CN strike risks 'serious damage' to Canada's reputation: industry

Striking CN rail members are seen outside the Mclean Rail Yard in North Vancouver, Wednesday, November, 20, 2019. *Jonathan Hayward/The Canadian Press via AP)
Striking CN rail members are seen outside the Mclean Rail Yard in North Vancouver, Wednesday, November, 20, 2019. *Jonathan Hayward/The Canadian Press via AP)

Some Canadian industries are raising concerns that a prolonged strike at Canadian National Railway (CNR.TO) may hurt Canada’s reputation and make it even more difficult to attract foreign investment.

About 3,200 CN conductors, trainpersons and yard workers represented by Teamsters Rail Conference Canada have been on strike since just after midnight on Tuesday after the union and company failed to reach a negotiated settlement.

The strike has left many industries that rely on Canada’s largest railway to bring product to global markets concerned that current and future investment may turn elsewhere if the work stoppage continues.

“Our global markets are getting tired of hearing excuses from Canada... They’re asking, ‘Isn’t this the third year in a row that Canada has had real shipment problems?’” Bob Masterson, president of the Chemistry Industry Association of Canada, said in an interview with Yahoo Finance Canada. In recent years, CN and its chief rival, Canadian Pacific Railway (CP.TO), have each grappled with tough winter conditions and strained capacity which, in some cases, has led to a backlog.

“It will have a negative impact on the perception of Canada, both to our customers globally and our investors,” Masterson said. “You wonder how many more situations like this Canada can sustain before that reputation is significantly harmed.”

Pierre Gratton, president of the Mining Association of Canada, said some of his member companies are worried that they will lose business if the strike is not resolved within a few days.

“The potential worst outcome is that because you can’t deliver your products to your customers, your customers go elsewhere and you may permanently lose them. That will have a very serious impact on our business,” he said in an interview with Yahoo Finance Canada.

“Canada has a reputation as a reliable trading partner, and this could have serious damage to that reputation if it continues much longer.”

Sylvain Charlebois, a Dalhousie University professor specializing in food distribution and policy, wrote in a note released Thursday that the strike is also exacerbating issues for farmers after “a harvest from hell.” He also said that strike will not help Canada’s reputation when it comes to the logistics of shipping goods across the country and overseas, which he describes as “just awful.”

“Canada is known to be a land of few options, transportation inefficiencies and bottlenecks. It’s been like this for years,” Charlebois wrote.

“Our trading partners are familiar with our domestic challenge which have compelled some to look elsewhere for grains and other agrifood commodities. This latest dispute will likely give them a new excuse to look away. Given the global nature of agrifood systems, this is certainly not what our farmers and food processors need.”

CN and Teamsters continued negotiations Thursday, but union spokesperson Christopher Monette said the company “is barely budging on any of the health and safety issues we’ve identified.” Teamsters says that wages are not a sticking point in the negotiations, but that the union is looking for changes to operating practices that it says are dangerous, and that it is refusing to accept a lifetime cap on prescription drug coverage. In a statement released Thursday, CN’s chief executive J. J. Ruest disputed Teamsters’ claims about health and safety and urged the union to agree to binding arbitration.

“All of us at CN are very aware of and regret the impact that the strike is having on our customers, supply chain partners, the Canadian economy, trade in general, and the public,” Ruest said.

“We remain committed to finding an equitable resolution and look forward to getting back to re-establishing the reliable service to which our customers are accustomed.”

The strike has put pressure on Prime Minister Justin Trudeau’s new minority government to reconvene parliament before the planned Dec. 5 start date and pass back-to-work legislation that would end the work stoppage.

Gratton hopes the government will intervene soon.

“It’s getting very tense and plant closures could start to commence in some cases within the next few days,” he said.

“We need swift action... that’s the kind of thing I think customers want to see.”

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