CNR Canadian National Railway Company

By Kim Mackrael and Paul Vieira 

OTTAWA -- Canadian National Railway Co. said Thursday it will shut down operations in eastern Canada as blockades set up by anti-pipeline activists threatened to upend the country's manufacturing sector and slow the broader economy.

The Montreal-based company said the move may lead to temporary layoffs of its workers in eastern Canada. Canadian National is the country's biggest railroad and ships commodities and consumer goods valued at more than 250 billion Canadian dollars annually (about $190 billion). It has been unable to move trains through a key transportation corridor connecting western Canada to the eastern part of the country for more than a week.

Business groups and organized labor on Thursday called on the Canadian government to intervene to stop the blockades, which involve protesters acting in solidarity with west coast indigenous leaders trying to stop construction of a natural-gas pipeline.

Canadian Manufacturers and Exporters, a lobbying group, said the roughly weeklong rail disruption has led to a sharp dwindling of inventories among member companies. "It is really important that the federal government get this resolved," said Dennis Darby, president of the group. He added that roughly three-quarters of the country's manufacturing activity is based in eastern Canada and leans on Canadian National for shipments.

Meanwhile, Teamsters Canada warned the shutdown of Canadian National's eastern network could lead to the layoff of as many as 6,000 of its members, most of whom work at the railroad. The union also represents workers at passenger-rail operators and short-line railroads who risk layoff because of the blockades.

"Our union -- and thousands of working families -- are in crisis. This situation cannot go on forever," Teamsters Canada President François Laporte said in a statement. "We urge Ottawa to intervene to help find a solution as soon as possible," he added.

Shortly after Canadian National's decision, the government-owned passenger rail operator Via Rail Canada said it "had no other option" but to cancel nearly all of its services until further notice. Canadian National owns more than 80% of the rail tracks used by Via Rail to carry passengers.

Canadian National said it has obtained court orders and requested the assistance of law-enforcement agencies to remove blockades in Ontario, Manitoba and British Columbia.

"While the illegal blockades have come to an end in Manitoba and may be ending imminently in British Columbia, the orders of the court in Ontario have yet to be enforced and continue to be ignored," the railroad said.

Andrew Brant, one of the people involved in the blockade in Ontario, said it began as an expression of solidarity with indigenous leaders on the west coast but has expanded to include a wider set of grievances regarding the government's treatment of indigenous people. "We're going to stand our ground," Mr. Brant said.

Canadian Prime Minister Justin Trudeau said freedom of expression is a democratic right but must respect the courts and the law. He said his government would meet with indigenous leaders on the west coast who oppose the pipeline.

A spokeswoman for Canada's transport minister, Marc Garneau, didn't immediately respond to a request for comment on Thursday. Mr. Garneau said earlier this week that it was up to local law-enforcement agencies to enforce the court orders.

Ontario's provincial police force didn't immediately respond to a request for comment about Canadian National's decision. A spokeswoman for the police force said earlier in the week that the method and timing of enforcing the court order was up to the police.

The country's other main railroad, Canadian Pacific Railway, said Thursday its operations have been hurt by the blockades and it would continue to monitor the situation closely. The bulk of Canadian Pacific's network is west of Toronto, Canada's biggest city, and about 120 miles west of the main blockade affecting freight traffic in eastern Canada.

Canadian National's chief executive officer, Jean-Jacques Ruest, said halting operations in eastern Canada is "the responsible approach to take for the safety of our employees and the protesters." He said the shutdown would continue until the blockades end completely.

Anti-pipeline protests have escalated across Canada since last week, when police began enforcing a separate court order to remove people who were trying to prevent construction of the natural-gas pipeline in northern British Columbia.

The Coastal GasLink pipeline is owned by TC Energy Corp. and is intended to carry gas to the west coast for shipment to markets in Asia. Protests have taken place in recent days outside the British Columbia legislature, on the roads leading to the Port of Vancouver, in downtown intersections and at three locations along the railway.

Write to Kim Mackrael at kim.mackrael@wsj.com and Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

February 13, 2020 20:44 ET (01:44 GMT)

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