corn Growers Association.

“Given constant trade flows and the importance of the trade relationship between the two nations, there is no good time for this to occur,” Swanson said.

The railways move an average of 69,000 tons of fertilizer product per day, equivalent to four to five trains, said Fertilizer Canada spokesperson Kayla FitzPatrick. Disruptions will cost the industry C$55 million ($40.34 million) to C$63 million per day in lost revenue, not including logistical and operational costs, she said.

Canadian meat producers warned that a rail stoppage would result in millions of dollars in losses and waste.

The Canadian Meat Council and Canadian Pork Council said some processing plants expect to lose up to C$3 million a week, and noted these facilities would be forced to shut down within seven to 10 days of a rail stoppage. Once the railways resume service, it would take two to five weeks for plants to return to normal capacity.

There is concern that the movement of Ontario soybeans to export markets, primarily Japan, will completely stop just before the harvest, said Crosby Devitt, CEO of Grain Farmers of Ontario.

With crop-shipment delays lasting beyond a week, companies must pay contract penalties and demurrage for ships waiting for grain to arrive, piling significant cost onto the industry, said Wade Sobkowich, executive director of the Western Grain Elevator Association.

“We’ll be playing catch-up for the rest of the harvest year, till next July,” he said.

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Canada is the world’s second-largest country by area and relies heavily on trains to transport grain, beans, automobiles, potash, coal and other goods.

“It’s a catastrophe. Literally nothing would move,” said Greg Northey, vice president of public affairs at Pulse Canada.

Talks between Canadian National Railway and Canadian Pacific Kansas City on one hand and the Teamsters union on the other have deadlocked, with each side accusing the other of bad faith.

The rail companies say they will start locking out workers on Aug. 22 if they cannot reach a labor deal, while the union says it is ready to call a strike for that date.

Industry groups want the Liberal government of Prime Minister Justin Trudeau to prevent a stoppage, noting Canada’s railways transport around $380 billion worth of goods annually.

“Factoring in the millions of Canadian jobs that would be impacted, the magnitude of the disruption is daunting,” the Business Council of Canada lobby organization said in an open letter to Trudeau and Labour Minister Steven MacKinnon.

U.S. freight traffic impacted

A stoppage would also hit the United States, given the degree of integration between the two economies. Canada sends around 75 per cent of all goods exports south of the border.

The networks of the two Canadian rail operators, CN and CPKC, connect with several key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC’s network also extends further south connecting with ports on both the east and west coast of Mexico.

CN said on Tuesday it was putting in place an embargo on any new reservations for movement of hazardous materials, security-sensitive cargoes or refrigerated containers originating in Canada, starting on Thursday.

It also announced it was embargoing all intermodal traffic originating from over half a dozen U.S. hubs with which its network connects, starting on Friday.

Separately, U.S. rail operator Norfolk Southern on Tuesday advised customers that it was embargoing all hazardous and security-sensitive cargoes to or from CN and CPKC’s networks effective immediately. It said additional embargoes may come in case of any work stoppages at the Canadian rail operators.

Some U.S. companies find it more efficient to use Montreal or Vancouver for imports and exports.

U.S. logistics firm C.H. Robinson, which manages more than 650,000 loads across the border a year, said it was lining up extra trucking capacity on both sides of the border.

“When all trains serving the entire country could literally be stopped on their tracks, that’s another whole level of disruption,” said Scott Shannon, a senior executive at C.H. Robinson.

Pressure mounts

Industry groups say MacKinnon has the power to refer the dispute to the country’s labor relations board and thereby head off a stoppage.

MacKinnon has so far said he wants the two sides to strike a deal at the negotiating table.

Pressure on Ottawa looks set to mount in the coming days as industry groups hammer home the potential costs of a stoppage.

Earlier this week, Morgan Stanley in a note to clients said that each week of shipment disruptions could dent the earnings before taxes of mining giant Glencore by an estimated $137.2 million, or more, as a rail shutdown would disrupt coal shipments from its majority-owned unit, Elk Valley Resources.

The Chemistry Industry Association of Canada said chlorine shipments would soon become unavailable, hitting the quality of drinking water within two weeks.

“There are very large municipalities that – if the strike goes on – are going to be under boil water advisories,” CEO Bob Masterson said by phone, noting that the industry moved more than 500 rail cars a day.

“There is no plan B … to transport this kind of volume you will need 2,000 trucks, roughly. There aren’t 2,000 trucks, and there aren’t 2,000 drivers,” he said.

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Unifor, which represents about 3,000 CN employees, said Friday its members voted to ratify four new two-year collective bargaining agreements taking them through to Dec. 31, 2024. The tentative agreements were announced March 20.

“When we opened contract talks with CN last fall, while the company was reporting massive profits, we were insistent that rail workers deserve to be compensated well and treated with respect,” Lana Payne, the union’s national president, said in a release.

“This agreement represents a significant step forward for our CN Rail members, including important improvements in wages, benefits, and job security.”

“Despite the diverse crafts represented by this union, we have been successful in improving alignment on our path forward to deliver better and safer service,” CN CEO Tracy Robinson said in a separate statement Monday.

The four agreements cover members of CN’s Unifor Local 100, which represents skilled trades in mechanical shops, and Council 4000, which represents intermodal, clerical and mechanical workers and excavator operators.

Unifor said its national bargaining committees had been in negotiations with CN since last October, leading up to their previous contracts’ expiry at the end of December 2022.

The Unifor-led employees had voted in favour of strike action in early March and had been in a position to strike as early as March 21. However, the union said negotiators decided at that time to keep talks going rather than hand in the required 72 hours’ notice to trigger a work stoppage.

Despite the number of employees who would have potentially been off the job in the event of a Unifor-led strike or a lockout, CN had said in early March it would not expect any impact on operations, as it had “contingency plans in place and the safe operations of our railway will continue.”

“Coming out of a pandemic and with global economic uncertainty, the bargaining committee knew it had its work cut out for them but with the support of members from across the country, we stood firm and were able to negotiate a fair contract,” Local 100 president Cory Will said Friday in Unifor’s release.

Federal Labour Minister Seamus O’Regan on Friday tweeted congratulations to the company and union on their new agreements, adding “The best deals are made at the table.” — Glacier FarmMedia Network

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CN, Unifor Local 100 and Unifor Council 4000 on Monday announced they have reached four new tentative collective agreements to cover about 3,000 railway employees, who had voted earlier this month in favour of strike action.

The employees were in a position to strike as early as Tuesday (March 21) if 72 hours’ notice had been given — but Unifor said in a separate statement Saturday its team had decided to continue negotiating with CN in Montreal through the weekend.

The company and union both said no details of the tentative deals would be released publicly until ratification votes are completed. Unifor said Monday those votes “will be held in the near future.”

CN CEO Tracy Robinson said in a statement Monday the company is “very pleased to have reached these tentative agreements” and “has always been committed to achieving negotiated settlements to improve the conditions of this important group of employees.”

Unifor Local 100 represents skilled trades in CN’s mechanical shops, while Council 4000 represents intermodal and clerical workers, mechanics and excavator operators.

Despite the number of employees who would potentially be off the job in the event of either a strike or lockout, CN had said March 6 it would not expect any impact on operations as it had “contingency plans in place and the safe operations of our railway will continue.”

“These negotiations were fraught with challenges, including demands for concessions by CN,” Unifor national president Lana Payne said in a separate release Monday.

“With the solid support of the membership, the bargaining committees were able to stand up to this large profitable company and persevere to secure the tentative agreements.”

Unifor said its bargaining committees had been in talks with CN since October. The collective agreements for the affected employees all expired at the end of December. — Glacier FarmMedia Network

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Robinson will replace Jean-Jacques Ruest, who announced his decision to step down from the role in October following investor demands for his exit after CN’s failed bid for Kansas City Southern.

CN will also appoint two new independent directors as a part of a settlement with TCI Fund Management, which has agreed to withdraw a requisition for a special meeting of shareholders that was previously slated for March 22.

Billionaire Chris Hohn’s TCI in September nominated four independent directors to the company’s board. It has been seeking a change since August, saying the board lacked “the right railroad experience and operational expertise.”

Robinson, who takes over the top role from Feb. 28, spent 27 years with Canadian Pacific Railway in various executive roles, before joining North American energy company TC Energy in 2014.

CN said Robinson has made it a personal priority to build proficiency in French, the sole official language of Quebec, which houses the company’s headquarters in Montreal.

The statement comes after a language furor rattled corporate Quebec last year, leaving some companies scrambling to improve the French-speaking skills of their C-suite executives.

CN also announced quarterly results on Tuesday. It reported an adjusted profit of $1.71 per share in the fourth quarter ended Dec. 31, beating market expectations of $1.53 per share.

— Reporting for Reuters by Rithika Krishna in Bangalore.

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The announcement comes days after CN said TCI’s pick and former Union Pacific executive Jim Vena had pulled out of the running for the CEO’s role.

“Given the CN board’s history of failed CEO appointments, it is not a surprise to us that the board has failed once again to attract the best candidate for the role,” TCI said, adding that shareholders can be confident the board will conduct a fair selection process if they elect the four candidates nominated by them at a special meeting, which is scheduled early next year.

TCI, which owns a five per cent stake in CN, has been seeking a change at the company since August after it entered into a bidding war with Canadian Pacific Railway for U.S. rail operator Kansas City Southern, which CP finally clinched in a US$27 billion deal.

The fallout from the deal caused CN CEO Jean-Jacques Ruest announce his retirement after facing consistent pressure from the hedge fund, with the railroad operator eyeing a new CEO announcement by January 2022.

TCI’s comments mark its foray into shareholder activism in Canada, where the fund has been holding a position in CN since 2018.

CN did not immediately respond to a Reuters’ request for a comment.

— Reporting for Reuters by Nathan Gomes in Bangalore.

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The decision was a blow to the deal that would create the first direct railway linking Canada, the U.S. and Mexico.

The voting trust would temporarily own Kansas City Southern without CN exerting control. It would have allowed KCS shareholders to receive and keep the $325 per share in cash and stock CN was offering, even if the combination was subsequently rejected by the regulator, the U.S. Surface Transportation Board (all figures US$ except where noted).

The STB said it left the door open for the companies to seek full review of their proposed merger. Regulatory experts said the process would be uncertain and could last more than a year. The companies did not immediately respond to requests for comment on their next steps.

KCS has an alternative suitor, Canadian Pacific Railway (CP), whose $25 billion deal to buy the company in March was later trumped later by CN.

Canadian Pacific’s proposed voting trust was approved in May, and this month the company presented a new $27 billion cash-and-stock bid for Kansas City Southern, confident the STB would reject CN’s voting trust.

CP did not immediately respond to a request for comment, but CP CEO Keith Creel said in a release that the company’s Aug. 10 offer to KCS “still stands.”

The STB’s ruling, Creel said, “clearly shows that the CN-KCS merger proposal is illusory and not achievable” and “knowing this, we believe (CP’s offer) recognizes the premium value of KCS while providing regulatory certainty (and) ought to be deemed a superior proposal.”

KCS shares closed on Tuesday down 4.39 per cent at $280.67. CN shares closed up 7.36 per cent at $148.40, indicating relief from shareholders that the acquisition now looks unlikely. CP shares dropped 4.55 per cent to C$86.69, highlighting trepidation among its shareholders over paying up for a deal with KCS.

After the STB decision, a CN shareholder, hedge fund TCI Management, sent a letter to the company’s board urging it to cancel its deal with KCS and replace CEO Jean-Jacques Ruest with Jim Vena, a veteran of both CN and Union Pacific. Vena could not be immediately reached for comment.

“The board must take responsibility for the company’s recent underperformance and failure,” TCI said in the letter. The fund, run by hedge fund veteran Chris Hohn, has a 5.2 per cent stake in CN and is also CP’s largest shareholder.

The STB said that even though the overlap of CN’s and KCS’s networks was confined to about 113 km between Baton Rouge and New Orleans, the two railways operated parallel lines in the central portion of the U.S. and could be under less pressure to compete if the voting trust was approved.

“The board finds that applicants have not demonstrated that their use of a voting trust would be consistent with the public interest,” the STB said in a statement.

U.S. President Joe Biden has issued sweeping executive orders aimed at promoting competition in the U.S. economy. One order encouraged the STB to consider Amtrak’s statutory rights when assessing whether a rail merger is in the public interest.

Passenger railroad Amtrak, majority owned by the U.S. government, had opposed CN’s voting trust, saying its pledge to divest the Baton Rouge to New Orleans line will harm future passenger service in Louisiana.

— Reporting for Reuters by Shreyasee Raj and Abhijith Ganapavaram in Bangalore and Greg Roumeliotis in New York. Includes files from Glacier FarmMedia Network staff.

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Manitoba’s share of CN’s $3 billion capital investment plan is going to be $95 million.

The company announced June 17 it would be using the funds to focus on technology and infrastructure maintenance to “enhance safety and fluidity” in its network.

“Our consistent and proactive infrastructure investment strategy and the essential work of our employees and supply chain partners are what enable CN to keep the economy moving safely and smoothly year after year,” said James Thompson, CN’s VP of the western region, in a media release.

“Safety is a core value at CN and we will continue to invest in our track and in technology to support our overall network capacity and provide our customers with safe and reliable service.”

He also noted the upcoming combination with Kansas City Southern would create a truly North America “connected” rail network and “… build the premier railway for the 21st century.”

Maintenance program highlights include:

• Replacing 29 miles of rail;
• Installing approximately 118,000 new railroad ties;
• Rebuilding 17 road crossing surfaces; and
• Maintenance work on bridges, culverts, signal systems, and other track infrastructure.

CN has already invested $610 million in Manitoba over the past five years. It employs 2,400 people in the province and has 864 miles of rail routes in the province.

The company touts its investment plan as a reflection of its “… determination to play an important role in the economic recovery and to be part of the climate solution.”

The company noted a more fluid network will encourage the use of rail for long-haul transportation, leading to reduced emissions.

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