CN strike another hit to Prairie economies

The strike that began Tuesday by thousands of unionized workers at Canadian National Railway Co. could deliver another blow to Prairie economies already struggling with logistics bottlenecks, trade woes and inclement weather.

Around 3,000 CN conductors, train and yard workers walked off the job after contract negotiations between the Teamsters Canada Rail Conference and Canada’s largest railroad operator collapsed. The move threatens to delay shipments of oil, grain and potash across the country, with the Prairies poised to feel the biggest economic impact.

“This is coming at a bad time,” said RBC economist Ramya Muthukumaran.

Transport disruptions would likely affect the gap between the North American oil-price benchmark, West Texas Intermediate, and Alberta’s Western Canada Select, at a time when that spread has already been widening due to pipeline shutdowns, Muthukumaran said.

READ MORE: Grain shippers worried as CN Rail workers strike

When workers at Canadian Pacific Railway, Canada’s other major railroad company, hit the picket lines for nine days in 2012, the country saw a six per cent decline in rail transportation, Muthukumaran noted. The impact of the current CN strike will depend on how long it lasts, she added.

The Canadian Association of Petroleum Producers (CAPP) said it will be “carefully” monitoring the situation.

“The oil industry is concerned about any developments that can negatively impact on the availability of rail capacity,” Ben Brunnen, CAPP vice-president of oilsands, said in an emailed statement.

READ MORE: Over 3,000 Canadian National Railway rail workers on strike — union

Other commodity producers have also sounded the alarm over the possibility of prolonged shipment delays.

The Alberta wheat and barley commissions have urged the federal government to “be prepared to intervene,” noting that many farmers are already struggling with poor harvest conditions and prices.

READ MORE: 2.7 million acres of canola left buried under snow in the Canadian prairies

The strike adds “insult to injury” for Alberta farmers who are already coping with heavy snowfall, Alberta Wheat Commission chair Gary Stanford said.

“There are a lot of farmers who already have a significant amount of their income trapped under snow … That means that for the grain we did manage to harvest, we won’t be paid at least until service resumes.”

With CN moving up to 5,650 hopper cars per week, equivalent to more than half a million tonnes of grain, even a few days of strike action could cause “a massive backlog,” the two organizations said in a joint press release.

“If those cars are not supplied, farmers can’t deliver and are not paid,” the statement notes.

Tweet This Click to share quote on Twitter: "If those cars are not supplied, farmers can't deliver and are not paid," the statement notes.

The Trudeau government, which faces harsh criticism in the West over its energy policies, is urging CN and the Teamsters Canada Rail Conference to continue negotiating.

Labour Minister Patty Hajdu said the government is concerned about the impact of a work stoppage on Canadians but remains hopeful the two sides will reach an agreement.

Union spokesman Christopher Monette said workers are still in talks with CN in hopes of ending the labour dispute as soon as possible.

READ MORE: Government meets with CN Rail, union in effort to avert strike

A full week of strike action might shave just 0.05 per cent off Canada’s November GDP, Muthukumaran said. A longer period of disruption, however, could have more lasting effects, she added.

It’s not clear if and when Trudeau’s newly elected minority government would order the workers back on the job.

Under Canadian parliamentary rules, any potential back-to-work legislation would only be considered after a new Speaker is elected and the speech from the throne has been read. Canada’s Parliament is currently set to return on Dec. 5.

The union has said it opposes demands by CN to reduce time off for workers and impose a lifetime cap on drug coverage benefits, among other things.

CN employed a total of 25,720 employees as of Dec. 31, 2018. The union has said passenger rail services in the country’s three biggest cities would not be affected by the strike.

— With files from the Canadian Press and Reuters