It will take several weeks before it's "business as usual" for many Canadian companies following the disruptive CN Rail strike, business leaders say.
The strike effectively ended Feb. 24, as CN and the union representing railway workers negotiated a settlement after the federal Conservative government introduced back-to-work legislation. Although rail workers still had to ratify the deal, most abided by the union's recommendation to return to work immediately.
"Another week or two wouldn't have been good for the economy," says Benjamin Tal, a senior analyst with CIBC World Markets in Toronto, adding Ottawa stopped the strike at the right time.
Michael McPhie, president of the Mining Association of British Columbia, says companies in his industry are being forced to play catch-up. "There will likely be some backlogs for a period of time until they can get things moving again at full force," McPhie says.
"One of the challenges is that the level of activity right now is extraordinarily high from one edge of the country to the other, and particularly in the northern part of British Columbia, where the CN line runs primarily for our business."
"Even finding the capacity to haul the coal (from mines) on a regular basis has been a challenge," adds McPhie. "So my expectation is that you're going to feel this for some time - more than several weeks, for sure."
Before the deal to settle the dispute, private-sector operators found themselves in the unusual position of calling on Ottawa to intervene. Most of the time, industry leaders and unions are loathe to ask government to settle labour disputes, as they prefer to negotiate amongst themselves.
Companies in several sectors scaled back operations after CN conductors and yardmen went on strike. Among the more notable slowdowns, Ford Canada shut down its St. Thomas, Ont., plant, which produces the Crown Victoria and Grand Marquis and employs 2,300 people, because the strike resulted in a shortage of materials. (Ford quickly called workers back after the settlement was announced.)
Canfor Corp. took production downtime at its Mackenzie, B.C., sawmill three production days earlier than planned, beginning Feb. 21. Canfor also curtailed production at mills in the B.C. towns of Vavenby and Houston, and at the Kyahwood remanufacturing joint venture in Moricetown, B.C.
The moves reduced Canfor's production by 20 million board feet.
U.S.-based Nova Chemical Corp. reduced ethylene and polyethylene capacity at its Canadian plants by 10 to 15 per cent.
The Retail Council of Canada says that while it prefers a negotiated settlement over the back-to-work legislation, it still supports the government's move.
"We were really pleased that (Labour) Minister (Jean-Pierre Blackburn) tabled the legislation," says Derek Nighbor, the council's vice-president of national affairs.
The tentative deal allowed CN conductors and other labourers to return to work quicker than the new law would have allowed. Nighbor says the anticipated four- to five-day delay in implementing the back-to-work legislation would have created some challenges in the market - "there's no doubt about that."
Nighbor says the retail council did not quantify potential losses in financial terms, "but it's safe to say the losses would have been significant.”
Retailers also would have faced added contingency costs if they had to find other ways to get their goods to market.
Andrew Casey, a spokesman for the Ottawa-based Forest Products Association of Canada (FPAC), which represents mill operators across the country, says the dispute was "hugely disruptive" to his group.
"We're pleased that the government did see the economic threat that was being imposed by a long-term strike, and they took action," says Casey, "because there seemed to be no end in sight."
Casey says some mills had to close down because they could not get the materials they needed to make their products, and it will take some time to resume full operations. "There's going to be some lag time. There's a backlog (of products waiting to be shipped.)" Container traffic backlogs at the Port of Vancouver, exacerbated by winter weather conditions in other parts of Canada, threatened to reduce inventories and sales and increase port-storage fees because of delays ships faced in berthing. The Vancouver Port Authority reported a backlog of 5,200 containers at its Deltaport terminal near Tsawwassen and estimated cargo volumes declined 50 per cent in the first 10 days of the strike.
Approximately $730 million worth of shipments were delayed.
Paul Landry, president and CEO of the B.C. Trucking Association (BCTA) says a prolonged strike would have hurt shippers, the economy and the Port of Vancouver's reputation. Instead, the settlement preserved Vancouver's place as Canada's gateway to the Asia-Pacific region.
"It's a good thing," says Landry about the dispute's resolution. "Whenever there are some problems with one mode in particular in terms of inter-modal traffic, it has a ripple effect on other modes. Ships divert to other ports, which means you're diverting not only rail traffic but truck traffic as well. Of course, rail inter-modal traffic (bound for truck transport), which is already on port property, doesn't get cleared as quickly as it normally would, so that could create problems as well."
If the strike had gone on longer, the dispute would have affected the national GDP and forced the Bank of Canada to evaluate interest rates, says CIBC's Tal.
"This is just a temporary hiccup, which is not insignificant, especially for companies already impacted by the strike. But from a big-picture perspective, this is not a big story," says Tal.
Businesses will be able to offset the impacts of the strike in "a matter of weeks" - not months, he adds.
"The market knows that this was only a temporary impact."
(Monte Stewart can be reached at monte@businessedge.ca)
