After a harvest from hell across the country, farmers now have to deal with a new problem: the CN strike. Over 3,000 CN employees out of about 24,000 in Canada and the United States are now off the job. They are asking for better working conditions and safety. Perhaps not the most “retaillable” issue out there for Canadians, given that commuter rail will likely not be disrupted. That would be a political loser for CN striking workers. What’s worse, however, is that the CN railway strike will likely not end soon.
We often see action from organized labour at certain points of an economic cycle when workers feel an opportunity to lobby for better working conditions. CN posted a healthy profit last quarter as revenues are up four per cent, although the company did review its revenue outlook due to a weakening economy. Workers saw a window and are taking advantage of this profit. However, for agriculture this can’t be happening at a worse time. Thousands of grain growers are still coping with early winter conditions, as they are desperately trying to get their products out of their fields. Over one and a half million acres of canola is still under snow, according to a report. But now access to markets for many farmers is essentially nonexistent. Most locations where CN is serving, is the only option available to farmers in that area. The only one.
Overseas markets are critical to the survival of the sector. Canada was to export 21 million tonnes of wheat this year and about nine million tonnes of canola seed. The CN strike may severely compromise the agrifood sector’s ability to deliver and execute its overseas contracts. The strike could also prevent some inputs such as delivering propane to farmers, which they need to dry goods and heat facilities. Logistics go both ways.
We rarely see logistics as the backbone of our economy, but it is. It’s hidden, it’s out there, but it is there. We buy and consume products every day which relies on logistics to get to whatever point of sale we interact with. Even if 60 per cent of all jobs have been filed by managers, CN’s efficiency will be affected by the strike.
The essential question is this: Should parliament intervene or not. Within a few days of the strike, many provinces and dozens of trade groups have begun pressuring the federal government for back-to-work legislation. This pressure is coming even though the government is not in position do to anything until a cabinet is sworn in, a speaker of the house is appointed and the Throne speech is voted on. Ottawa’s legislative to-do list is quite lengthy before it is able to vote on any new laws.
When the last strike happened, in 2009, the Harper Government did not hesitate to intervene. The strike lasted just a few days. This time around, not only is Parliament not sitting, but it’s not clear how the new government will react to such measures. While Liberals have intervened in the past, it may be that they feel bargaining needs to do its work. And in a minority situation, the government would need the support of at least another party. The Conservatives are likely the only major party who would support the government. But seeing both the Liberals and Conservatives agreeing on anything is highly unlikely. For the Bloc and the NDP, back-to-work legislation would likely be a non-starter.
Beyond the politics of it all lies Canada’s reputation in logistics. It’s just awful. Canada is known to be a land of few options, transportation inefficiencies and bottlenecks. It’s been like this for years. Given the size of our economy and landmass, Canada’s investment levels on public infrastructure should have been at least triple of what we have seen since 1980. Just south of us, the United States offers great infrastructure, including well-maintained roads, high intermodal capacity and multiple options to move products. It is easy and less costly for any sector to use American distribution channels, including agriculture. Yet farmers who are located far from the American border are highly vulnerable to labour disputes and disruptions like this one.
Canada started to take logistics seriously about a decade ago when the Gateway and Corridor initiative was launched, forcing all provinces to work together and invest in our floundering infrastructure. Yet efforts came in with a huge backlog of challenges as most of our transportation system, from Halifax to Vancouver, has been undercapitalized for years. Labour disputes have only compounded the problem. 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.
The economic impact of this labour dispute is real. However, unlike some may suggest, this won’t bring our economy into a recession, but it won’t help. Consequently, our government may not be keen to force an end to this trade dispute, but it certainly needs to think about how it can do a better job in providing our agrifood sector better access to market.