Canadian National Railway executives downplayed the effect the ongoing rail blockades will have on its annual financial results at an investor conference Wednesday, even as it sent temporary layoff notices to 450 employees in Eastern Canada.
CN is maintaining its annual guidance that both volumes shipped and profit will grow in 2020, chief financial officer and executive vice-president Ghislain Houle said at a Barclays Investment Bank event in Miami.
“We still remain cautiously optimistic,” Houle said.
“Yes, there’s a little bit more noise in the first quarter than what we’re used to, but again, it’s only a month and a half.”
CN said late Tuesday that the temporary layoffs would affect operational staff, including employees working at the Autoport in Eastern Passage, as well as at facilities in Moncton, Charny, Que., and Montreal.
The Montreal-based freight transporter said the situation is “regrettable.”
CN said it’s had to cancel about 400 trains as a result of blockades erected in solidarity with the hereditary chiefs of the Wet’suwet’en First Nation, who oppose development of a natural gas pipeline that crosses their traditional territory.
Autoport impact
The sprawling Autoport on Halifax Harbour is promoted as one of North America’s largest vehicle processing and transshipment facilities, handling about 185,000 vehicles every year that make their way on railcars after being taken off ships.
CN announced last week that the company had been forced to begin “a disciplined and progressive shutdown of its operations in Eastern Canada.” The moves would include stopping and safely securing all trans-continental trains across its Canadian network, and it cautioned that the blockade stalemate could soon lead to temporary layoffs among the company’s Eastern Canadian operational staff.
CN said its only remaining responsible option was to progressively shut down its Eastern Canadian operations until the illegal blockades end.
“This situation is regrettable for its impact on the economy and on our railroaders as these protests are unrelated to CN's activities and beyond our control,” said J.J. Ruest, president and chief executive officer at CN, in a statement.
“Our shutdown will be progressive and methodical to ensure that we are well set up for recovery, which will come when the illegal blockades end completely.”
The blockades have affected cargo from west of Montreal getting to the Port of Halifax. Cargo east of Montreal is still moving, while anything bound for west of there is being held at the port, according to Halifax Shipping News columnist Peter Ziobrowski.
CN says it transports more than $250-billion worth of goods annually on a rail network of about 20,000 route miles across Canada and mid-America.
Via layoffs
Meanwhile, Via Rail said Wednesday that it was pleased to have obtained authorization from CN Rail to resume partial service between Quebec City, Montréal and Ottawa and to resume regular service in southwestern Ontario starting Thursday. However, the passenger carrier said it had no choice but to continue the cancellation of services on a large part of its network, and this was going to affect employment.
“It is with sincere regret that we must proceed with temporary work suspensions,” Via said in a statement.
“Starting (Wednesday), close to 1,000 Via Rail employees will receive a notice regarding this matter. The terms of the collective agreements will be respected with regards to the notices given to unionized employees.”
The interruption is unprecedented in VIA’s 42 years of existence, said Cynthia Garneau, president and CEO, in a news release.
“Since the beginning of the crisis, we have been closely working with the infrastructure owner in order to formulate a progressive, safe and orderly resumption plan. We have done everything to mitigate the impact on our employees and our passengers.
“At this point, we believe we have made the fairest and most reasonable decision with the proposed temporary suspension plan. I would like to thank all our union partners for their collaboration and comprehension."
Unifor said 175 Local 100 members and 700 Council 4,000 members received notice of temporary layoff Wednesday from Via Rail. Local 100’s representation includes some workers at Autoport, CN and Via Rail. Council 4,000 members work at VIA and CN Transportation Ltd., among other operations.
“We recognize that these are a result of external factors outside both the employer and the union’s control, and expect these to be temporary disruptions,” said Jerry Dias, Unifor national president, in a statement provided Wednesday to The Chronicle Herald.
“Unifor is in negotiations with the employer to minimize any losses of earnings, ensure notice periods are respected, and to ultimately facilitate an expedited return-to-work process.”
Political points
Provincial Progressive Conservative Leader Tim Houston took a shot at Stephen McNeil on Wednesday as he encouraged the premier to get in touch with federal counterparts about the effect of the blockades on residents.
“Nova Scotians are worried about a propane shortage in the middle of February,” Houston said in a statement.
“Premier McNeil must urge his federal Liberal counterparts to enforce the law. The impact of prolonged blockades on our provincial economy will be substantial,” said Houston.
“It’s absolutely the premier’s responsibility to demand that the prime minister take immediate action and put an end to the blockade.”
The blockades started Feb. 6 in protest of the Coastal Gaslink natural gas pipeline slated for construction in B.C. through Wet’suwet’en territory, where hereditary chiefs dispute the pipeline route and consultation process.
Other blockades were erected in support at several locations across Canada. The blockade on CN’s main line east of Belleville, Ont., near Tyendinaga Mohawk territory has cut off east-west shipments on the network.
“This has nothing to do by the way with CN; we’re a bit taken hostage, we’re a bit victim out of this,” Houle told analysts, adding that CN is co-operating with the government as Ottawa negotiates with First Nations to resolve the issue.
“We’re very hopeful that this blockage on our eastern network will be lifted any time soon, in the next day or two.”
The blockade on CN’s main line to the port in Prince Rupert, B.C., has already been lifted, allowing CN to recover its western franchise and route to Chicago, the two segments where it moves most of its volume, Houle said.
“Our eastern franchise is actually underutilized,” he said.
“I don’t want to undermine the impact of the blockades that are on our eastern network, and we’re hoping it’s going to be resolved, but at this point we’re not panicking.”
While CN struck an optimistic tone, businesses across the country remained concerned about halted movement of goods and commodities.
CFIB view
The Canadian Federation of Independent Business, which represents 110,000 small and medium-sized businesses, is urging the federal government to work with the provinces and law enforcement agencies to immediately restore rail service.
Small businesses are facing steep costs if the rail stoppage continues, CFIB said in an open letter to Trudeau. As examples, the CFIB cited a flag maker in Quebec that receives raw materials from Taiwan and stands to lose $100,000 if its shipment doesn’t arrive, thus preventing it from fulfilling a contract. In Alberta, the CFIB pointed to one member that can only last 30 days without steel shipments before it has to lay off 400 employees.
“Canada’s reputation as a dependable place to do business is at stake if a speedy resolution is not reached,” the CFIB stated.
With The Chronicle Herald
