Business

Factory shutdowns, layoffs possible if rail blockades continue, manufacturers' group says

Rail blockades have brought Canada's manufacturing industry to a virtual standstill, with plant closures and temporary layoffs not far behind if it continues, the group that represents the industry says.

CN announces 450 temporary layoffs as disruptions cause $425M worth of goods to sit idle every day

Protestors stand on train tracks during a blockade of the rail line leading to Macmillan Yard in Toronto on Saturday. The protest is in solidarity with the Wet'suwet'en hereditary chiefs opposed to the LNG pipeline in northern British Columbia. (Chris Young/Canadian Press)

Rail blockades have brought Canada's manufacturing industry to a virtual standstill, and the industry will start seeing plant closures and temporary layoffs soon if it continues, the group that represents the industry says.

Rail and transport protests are hurting a key cog of Canada's economy at a time when it can hardly afford the hit, members of the Canadian Manufacturers and Exporters (CME) said at a news conference in Toronto on Tuesday.

In British Columbia some Indigenous protestors and sympathizers have shut down a key rail line in Northern B.C. because they oppose the construction of the Coastal GasLink pipeline on the grounds that it would run through the hereditary land of the Wet'suwet'en people.

Another group has blockaded another key rail line near Belleville, Ont., in solidarity with the B.C. protest.

Those actions have broken the supply chains for manufacturers, who rely on rail service to bring in parts and components but also to ship out finished products to customers.

The group says that every day the rail stoppages continue, $425 million worth of manufactured goods are sitting idle.

"We're at the point now where we are fearful we are going to start seeing shutdowns or layoffs," CME President Dennis Darby said.

In a statement Tuesday evening, CN Rail confirmed it has sent temporary layoff notices to about 450 Eastern Canadian operational staff.

"This situation is regrettable for its impact on the economy and on our railroaders as these protests are unrelated to CN's activities, and beyond our control," CN spokesman Alexandre Boulé said in the statement.

Economy held 'hostage'

Darby said many of his group's members are telling him they can survive a disruption like this for about two weeks, but they are now at the point where they no longer can absorb it, and the economy is being held "hostage."

Ian Anderson, president of manufacturer CKF Inc., was in attendance and he said his company has done all it can to find workarounds to the disruption, but truck transportation can only do so much.

"We're in a bit of chaos now in our supply chain," he said. "We are trying to cope, hoping it would end as soon as possible.

"We didn't see this coming," he added. "We need certainty to do business."

The protests are happening at a time when Canada's manufacturing industry was hard hit to begin with.

New numbers from Statistics Canada released Tuesday show Canadian manufacturing sales fell for four months in a row to close out 2019, as the industry's sales slipped to $56.4 billion in December. That was down 0.7 per cent from November's level, which was itself down a full percentage point from the previous month's level. Economists were expecting the industry to have grown by about 0.7 per cent — not to have shrunk by that much.

A weeklong CN Rail strike last fall was a factor in the December numbers, but there were other factors at play.

The motor vehicle assembly and aerospace industries were especially hard hit during the month, Statistics Canada noted. While the impact of the November rail strike may have been only temporary, it exacerbated weaknesses that were already there, RBC economist Nathan Janzen said.

 "Underlying trends in the Canadian manufacturing sector were on the soft side at the end of 2019," he said, "[and] the outlook is being clouded once again by … another round of disruptions to rail transportation via the ongoing blockade of main rail lines."

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