Bob Masterson is the president and CEO of the Chemistry Industry Association of Canada.
With the Canadian National Railway Co. strike closing out its first working week and without an end in sight, Canada’s 43rd Parliament faces its first major test even before its formal resumption on Dec. 5.
By now, many of Canada’s chemistry facilities will be entering shutdown mode – either because they have nowhere left to store products, or because they can no longer receive the materials necessary for their operations. While some companies and facilities may be able to transition staff to maintenance activities, others will have little choice but to furlough workers until the strike ends and service is restored. Ultimately, the effects won’t be felt just by “the economy” – they will be felt, very sharply, by businesses, workers and their families.
Rail service is absolutely essential to Canada’s $58-billion chemistry industry. More than 80 per cent of the industry’s shipments are by rail, and more specifically, nearly $40-million a day is shipped on CN’s network. Unfortunately, there is no Plan B to address the absence of CN’s service. Most of Canada’s chemistry facilities are captive to one of the nation’s two major freight railways – CN or Canadian Pacific Railway Ltd. Simply put, these facilities cannot just move shipments onto another rail system for the duration of the CN strike.
A small number of chemistry facilities will have access to service from both railways. However, it is no simple matter to simply move shipments from one carrier to another. Contracts need to be negotiated, rail workers need to be trained on safe handling of new products, and in either case, CP has said it is unable to take on cargo affected by the CN strike due to its own capacity constraints.
That leaves a third option – road freight. Very few of Canada’s chemistry shipments travel by road. The quantities involved and the need to traverse mountains in winter make road shipments inefficient and uneconomic. In some cases, road transit is also unsafe for certain chemical products. For example, chlorine, which is widely used to treat drinking water in major Canadian municipalities, is a highly dangerous substance that must be shipped only in specially designed, impact-resistant rail containers.
Only one real option is available: CN’s rail service must be restored as soon as possible. Either both parties must agree to enter binding arbitration, or the federal government must legislate a return to service and impose arbitration.
The current strike makes 2019 the third straight year with significant rail service disruptions in Canada. This affects Canada’s reputation as a reliable supplier to global chemical markets and other key industries such as minerals, forest products, agricultural products and others. Disruptions also have highly negative effects on Canada’s reputation among global investors. Foreign direct investment in Canada is already in decline and of concern to the Finance Minister and his advisers. Over the past six years, and based on historical patterns, Canada should have seen $30-billion in new chemistry investments. It has realized only a third of that, and the other two-thirds have gone elsewhere.
It’s unlikely that newly elected and re-elected MPs thought they would need to consider such an unpleasant task as an immediate priority so soon, and before the planned resumption of Parliament. Nevertheless, making timely decisions in difficult situations is exactly what citizens entrust to their elected officials. There is no Plan B for others to take. It’s time for Parliament to act.