CNS Canada — Select maintenance workers at Canadian Pacific Railway will be laid off effective Thursday as the railway’s revenue is expected to plummet in the second quarter.
Lower volumes are one reason given for declining profits, though grain movement this crop year is ahead of average.
Earlier this month, 500 CP maintenance workers were informed they’d be laid off effective June 30.
The layoffs, which officials from the railway say are temporary, have led to concerns aired over rail safety, as fewer people maintaining and monitoring the track could increase the likelihood of an accident.
“From what we’ve been informed by the company, the grain (handle) has already went lower. I don’t know if it’s because the volumes haven’t been there to transport,” said Gary Doherty, president of the Teamsters Canada Rail Conference maintenance of way employees division.
Grain movement often slows in the summer, but job losses are not due to that seasonality.
Martin Cej, CP’s assistant vice-president for public affairs and communications, cited lower car volumes and softening demand. “The economy is slow. The economic growth in North America right now is slow.
“Farmers aren’t shipping grain right now. There’s an expectation that the crops will be very large, but nobody is shipping anything right now,” he said.
However, for the 2015-16 crop-year to date, CP has moved 4.8 per cent more grain than last year, 10.4 per cent more than the three-year average and 16.7 per cent more than the five-year average, CP said in an emailed statement.
“Grain is CP’s largest line of business and CP continues to move record amounts of grain,” said the company, which also moves fertilizers, ethanol, food and industrial and forest products, among other cargo.
A recent earnings forecast for the second quarter of 2016 noted CP’s revenue is expected to decline about 12 per cent from the same quarter last year.
Lower-than-anticipated volumes in bulk commodities, such as grain and potash, wildfires in northern Alberta and a strengthening Canadian dollar contributed to the anticipated declines in revenue, CP said.
The expectation for a slower second quarter follows declines in CP’s first quarter, in which revenues were down four per cent to $1.59 billion.
Operating income in that quarter advanced seven per cent to $653 million.
A period of lower volumes would be ideal for maintenance workers to operate on the track, Doherty said.
“Our guys work around the trains; if there is an increase in volumes, then it is harder for them to get on the tracks and work,” he said.
Fewer maintenance workers patrolling the tracks and doing basic upkeep could also increase the potential for future derailments.
CP has increased spending on infrastructure improvements by 32 per cent from 2012 through 2015, installing new track, ties and ballast and doing other work to ensure a safer railroad, Cej said.
“With fewer trains going across the tracks, you need fewer workers to support that,” he said. “Once people start shipping more stuff we will be bringing them back.”
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.