CP Rail strike: Industries across Canada scrambling, warn of ‘significant’ economic impact

FILE — A Canadian Pacific Railway crew works on their train at the CP Rail yards in Calgary, Alberta. REUTERS/Todd Korol/File Photo

UPDATE: A deal has been reached to end the CP Rail strike

Thousands of conductors and engineers with Canadian Pacific Railway walked off the job Tuesday night — sparking transportation worries across the country.

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More than 3,000 employees of Canada’s second-largest railroad are now on strike, but the union says it’s still negotiating with the railway with the help of a federal mediator.

The railroad workers, whose collective agreement expired late last year, are asking for more predictable schedules to combat crew fatigue, among other demands.

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In the meantime, represenatives of the grain, mining, aluminium and fertilizer industries say the strike will have a significant economic impact on them and urged the Canadian government to help resolve the issue.

Here’s a look at the industries affected by the walkout.

Grain industry

The strike could force the railroad to shut down its freight service at a particularly bad time for grain farmers, whose livelihoods were threatened because grain shipping was severely disrupted over the past winter due to extreme cold.

The longer farmers’ product sits in grain elevators — and on rails — the quicker it depreciates in value. Add to that, leery buyers, who are unsure they’ll ever see the product they bought, and it’s an unenviable predicament.

LISTEN: John Barlow, shadow minister for Agriculture and Agri-Food, joins Danielle Smith to explain how the CP Rail strike will affect the agriculture industry

Wade Sobkowich, executive director of the Western Grain Elevator Association, told the Canadian Press they were hoping for a miracle but fully expected a work stoppage and must now notify farmers.

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WATCH: CP Rail strike would hurt Canadian economy, Ottawa says

He said deliveries will have to be rescheduled and overseas customers must be told that shipments will be late.

Grain Growers of Canada president Jeff Nielsen said the organization had asked the federal government to intervene with legislation to keep grain moving, but Prime Minister Trudeau has already ruled out a back-to-work bill.

Nielson said as grain farmers recover from the winter grain backlog, it is essential that shipping stays on track.

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Using trucks to ship grain may also be out of the question.

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“Even without the tightness in the market, alternative modes of transport wouldn’t be able to make up for the loss of Canadian Pacific’s capacity,” analyst David Tyerman of Cormark Securities Inc said.

Fertilizer industry

On Wednesday, Fertilizer Canada released a statement about the walkout, saying the strike negatively impacts producers and compromises the country’s position as a leading fertilizer supplier.

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“As the Canadian fertilizer industry exports to more than 75 countries, our members rely on an efficient transportation system in order to remain globally competitive,” Garth Whyte of Fertilizer Canada said.

“We strongly urge the government to take whatever action is necessary to ensure minimal damage is done to the Canadian economy and especially Canadian trade industries.”

Mining industry

The Mining and the Aluminum Associations of Canada said the strike would also have a “significant economic impact” on their industries and cause a shortfall of essential fuel and supply shipments to mines across the country.

“On the backdrop of recent, painful and ongoing service disruptions in the rail freight market, and the damage this has already done to Canada’s reputation as a reliable trading partner, the economy can ill afford the effects of a protracted labour dispute that grinds a half of Canada’s rail freight capacity to a halt,”  Pierre Gratton of the Mining Association of Canada (MAC) said in a statement. 

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Canada’s Oil and Natural Gas Producers (CAPP) said the oil industry is concerned about the availability of rail capacity “given the current tight pipeline situation.”

“Increased transportation capacity of all types is needed to reach more Canadians and new, growing markets around the world to ensure Canada remains globally competitive,” a representative from the organization said.

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According to MAC’s 2017 Facts & Figures report, the Canadian mining industry accounts for over 50 per cent of the freight revenues of Canada’s rail system yearly (around $6 billion annually).

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Aluminium industry

The Aluminium Association of Canada said the strike adds “major challenges” to the operations of aluminium smelters; many producers now have to resort to complex and “more costly” transportation options.

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“The financial and logistical impact on our operations are significant in an already challenging market environment for our businesses,” the organization said in a statement.

“Currently affected by a series of increased costs and an uncertainty in the market, aluminium is a commodity that does not allow any transfer of additional costs to purchasing customers.”

Commuter trains not impacted

As part of the strike deal, the union ensured passenger service on three commuter railways in Vancouver, Toronto and Montreal will be uninterrupted.

What the Canadian government is doing

Prime Minister Justin Trudeau said in an interview with Bloomberg on Tuesday his government believes in the right to strike and would not intervene, as his predecessor had, “early and often” in labour disputes.

But he said he would not rule out back-to-work legislation.

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— With files from Global News’ Colton Praill, Associated Press and Reuters

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