CP insists it’s ready to move crop despite layoffs

Canadian Pacific Railway says it is ready to move an oversized western Canadian crop this fall.

CP’s recently announced plan to lay off as many as 500 railway maintenance workers will not affect its ability to move grain efficiently, company officials added.

“CP is keen to work collaboratively with all supply chain partners to continue moving record amounts of grain, as we did in 2013-14 and 2014-15,” president Hunter Harrison said in a June 28 letter to federal transport minister Marc Garneau and federal agriculture minister Lawrence MacAulay.

“CP is maintaining and repairing both stored cars and locomotives to add capacity this harvest, in line with the supply chain’s ability to efficiently handle the volume, and is positioned to recall employees to ensure our running trade and mechanical crew base can handle such volume, if and where required.”

This year’s prairie grain harvest is expected to be earlier than normal and larger than normal.

In his June 28 letter, Harrison alluded to a large prairie crop, perhaps four to five million tonnes less than the record harvest of 2013-14.

CP is aware that demand for rail service from grain shippers may be heavier than expected and is communicating with other grain supply chain partners “to ensure the supply chain is as prepared as possible for moving what could be an historically large crop,” he added.

Harrison also pointed to significant infrastructural improvements by both the railway and grain handling companies, which will allow the supply chain to move greater volumes of grain more efficiently.

However, he reiterated that all parts of the supply chain must work together and avoid finger pointing, a reference to the combative relations that emerged between large grain companies and railways during the logistically challenged 2013-14 shipping season.

“I am hoping that the energy consumed by finger pointing in the past can be put instead to a collective effort to work together to move even higher volumes of grain from the Canadian Prairies to customers in the U.S. or international markets,” Harrison said in his letter.

“Not only is finger pointing counter productive, it tarnishes Canada’s reputation as a world-class supplier and it distracts us from the most important task: moving grain.”

CP also stressed the importance of maintaining fluid operations at port terminals in Vancouver and ensuring that more grain flows through Thunder Bay.

“it is essential that … the port of Thunder Bay stays open as long as possible,” Harrison wrote. “Thunder Bay is an important outlet for Canadian grain. It’s closure from late December to March-April of every year significantly reduces grain supply chain capacity.”

Harrison’s letter was sent to federal politicians a week after the railway announced its intention to issue layoff notices to 500 railway maintenance workers.

Shortly after announcing the layoffs, their union warned that staff reductions would raise the risk of future derailments and potential disasters.

Officials with the Teamsters Canada Rail Conference criticized CP for failing to conduct a formal risk assessment before announcing the job cuts.

“I don’t think it’s scaremongering at all,” Teamsters official Gary Doherty told CBC. “I think the public should be aware of the potential. My concern is derailments. (If) we don’t have people out there properly maintaining the track or doing inspections, the potential for disaster is there.”

CP spokesperson Jeremy Berry said the railway consulted with Transport Canada before announcing the layoffs.

He said the network is in extremely good shape heading into the new crop year, adding that significant network improvements have taken place since 2012.

CP has “increased spending on infrastructure … installing new track, new ties, new ballast and doing other work to ensure a safer railroad,” the company said in a prepared statement.

“In addition, more than 700 switches have been removed from active service since 2012, which significantly lessens the risk of incidents across the network.”

“The recently announced temporary layoffs are the result of lower car volumes and softening demand in a lacklustre North American economy — factors that are affecting all railroads, not just CP,” company officials added. “CP must adjust staffing levels according to business ebbs and flows associated with global markets and operational efficiency gains.”

Berry said the layoffs would take effect beginning immediately.

Workers will be called back as economic conditions improve.

CP announced June 21 that revenue in the second quarter of 2016 would decline 12 percent because of lower-than-anticipated volumes in bulk commodities and wildfires in northern Alberta.

Harrison’s letter to federal cabinet ministers comes just weeks after Ottawa took steps to extend provisions in the Fair Rail for Grain Farmers Act.

Some provisions in the legislation were due to expire Aug. 1, but instead will be extended for one year. Provisions give Ottawa the authority to set minimum grain volume requirements for Class 1 railways. The legislation also extends railway interswitching provisions to160 kilometres, up from 30 km previously.

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