Labrador West bracing for economic fallout from IOC strike

Paycheques for roughly 1,300 workers of the IOC mine in Labrador City will stop rolling in, and that has businesses in the region tightening their belts.

'This is just a part of being a one-horse town,' says former Wabush mayor Colin Vardy

Former Wabush mayor Colin Vardy says he took on a janitorial contract in anticipation of the strike, and it's a good time to focus on projects he puts off when things are busy. (Jacob Barker/CBC)

Just as Labrador West is recovering from a slump brought on by low iron ore prices, businesses in the area are facing another potential downturn caused by a work stoppage at one of the largest employers in the province.

"It's kind of just 'bunker down, watch every penny and just hope the money doesn't run out before the clock stops ticking,'" former Wabush mayor Colin Vardy told CBC.

Vardy now focuses on his business, Herb's Industrial, which mainly deals with IOC contractors. He's already seeing business drop off. (Jacob Barker/CBC)

The strike is now in its second week and there's no resolution in sight. Despite the strike's potential financial toll, workers voted over 90 per cent in favour of it over changes the company wanted to make to their contract. Now the region is in a position where 1,300 workers may soon see their salaries disappear, replaced by $350 a week in strike pay. 

'Unfortunately, there are businesses in town that have put all their eggs in one basket and that's IOC."- Colin Vardy

Since Vardy left politics, he's devoted his time to building up his business, which benefits from sales to contractors that deal with IOC. He says he's already seen a drop in business.

"Our reserves are fairly small so the ability for us to weather a storm is much less than a big company but we'll be OK. We'll be around afterwards."

'One horse town'

"This is just a part of being a one-horse town when people are negotiating contracts," Vardy said. 

"I think the hardest part this time around is we were just recovering from the crash and there's not a lot of financial reserves around."

Vardy says the economic impact will really start to kick in in the next two to three weeks if the strike continues. He has branched out, though; in anticipation of the strike he took on a janitorial contract with the government.

IOC is the largest employer in the province outside of the government itself. About 1,300 workers will soon be without their regular paycheques. (Jacob Barker/CBC)

"We're in a lucky position. That will help float us through the next little while," Vardy said.

"Unfortunately, there are businesses in town that have put all their eggs in one basket and that's IOC so it could be much harder for them than it is for us." 

Wait and see

Labrador West is used to the ups and downs of a cyclical economy, said Chamber of Commerce president Toby Leon, but there's no denying the work stoppage is having an effect.

"At the end of the day it's still lost income, and things are slow in town," Leon said.

President of the Labrador West Chamber of commerce Toby Leon says the community is used to ups and downs and can already feel the effects of the strike. (Jacob Barker/CBC)
 

"Businesses know how to contract and expand fairly quickly but you plan to use your staff as best you can, you get some housekeeping done in the short-term … and you start to plan about what happens if if goes on any longer."

Hope for the best

Labrador CIty Mayor Wayne Button, who runs a chiropractic clinic in town, says there will be a big effect on his business.

"I expect a 40 to 50 per cent drop off rate in my business," Button said. "There's already been a few patients that can't afford to come here and their insurance is actually cut off right now so I understand that."

Labraody City Mayor Wayne Button runs a chiropractic clinic. He predicts he will lose 40 to 50 per cent of his clients during the strike. (Jacob Barker/CBC)

Button, who describes himself as an optimist, is holding out hope the two sides can come to an understanding.

"There's only one or two issues that they're really far apart on so if they can get back to the table and work that out, this can be resolved pretty quickly," Button said. "Let's hope that's what happens."

About the Author

Jacob Barker

Videojournalist

Jacob Barker reports on Labrador for CBC News from Happy Valley-Goose Bay.