CN Rail layoffs will ‘further complicate’ tangled supply chain, industries say

Click to play video: 'CN Rail issues approximately 450 temporary layoff notices amid Wet’suwet’en protests'
CN Rail issues approximately 450 temporary layoff notices amid Wet’suwet’en protests
WATCH: CN Rail issues approximately 450 temporary layoff notices amid Wet’suwet’en protests – Feb 19, 2020

Blockades across Canada’s railway system have choked branches of the supply chain for two weeks. Now, industries are facing a new hurdle — the layoffs of hundreds of CN Rail workers.

It wasn’t very long ago that supply chain industries were grappling with similar circumstances.

“Our last situation like this was the CN Rail strike in November. That was an eight-day long strike and it took us over a month to recover, if not more,” Joel Neuheimer, vice-president of international trade and transportation for the Forest Products Association of Canada, told Global News.

While the situation feels familiar, for many industries, the impacts are only adding to a pile of issues tangling the rail system.

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“Given that we’re in day 13 of the blockade now, it’s going to take at least twice that to recover, given all the different aspects, including these new layoffs.”

Click to play video: 'Railway blockades continue across Ontario'
Railway blockades continue across Ontario

CN Rail planned to lay off roughly 1,600 employees since last year, citing international trade tensions and slowing economic growth. But as protests and blockades in support of the Wet’suwet’en hereditary chiefs have persisted at rail lines across the country, CN says a “progressive and methodical” shutdown was necessary.

The layoffs announced Tuesday impact about 450 workers in Eastern Canada, including operational staff and employees at Autoport locations in Nova Scotia, New Brunswick and Quebec.

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CN says it’s been forced to cancel more than 400 trains and keep a significant portion of the network at a standstill due to blockades on vital rail lines in Ontario, Montreal and B.C.

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Canada’s forest sector — which includes lumber and wood products like pulp and paper — has already seen a loss of $100 million since the blockades sprang up two weeks ago.

The pulp side of the industry is being hit the hardest, Neuheimer said.

“Factories are getting close to going into standby mode. There’s nowhere else for them to put the product, they’re running out of space, so they’re having to lease extra space along the supply chain,” he said.

“That’s exacerbating the financial impact.”

Contingency plans for delivering goods are also driving up losses, according to Neuheimer.

He said that while shipping products by truck is an option when railways are jammed, it’s “not a complete solution.” A national shortage of trucks and drivers has made it difficult for commodity shippers of all kinds, he said.

“This is a big part of the chunk in how you get to $100 million in losses to date for the sector.”

Click to play video: 'Economic toll of the Coastal GasLink pipeline protests'
Economic toll of the Coastal GasLink pipeline protests

Canadian Manufacturers and Exporters CEO Dennis Darby said the costs blooming behind the crisis are “beyond serious.”

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He claims that an estimated $425 million in goods are becoming stranded daily as a result of the blockades. Darby and other business leaders gathered in Toronto on Tuesday to urge the government to act — and fast.

He suggested that layoffs could find their way into branches of Canada’s supply chain, as well.

“Manufacturers don’t have much time before the impact becomes dire,” he said. “It’s critical.”

Supply Chain Canada, which represents chain management roles in the industry, said while it’s difficult to quantify the “innumerable impacts” at this point in the debacle, it’s undoubtedly far-reaching.

“Railway freight has a significant effect on the Canadian economy, as railway infrastructure is critical to a healthy, functioning supply chain. Each additional day rail lines are disrupted, it requires three to four days for supply chains to recover,” Simona Zar, Supply Chain Canada’s director of industry affairs and public policy, told Global News.

“It’s yet another consequence of the many disruptions that have taken place. We can expect more if the blockades continue.”

These business leaders are among more than 30 others who signed a letter to Prime Minister Justin Trudeau this week, urging him to bring the blockades to an end.

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Trudeau spent hours in a closed-door meeting Monday with some of his cabinet ministers discussing ways to end the demonstrations peacefully and quickly.

He said that it is “past time” for a resolution to the rail blockades, but offered no clear answers for what action the government is willing to take other than to “open dialogue” with protesters and First Nations leaders.

We know that people are facing shortages, they’re facing disruptions, they’re facing layoffs. That’s unacceptable,” he told reporters Wednesday.

“That’s why we’re going to continue working extremely hard with everyone involved to resolve the situation as quickly as possible.”

Click to play video: 'AFN chief Bellegarde says Wet’suwet’en made 3 ‘simple’ requests'
AFN chief Bellegarde says Wet’suwet’en made 3 ‘simple’ requests

“They know that these protests are serious, that this is a critical moment for the future of our country. So do I. On all sides, people are upset and frustrated. I get it, because this is about things that matter,” he said.

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“It is time — past time — for this situation to be resolved. But what we are facing was not created overnight.”

Via Rail, which has been tangled in the disruptions, issued layoff notices of its own on Wednesday. The company said roughly 1,000 of its employees would be “temporarily suspended” and the vast majority of its passenger trains cancelled across the country as a result of the ongoing blockades.

Via Rail told Global News in a statement that it is “not in a position” to estimate losses related to the rail blockades at this time.

— With files from the Canadian Press and Global News’ Amanda Connolly 

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