The 140 job losses at PotashCorp's Cory mine announced today are bad news for the company and Saskatchewan's economy — and things will likely get much worse, says a University of Saskatchewan business professor.
"It hasn't bottomed out yet," said Brooke Dobni, a professor in the U of S Edwards School of Business. "It's belt-tightening time."
PotashCorp announced layoffs to 100 permanent workers and 40 temporary workers Wednesday. Most will lose their job in February; 350 workers will continue to work at the mine. There will be temporary layoffs at other mines in the new year as the company decreases production.
Good old days done
Dobni said the potash industry slump could continue for several years. Russian and Eastern European competitors continue to flood the market. PotashCorp doesn't have the market clout alone to influence world prices. Dobni said those hoping for a return to prices over $800 per tonne anytime soon are dreaming.
"The good old days are gone," he said.
During the boom years of the past decade, the provincial government explored the idea of setting aside a portion of the record resource revenues. That money could be accessed when world prices fell on potash, oil and other commodities, as is currently the case. Norway and other countries established these "sovereign wealth funds" and can draw on tens of billions of dollars during hard times.
Dobni said Saskatchewan and Alberta failed to put any money away due to a lack of public and political will. They are now paying the price.
"You spend that money once and now it's gone. We've got to change the way we think about our finances," Dobni said.
Because of the continued resource price slump, Dobni anticipated the billion-dollar provincial deficit projections to grow even higher by fiscal year-end.
Layoffs necessary, says PotashCorp
PotashCorp spokesman Randy Burton said it's a sad day at the company. He said there are plans in place to help affected workers and their families.
"Prices remain a challenge, so it's incumbent on us to maintain the strength of the company, not just for our employees but for all our stakeholders in the community and the provincial economy as well," he said.
- Potash Corp., Agrium agree to merger that would create $36B agriculture giant
- No quick end to potash doldrums in Saskatchewan as capacity ramps up
PotashCorp will now be working on providing workers with severance packages, assistance, transition programs and information on existing openings at other sites.
The company said the layoffs were necessary after the mine cut its production by 600,000 tonnes. While the Cory mine used to produce red and white potash, it will now produce white potash only.
The Cory mine is located 20 kilometres west of Saskatoon.