CP Rail strike could be ‘detrimental’ to Canada’s economy, experts warn

Click to play video: 'Farmers concerned as CP rail trains could grind to a halt due to labour impasse'
Farmers concerned as CP rail trains could grind to a halt due to labour impasse
CP Rail trains could stop rolling across the country early Sunday morning and that would be yet another blow to farmers in Canada’s western provinces. About 3,000 rail workers have served notice that they plan to go out on strike, hours after the railways said it was prepared to lock them out. After battling drought and fires in last year’s growing season and facing more cost increases on feed and fertilizers amid supply chain strains and the war in Ukraine, farmers say they’re extremely concerned – Mar 18, 2022

With CP Rail trains ground to a halt nationwide and thousands of workers starting to march picket lines, the anticipated strike at Canada’s second-largest railroad operator has come at one of the worst times for the country’s economy, experts say.

“The hit to the Canadian economy that this can cause is so detrimental,” Richard Powers, associate professor at the University of Toronto’s Rotman School of Management, told Global News. “I don’t know what else we can face without seeing a real collapse.”

The strike, involving nearly 3,000 engineers, conductors and other train employees, took effect early Sunday morning after a lockout initiated by the Calgary-based railway.

Following the lockout, the Teamsters Canada Rail Conference said workers were also on strike, with picketing underway at various Canadian Pacific locations. This is the fifth work stoppage since 1993, according to CP Rail.

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Click to play video: 'NDP against back-to-work legislation amid CP Rail labour dispute: Singh'
NDP against back-to-work legislation amid CP Rail labour dispute: Singh

There are 26 outstanding issues, including wages, benefits and pensions, currently causing turmoil between the two sides. While both parties are still at the table with federal mediators, significant negotiation is still foreseen. Powers doesn’t see the conflict ending before Friday.

“It appears that there are still a lot of issues yet to discuss and to agree upon. A strike coming at this time, it just adds to the confusion and chaos,” Powers said, noting the clash has come off the heels of the COVID-19 pandemic and Russia’s invasion of Ukraine, which have already drastically impacted the economy not only in Canada but across the world.

Click to play video: 'Alberta’s agriculture industry braces for impact from CP Rail work stoppage'
Alberta’s agriculture industry braces for impact from CP Rail work stoppage

For Canadians, everything from agricultural and farm products to fuel and vehicles will be impacted, according to Powers.

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“Movement of parts is so important and now you’ve just cut that off,” he said.

Click to play video: 'Reactions pour in from the Prairies as possible CP Rail lockout draws closer'
Reactions pour in from the Prairies as possible CP Rail lockout draws closer

According to Dennis Darby, president of the trade association Canadian Manufacturers and Exporters, a survey conducted between Feb. 8 and Feb. 28 found nine out of ten of Canadian manufacturers are facing supply chain issues.

He said Canadian manufacturers have already lost out on an estimated $10.5 billion in sales because of transportation network disruptions and they simply cannot afford another interruption.

“Adding to our concern is the fact that a labour disruption at CP Rail will deal another blow to Canada’s reputation as a good place to do business and as a reliable supply chain partner,” Darby said.

The grain industry, specifically, is anticipated to feel the impact of the strike.

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“We have those waiting for the crop off the west coast, feed-lot operators waiting for product, processing facilities across the prairies and in eastern Canada in need of canola and cereal grains in order to provide bread for the store shelves. And, we’re seeing inflation increases,” Western Grain Elevator Association spokesperson Wade Sobkowich said last week.

“Everything is coming at us all at once. There are some things we can control and some things we can’t. We should be able to control a work stoppage and yet here we are facing one. This is the last thing we need right now in the grain sector and as an economy here in Canada.”

Sobkowich said roughly half of annual grain crops are exported on CP rail lines. He said average crop size ranges between 30 and 40 million metric tons.

The beef industry could also be affected as CP Rail imports corn for feeding cattle in the nation, Opher Baron, professor and academic director at the University of Toronto’s Rotman School of Business, told Global News.

“They are basically feeding the beef industry in Canada,” he said, noting much of the country’s ground transportation is done on the rails.

Canadians could pay more when buying food, clothes, and more depending how long the strike lasts, according to Baron.

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“This strike is not a small pool. It’s potentially a big one. It can have quite a large effect,” he said.

Even in the United States, the CP rail conflict has interrupted fertilizer and other shipments to and from the country.

Canadian Pacific covers much of the U.S. Midwest and is a large shipper of potash and fertilizer for agriculture. It also carries grain from the U.S. to its northern neighbour for domestic use and exports. The railroad serves the Dakotas, Minnesota, Iowa, Illinois, Wisconsin, Missouri and other states, according to a map on its investor website.

Canadian Pacific also operates in New England and upstate New York, spokesman for CP Patrick Waldron said.

CP got 29 per cent of its 2020 freight revenue from cross-border shipments between the U.S. and Canada, its investor website states.

Locked-out workers picket the Canadian Pacific Railway headquarters in Calgary, Alta., Sunday, March 20, 2022. THE CANADIAN PRESS/Jeff McIntosh

According to Powers, the federal government needs to be “looking at back to work legislation” to kick start the Canadian economy. However, he added that this type of measure is rarely used in Canada as it is an affront to the collective bargaining process.

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“We have to respect the process. Let’s give them a chance. But at the same time, they have to recognize that at some point things have to change,” he said.

— With files from Global News’ Sean Boynton, Connor O’Donovan and The Canadian Press

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