CP cuts raise worry over potential slowdown

CNS Canada –– Canadian Pacific Railway’s decision to cut 1,000 jobs has caught the attention of two Prairie farm leaders.

Norm Hall, president of Agricultural Producers Association of Saskatchewan, worries the move is short-sighted and may catch up with the railway in months and years to come, when commodity prices catch fire again.

“You dump those employees now but when things heat up in 12, 18 months, either in the oilpatch or potash, it’s going to take another 18 to 24 months to find enough employees to replace these guys,” he said.

His concerns are echoed by Saskatchewan’s Kevin Hursh, who sits on the board of the Inland Terminal Association of Canada. CP’s cuts came up at a meeting Jan. 25, he said.

“There is a worry that when times are slow it’s pretty easy to cut capacity and cut jobs. It’s much more difficult to gear them up when demand returns,” he said.

The current winter has been a relatively easy one for the railways, but that could always change, he added.

“A whole lot of factors can come to play and the railways have not shown much eagerness to have surge capacity at their disposal.”

Both Hall and Hursh said the railways are doing a good job presently and they hope that continues.

However, Hall said, grain still tends to be a low priority when it comes time to actually move the product.

Another aspect worth considering is CP’s recent pursuit of rival company Norfolk Southern, the No. 2 railway in the eastern U.S.

“Those arrangements usually work a lot better if you can stay on the same railway and not have to pass things off from one railway company to another railway company,” said Hursh.

For its part CP said in an email that it adjusts staffing levels to the demands of the ever-changing market.

Furthermore, the company said, it would look to bring back employees to meet any future demand.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS at @CNSCanada on Twitter.