*

Talks between rail companies and Teamsters deadlocked,

each side

accuses other of bad faith

*

Industry groups urge Trudeau's government to prevent

stoppage,

citing economic impact

*

U.S. rail operator Norfolk Southern ( NSC ) embargoes hazardous

cargoes

to/from CN and CPKC networks

By David Ljunggren, Promit Mukherjee

OTTAWA, Aug 14 (Reuters) - North American industry

groups and shippers are bracing for an unprecedented

simultaneous stoppage at both of Canada's main railway companies

that could inflict billions of dollars' worth of economic

damage.

Canada is the world's second-largest country by area and

relies heavily on trains to transport grain, beans and other

dried seeds of legume plants, potash, coal, automobiles 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 ( CNI ) and

Canadian Pacific Kansas City ( CP ) 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 C$380 billion ($277 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.

A stoppage would also hit the United States, given the

degree of integration between the two economies. Canada sends

around 75% 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.

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.

In anticipation of a potential lockout, 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 ( NSC ) on

Tuesday advised all customers that it was embargoing all

hazardous and security-sensitive cargoes to or from CN and

CPKC's networks effective immediately. It also said additional

embargoes may be issued in case of any work stoppages at the

Canadian rail operators.

($1 = 1.3721 Canadian dollars)