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U.S. economy could be hit hard by lockouts at Canada’s 2 major freight railroads
Both of Canada’s major freight railroads have come to a full stop because of a contract dispute with their workers, an impasse that could bring significant economic harm to businesses and consumers in Canada and the U.S. if the trains don’t resume running soon.
Canadian National and CPKC railroads both locked out their employees after the deadline of 12:01 a.m. Eastern Thursday passed without new agreements with the Teamsters Canada Rail Conference, which represents some 10,000 engineers, conductors and dispatchers.
All rail traffic in Canada and all shipments crossing the U.S. border have stopped, although CPKC and CN’s trains will continue to operate in the U.S. and Mexico.
Billions of dollars of goods each month move between Canada and the U.S. via rail, according to the U.S. Department of Transportation.
“If rail traffic grinds to a halt, businesses and families across the country will feel the impact,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”
Charlie Riedel / AP
There will be other impacts as well, including on the more than 30,000 commuters in Vancouver, Toronto and Montreal who will be scrambling to find a new way into work because their trains won’t be able to operate over CPKC’s tracks while the railroad is shut down.
Business groups had urged the government to intervene, but Prime Minister Justin Trudeau has declined to force both sides into arbitration yet.
CN said it was waiting for a response on one final offer made late Wednesday when it locked the workers out. CPKC spokesperson Patrick Waldron said the union rejected its last offer that CEO Keith Creel made at the table in person. Both railroads have said they would end the lockout if the union agreed to binding arbitration.
“Despite the lockout, the Teamsters remain at the bargaining table with both companies,” the union said in a statement.
CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said.
Lockouts’ potential impact
Many companies across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.
That’s why the U.S. government kept rail workers from going on strike two years ago and forced them to accept a contract despite their concerns about demanding schedules and the lack of paid sick time.
Manufacturing companies may have to scale back or even shut down production if they can’t get rail service, while ports and grain elevators will quickly become clogged with shipments waiting to move. And if the dispute drags on for a couple of weeks, water treatment plants all across Canada might have to scramble without new shipments of chlorine.
“If railways are not picking up the goods that are coming in by ships, then pretty soon your terminals get filled up. And at that point you cannot take any vessels at the terminal anymore,” said Victor Pang, chief financial officer at the Vancouver Fraser Port Authority.
He pointed to the 13-day strike by 7,400 British Columbia dockworkers last summer, which manufacturers said blocked the flow of $500 million Canadian ($368 million U.S.) worth of goods each day.
Some companies would undoubtedly turn to trucking to keep some of their products moving, but there’s no way to make up for the volume railroads deliver. It would take some 300 trucks to haul everything just one train can carry.
Canada’s railroads have sometimes shut down briefly in the past during contract negotiations – most recently CPKC was offline for a couple of days in March 2022 – but it’s rare for both lines to stop at the same time. The impact on businesses will be magnified because both CN and CPKC have stopped.
Both CN and CPKC had been gradually shutting down since last week ahead of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to be stopped so they wouldn’t be stranded somewhere on the tracks.
As the Canadian contract talks were coming down to the wire, one of the biggest U.S. railroads, CSX, broke with the U.S. freight rail industry’s longstanding practice of negotiating jointly for years with the unions. CSX reached a deal with several of its 13 unions that cover 25% of its workers ahead of the start of national bargaining later this year.
The new five-year contracts will provide 17.5% raises, better benefits and vacation time if they are ratified. The unions that have signed deals with CSX include part of the SMART-TD union representing conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union. TCU President Artie Maratea said he’s proud that his union reached a deal “without years of unnecessary delay and stall tactics.”
Trudeau’s dilemma
Trudeau has been reluctant to force arbitration because he doesn’t want to offend the Teamsters Canada Rail Conference and other unions, but he urged both sides to reach a deal Wednesday because of the tremendous economic damage that would follow a full shutdown.
“It is in the best interest of both sides to continue doing the hard work at the table,” Trudeau said to reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses, right across the country, are counting on both sides to do the work and get to a resolution.”
Numerous business groups have been urging Trudeau to act.
Trudeau said Labor Minister Steven MacKinnon met with both sides in the CN talks in Montreal on Tuesday and would be on hand for the CPKC talks in Calgary, Alberta. MacKinnon later said he wrapped up his meetings with the rail companies and the Teamsters.
‘Workers, farmers, commuters and businesses can’t wait. Canadians need urgency at the table. The parties need to get deals done now,” he posted on the social platform X.
The negotiations are stuck on issues related to the way rail workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest to train crews. Both railroads had proposed shifting away from the existing system, which pays workers based on the miles in a trip, to an hourly system they said would make it easier to provide predictable time off.
The railroads said their contract offers have included raises consistent with recent deals in the industry. Engineers make about $150,000 a year on Canadian National while conductors earn $120,000, and CPKC says its wages are comparable.
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After Tyre Nichols’ fatal beating, Memphis officer texted photo of bloodied man to ex-girlfriend, she testifies
A former Memphis police officer charged in the fatal beating of Tyre Nichols sent his ex-girlfriend a photo of the badly injured man on the night he was punched, kicked and hit with a police baton following a traffic stop, according to trial testimony Wednesday.
Brittany Leake, a Memphis officer and Demetrius Haley’s former girlfriend, testified during the criminal trial that she was on the phone with Haley when officers pulled Nichols over for a traffic stop. She said she heard a “commotion,” including verbal orders for someone to give officers his hands.
The call ended, but Haley later texted the photo in a group chat comprising Haley, Leake and her godsister, she testified. Prosecutors displayed the photo for the jury. It showed Nichols with his eyes closed, on the ground with what appeared to be blood near his mouth and his hands behind his back.
Leake said that when she saw the photo, her reaction was: “Oh my God, he definitely needs to go to the Med.”
The Med is shorthand for Memphis’ trauma hospital.
The fatal beating, caught on police bodycams and street surveillance cameras, has sparked protests and calls for police reform. Officers said they pulled over Nichols for reckless driving, but Memphis’ police chief said there was no evidence to substantiate that claim.
Haley, Tadarrius Bean and Justin Smith are on trial after pleading not guilty to charges that they deprived Nichols of his civil rights through excessive force and failure to intervene, and obstructed justice through witness tampering. Their trial began Sept. 9 and is expected to run three to four weeks.
George Walker IV / AP
The Memphis Police Department fired the three men, along with Emmitt Martin III and Desmond Mills Jr., after Nichols’ death. The beating was caught on police video, which was released publicly. The officers were later indicted on the federal charges. Martin and Mills have taken plea deals.
During her testimony Wednesday, Leake said she deleted the photo after she saw it and that sending such a photo is against police policy.
“I wasn’t offended, but it was difficult to look at,” she said.
Leake said Haley had sent her photos before of drugs, and of a person who had been injured in a car accident.
Earlier Wednesday, Martin was on the witness stand for a third day. Defense attorneys tried to show inconsistencies between Martin’s statements to investigators and his court testimony. Martin acknowledged lying about what happened to Memphis Police Department internal investigators, to try to cover up and “justify what I did.”
But Martin said he told the truth to FBI investigators after he pleaded guilty in August, including statements about feeling pressure on his duty belt where his gun was located during the traffic stop, but not being able to see if Nichols was trying to get his gun. Martin has testified that he said “let go of my gun” during the traffic stop.
Martin Zummach, the attorney for Justin Smith, asked Martin if he knew of any reasons why Nichols did not simply say, “I give up.”
“He’s out of it,” Martin said. “Disoriented.”
Martin testified that the situation escalated quickly when Haley pulled his gun and violently yanked Nichols from his car, using expletives and failing to tell Nichols why he had been pulled over and removed from the vehicle.
“He never got a chance to comply,” Martin said.
Nichols, who was Black, was pepper sprayed and hit with a stun gun during the traffic stop, but ran away, police video shows. The five officers, who also are Black, then beat him about a block from his home, as he called out for his mother.
Video shows the officers milling about and talking as Nichols struggled with his injuries. Nichols died Jan. 10, 2023, three days after the beating.
An autopsy report shows Nichols – the father of a boy who is now 7 – died from blows to the head. The report describes brain injuries, and cuts and bruises on his head and elsewhere on his body.
Jesse Guy testified that he was working as a paramedic for the Memphis Fire Department the night of the beating. He arrived at the location after two emergency medical technicians, Robert Long and JaMichael Sandridge.
Guy said he was not told about the medical problems Nichols had experienced before he arrived, and that Nichols was injured, seated on the ground and unresponsive.
Nichols had no pulse and was not breathing, and it “felt like he was lifeless,” Guy said.
In the ambulance, Guy performed CPR and provided mechanical ventilation, and Nichols had a pulse by the time he arrived at the hospital, the paramedic said.
Guy said Long and Sandridge did not say if they had checked Nichols’ pulse and heart rate, and they did not report if they had given him oxygen. When asked by one of Bean’s lawyers whether that information would have been helpful in treating Nichols, Guy said yes.
Long and Sandridge were fired for violating fire department policies after Nichols died. They have not been criminally charged.
The five officers also have been charged with second-degree murder in state court, where they pleaded not guilty. Mills and Martin are expected to change their pleas.
Federal prosecutors have previously recommended a 40-year sentence for Martin. A date has not been set in state court yet.
Nichols worked for FedEx, and he enjoyed skateboarding and photography. The city of Sacramento, where Nichols grew up, named a skatepark in his honor. “Tyre fell in love with skateboarding at a young age and it wasn’t long before it became a part of his lifestyle,” states the resolution approved by the city council. He had a tattoo of his mother’s name.
“Tyre Nichols’ family have been praying for justice and accountability from the very beginning of this tragedy,” Ben Crump and Antonio Romanucci, the civil rights attorneys representing Nichols’ family, said in a statement when the trial began.
Boeing’s CEO said Wednesday that the company will begin furloughing “a large number” of employees to conserve cash during the strike by union machinists that began last week.
Chief Executive Kelly Ortberg said the people who would be required to take time off without pay starting in coming days include executives, managers and other employees based in the U.S.
“While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time,” Ortberg said in a company-wide message to staff.
Boeing didn’t say how many people will face rolling furloughs, but the number is expected to run into the tens of thousands. The aerospace giant had 171,000 employees at the start of the year.
About 33,000 Boeing factory workers in the Pacific Northwest began a strike Friday after rejecting a proposal to raise pay by 25% over four years. They want raises of at least 40%, the return of a traditional pension plan and other improvements in the contract offer they voted down.
Scott Brauer / Bloomberg via Getty Images
The strike is halting production of several airplane models including Boeing’s best-selling plane, the 737 Max. The company gets more than half of the purchase price when new planes are delivered to buyers, so the strike will quickly hurt Boeing’s cash flow.
Ortberg said selected employees will be furloughed for one week every four weeks while retaining their benefits. The CEO and other senior executives will take pay cuts during the duration of the strike, he said, without stating how deep the cuts will be.
All work related to safety, quality, customer support and certification of new planes will continue during the furloughs, he said, including production of 787 Dreamliner jets, which are built by nonunion workers in South Carolina.
Ortberg said in a memo to employees that the company is talking to the International Association of Machinists and Aerospace Workers about a new contract agreement that could be ratified.
“However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” he said.
Boeing’s chief financial officer warned employees earlier this week that temporary layoffs were possible.
The company, which is based in Arlington, Virginia, but has most of its commercial-airplanes business located in the Pacific Northwest, is also cutting spending on suppliers, freezing hiring and eliminating most travel.
Despite two full days of talks assisted by the Federal Mediation and Conciliation Service, the union said Wednesday that no resolution had been reached and no additional negotiations were scheduled, according to CBS Seattle affiliate KIRO-TV.
Striking workers are picketing at several locations in the Seattle area, Oregon and California. The union, which recommended the offer that members later rejected by a 96% vote, is surveying the workers to learn what they want in a new contract. The union’s last strike at Boeing, in 2008, lasted about two months.
If the walkout doesn’t end soon, Boeing’s credit rating could be downgraded to non-investment or junk status, which would make borrowing more expensive. Shortly after the walkout began Friday, Moody’s put Boeing on review for a possible downgrade, and Fitch said a strike longer than two weeks would make a downgrade more likely.
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