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Canadian National Railway locomotives are seen in Montreal on February 23, 2015.The company plans to lay off about 1,600 employees.

Ryan Remiorz/The Canadian Press

Canadian National Railway Co. is laying off about 1,600 people as freight volumes decline amid trade tensions and a weakening North American economy, a source has told The Globe and Mail.

The layoffs affect managers, office employees and unionized rail workers in a range of positions across CN’s network in Canada and the United States. The number of job losses could rise if demand from rail customers continues to decline, said a person familiar with the matter whose identity The Globe and Mail is keeping confidential because they were not authorized to speak publicly.

“The company is adjusting its resources to demand,” said Alexandre Boulé, a CN spokesman. “This includes the difficult decision of adjusting its work force to demand levels by placing some employees on furlough and reducing both management and union job numbers due to a weakening of many sectors of the economy. These adjustments have already started to take place across the network.” Mr. Boulé declined to say how many jobs are affected.

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Canada’s largest railway, which employs 24,000 people in Canada and the United States, in October cut its profit outlook for 2019, blaming softer demand for much of the freight it hauls. Industrial activity in the United States has slowed, and exports have weakened as the tariff war started by U.S. President Donald Trump has upended supply chains and driven up prices. Consumer spending in Canada and the United States has also showed weakness.

CN executives said in an October conference call with stock analysts that an unspecified number of job cuts would affect a range of CN departments, from mechanical shops to information technology.

Jean-Jacques Ruest, CN’s chief executive officer, said CN is responding to the deteriorating market by parking or scrapping 5,000 rail cars, or 8 per cent of its fleet, returning leased locomotives and vacating 75,000 square feet of leased office space in Montreal.

“The overall strategy is quite simple: The need to adjust the resource for demand,” Mr. Ruest said.​

Combined rail traffic at CN and Canadian Pacific Railway Ltd. rose by 0.3 per cent in the first 45 weeks of the year, including both companies’ U.S. operations, according to the American Association of Railroads. This compares with a 4.4-per-cent decline in carloads hauled by the big U.S. carriers on their domestic networks.

In Canada, six of 11 freight types have posted declines in volumes, led by a 12-per-cent drop on nonmetallic minerals and a 7-per-cent drop in forest products. Petroleum carloads are up by 19 per cent, the AAR said. ​

CN is in contract negotiations with Teamsters Canada Rail Conference, which represents 3,000 train operators. With 72 hours’ notice, the union could be in a strike position on Nov. 19.

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