CN Asks Federal Government to Order Binding Arbitration to Protect Canada’s Economy
Rhea-AI Summary
CN (TSX: CNR) (NYSE: CNI) has formally requested government intervention under section 107 of the Canada Labour Code due to a lack of progress in negotiations with the Teamsters Canada Rail Conference (TCRC). The company is seeking binding arbitration to resolve the labour conflict and protect Canada's economy from prolonged uncertainty.
CN warns of a potential phased network shutdown starting August 22nd if no progress is made. The company has made four offers to the TCRC since January, including proposals on wages, rest, and labour availability, all of which were rejected. CN emphasizes the need for predictability in supply chains and highlights the potential impact on consumers and workers across Canada.
Positive
- CN's proactive approach in seeking government intervention to resolve the labour dispute
- Company's willingness to engage in binding arbitration for a fair resolution
- Multiple offers made to TCRC, demonstrating flexibility in negotiations
- Current average earnings for conductors ($121,000) and locomotive engineers ($150,000) in 2023
Negative
- Lack of progress in negotiations with TCRC, potentially leading to a labour disruption
- Possible phased shutdown of CN's network starting August 22nd
- Risk of supply chain disruptions and economic impact across Canada
- Rejection of all CN's offers by the union, including the binding arbitration proposal
News Market Reaction
On the day this news was published, CNI declined 0.14%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Absence of Progress at the Negotiating Table Requires Immediate Action
MONTREAL, Aug. 09, 2024 (GLOBE NEWSWIRE) -- Following the Canada Industrial Relations Board’s (CIRB) decision that does not bring the labour conflict any closer to a resolution, CN (TSX: CNR) (NYSE: CNI) is formally requesting the Minister of Labour’s intervention under section 107 of the Canada Labour Code to protect Canada’s economy from the impacts of prolonged uncertainty.
Negotiations with the TCRC resumed on Wednesday. However, no progress has been made as the TCRC has not engaged meaningfully at the negotiating table.
While CN is willing to keep negotiating with the TCRC, the Company has lost faith in the process and is concerned that a negotiated deal is no longer possible without a willing partner. Therefore, the Company formally requests the Minister of Labour’s intervention.
Unless there is immediate and meaningful progress at the negotiating table or binding arbitration, CN will have no choice but to begin a phased and progressive shutdown of its network, starting with embargoes of hazardous goods, which would culminate in a lockout at 00:01 Eastern Time on August 22nd.
Since the beginning of the year, CN has made four offers to the TCRC. The offers included points on wages, rest, and labour availability while remaining fully compliant with the government-mandated rules overseeing duty and rest periods. None of CN's offers compromised safety in any way. The latest offer proposed third-party arbitration. The union rejected all offers and has made no counter-proposals.
Supply chains require predictability to function properly. Unfortunately, even the possibility of an unpredictable labour disruption and subsequent disorderly shutdown creates a safety risk and unacceptable uncertainty for industries that depend on rail. Prolonged uncertainty will impact consumers and workers across industries and across Canada.
Background on 2024 Negotiations and Offers
In January, CN offered the TCRC a modernized agreement that protected safety and acquired rights while improving work/life balance, which was refused.
The offer was then improved in April with a focus on better wages, job security, and guaranteed earnings for employees. The TCRC refused the improved offer.
In May, CN then presented a simplified offer within the framework of the existing agreement, which the TCRC also refused.
In the absence of a path forward, CN offered to submit to binding arbitration in June. Binding arbitration is a process where both parties empower a mutually agreed upon independent arbitrator to determine the terms of a settlement. It is an impartial approach that would achieve a resolution while avoiding a costly disruption to supply chains, Canadians, and the Canadian economy. The TCRC refused this offer.
All of the information regarding the offers, including details on the proposed wages, rest, and labour availability, is available here.
Current Rest and Wages
Rest:
- By combining Duty and Rest Period Rules (DRPR), paid sick days, personal leave days, and existing rest and vacation provisions in their collective agreements, conductors and locomotive engineers currently work approximately 160 days a year.
Wages:
- In 2023, the average conductor earned approximately
$121,000 , not including pension and medical benefits. - In 2023, the average locomotive engineer earned approximately
$150,000 , not including pension and medical benefits.
About Embargoes
Railroads issue embargoes when, in the judgement of the railroad, an actual or threatened physical or operational impairment, of a temporary nature, warrant restrictions against such movements. It is particularly critical in the event of labor disruption to prevent sensitive and dangerous goods to be stranded on the network. The embargoes are effective within 48 hours of being issued.
Any product coming to, leaving, or moving within Canada on rail will not be transported during a work stoppage. Only limited train movements within yards will be executed as there are not enough certified management train crews to ensure intercity train movements.
Should a settlement be reached, or arbitration be agreed to, CN will remove its embargoes and resume normal operations.
CN Forward-Looking Statements
Certain statements by CN included in this news release constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as “believes,” “expects,” “anticipates,” “assumes,” “outlook,” “plans,” “targets,” or other similar words. Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.
About CN
CN powers the economy by safely transporting more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year for its customers. With its nearly 20,000-mile rail network and related transportation services, CN connects Canada’s Eastern and Western coasts with the U.S. Midwest and the Gulf of Mexico, contributing to sustainable trade and the prosperity of the communities in which it operates since 1919.
Contacts:
| Media | Investment Community |
| Jonathan Abecassis | Stacy Alderson |
| Director, Public Affairs and | Assistant Vice-President |
| Media Relations | Investor Relations |
| (438) 455-3692 media@cn.ca | (514) 399-0052 investor.relations@cn.ca |
FAQ
What action has CN (CNI) taken regarding the labour conflict with TCRC?
When might CN (CNI) begin a phased shutdown of its network?
How many offers has CN (CNI) made to the TCRC during the 2024 negotiations?
What were the average earnings for CN (CNI) conductors and locomotive engineers in 2023?
