Union says no real progress in Canada rail strike as analysts forecast hit to economy

By Allison Lampert and Kelsey Johnson
FILE PHOTO: Teamsters workers picket outside the CN Rail Brampton Intermodal Terminal in Brampton

By Allison Lampert and Kelsey Johnson

MONTREAL, OTTAWA (Reuters) - A strike at Canada's biggest railroad, Canadian National Railway Co, entered its fourth day on Friday as talks continued with no signs of a deal and analysts warned that a prolonged dispute would weigh on economic growth.

Some 3,200 unionized employees with the Teamsters, including conductors and yard workers, hit picket lines to demand better working conditions and changes they say would make the job safer.

Canada's biggest rail strike in a decade has sparked concerns that farmers and homeowners may run short of propane, although the union claims the railroad has manufactured that shortage.

Prime Minister Justin Trudeau's government faces pressure from industry and provincial leaders to end the strike and force workers back to their jobs.

Transport Minister Marc Garneau reiterated calls on Friday for a negotiated deal, insisting collective bargaining was the "quickest way" to resolve the strike.

He told reporters in Montreal a train carrying 100 propane cars was enroute to Quebec from Alberta, but would take a few days to arrive. Propane, he said, was also being trucked in from neighboring Ontario.

In a statement CN said it had some managers who could drive trains, but those employees could only meet about 10% of demand normally handled by striking workers.

Canada relies on CN and Canadian Pacific Railway to move crops, oil, potash, coal and manufactured goods to ports and the United States. Industry figures show that around half of the country's exports move by rail.

The Teamsters said in a statement on Friday that "no substantive progress has been made on the union's key workplace safety and health issues," including worker fatigue. The union is also trying to limit workers' use of beltpacks to remotely control trains while standing outside the car.

Economists warned on Friday that a prolonged strike could hit already slowing growth expected by year's end.

A five-day strike could cost the Canadian economy between C$800 million ($603 million) and C$1.1 billion annualized in the fourth quarter, said TD Bank’s senior economist, Brian DePratto.

"We were already expecting real Q4 growth of only 1.0%, so an extended strike risks seeing a near flattening in economic activity to finish the year, and hit an already-challenged goods sector," said CIBC's Avery Shenfeld in a note.


FARMERS PROTEST

The Canadian Federation of Independent Business urged Trudeau's government to take steps to pass back-to-work legislation if the strike is not resolved by early next week. Other hard-hit sectors like agriculture and mining, have made similar requests.

Premier Doug Ford of Ontario, Canada's most populous province, said he had discussed the strike with Trudeau at a meeting in Ottawa on Friday. He called for an end to the strike, since back-to-work legislation would take time to approve.

Trudeau, who was re-elected in late October, has yet to reconvene Parliament, and several procedural steps would be needed before such legislation could be introduced.

The Teamsters suggested CN was manufacturing the propane shortage by choosing not to transport the product.

"While CN is nowhere near operating at full capacity, we think enough trains are running to allow CN to supply Ontario and Quebec with propane," said Lyndon Isaak, president of the Teamsters Canada Rail Conference.

Industry and the premier of Quebec have expressed alarm at the shortage of propane.

In Quebec's Montérégie region, frustrated farmers who rely on propane to dry their crops and heat livestock barns protested the CN strike, saying the situation could have been avoided.

Montreal-based CN has proposed binding arbitration, an option that the union has rejected.

CN stock rose 0.22% in afternoon trading after slipping 0.5% midday.


(Reporting By Allison Lampert in Montreal, additional reporting by Kelsey Johnson in Ottawa; Editing by Denny Thomas, Steve Orlofsky and David Gregorio)