Nfld. & Labrador

Citing oil struggles, Woodward lays off ship workers to sail internationally

The shipping company will sail for the winter under a Marshall Islands flag, and has laid off some workers in what Woodward says is a bid to keep the business afloat.

Tankers will sail under Marshall Islands flags until May to save money, says company

Woodward's Coastal Shipping is switching the flags on its tankers from Canadian ones to those of the Marshall Islands, a move that lets the company hire foreign workers. (Transportation Safety Board)

A Labrador-based shipping company says in order to stay afloat after a rocky year, it has little choice but to lay off some of its Canadian workers and operate in international markets for the next few months, a move raising the ire of the sailors' union.

Woodward's Coastal Shipping Limited will be switching flags on its fleet of tankers from Canadian ones to those of the Marshall Islands at the end of the month, a move known in the industry as "reflagging."

"We hear once in a while that a company will do this, and we absolutely disagree with this behaviour," said Patrice Caron, the executive vice-president of the Seafarers International Union of Canada, which represents workers aboard Woodward's ships.

Caron said the move allows the company to swap out its Canadian workers for international ones, who are paid less.

While Woodward has changed flags in previous years, including in 2019, Caron said "it's shocking and insulting," to union members who will now be without work for months, despite their qualifications.

The union and the company don't agree on how many workers will be affected. Caron said about 60 people will be laid off, while Woodward pegged that number at closer to 30, with half the crew staying on to provide "continuity with the management of the ships," said Woodward president and CEO Peter Woodward.

The CEO said some people who have been offered international work may choose a layoff instead, leaving the total number up in the air. But what isn't up for dispute is the reason for the switch: a money-saver in the midst of what he called a "terrible" year.

"We're basically managing our business to try and keep it going," Woodward told CBC Radio's Labrador Morning.

The Tuvaq tanker, tied up in Nain, is one ship in the Woodward fleet. (Submitted by Valeri Pilgrim)

Oil and gas pains

The Coastal Shipping fleet delivers fuel to areas including Labrador's northern coast and Nunavut. But the struggles in the oil and gas sector have rippled down to delivery, and Woodward said he's seeing work dry up, with competitors tying up their fleets at rates he hasn't seen in more than a decade.

"It's been a tough year for the oil business. Demand is down and major oil companies are going through tough times, and it's reflecting on the people that service the oil industry as well," he said.

The union agreed 2020 has been challenging.

"We do have shipping companies throughout Canada that are feeling these shortages, especially in the oil and gas trade. Up until we regain normal life, tanker trade is weaker," said Caron.

If the company wanted to keep Canadians, they could do it.- Patrice Caron

But Woodward said tying up the fleet for the winter is akin to leaving a car in a snowbank and expecting it to run again in the spring. 

"We're really anxious just to keep our ships going for the winter months," he said.

The flag swapping gambit might not even work out, he added.

"We still haven't secured any work, so there's still a possibility that we may have to tie the ships up if we don't find work. And that'll be terrible because that will end up with significantly more layoffs than we hoped," Woodward said.

The switch is expected toward the end of December and last until May, he said.

Less money, for everyone

Going international means competing at international rates, said Woodward, which pay about half as much as similar Canadian work. That means reducing costs, he said, such as payroll.

While foreign crews make less than their Canadian counterparts, Caron said organizations such as the International Labour Organization and the International Transport Federation are addressing workers' living conditions and wages. On the latter, Caron said the gap is closing.

"We're not there yet, but it's getting closer. So if the company wanted to keep Canadians, they could do it, and I don't think it would be that much more expensive for them," he said.

To Woodward, the bottom line matters.

"I have a lot of empathy for our crew. We have a lot of great crew members. We're just trying to run the business so that it's sustainable and that we'll be around for next year," he said.

But as Canadian owned-ships continue to reflag, Caron said, the issue is a perennial one.

"We're complaining each time, but it's very difficult to make them understand when there's dollar signs at the end. It's very difficult to get a company, a corporation that size to change their mind."

To keep it from reoccurring, he would like to see the federal government provide incentives for keeping Canadian crews employed, such as lowering fees for working internationally.

Read more from CBC Newfoundland and Labrador

With files from Labrador Morning