Canada Rail Strike Hurts Chemicals Manufacturers

photo : life.com

With 70% of the production volume of the Canadian chemical industry being moved by rail, the current rail strike has the potential to severely hurt chemicals manufacturers.

The dispute, by the locomotive engineers, is not currently impacting freight, as positions are being covered by managers, but this isn't considered sustainable in the long-term, especially as weather conditions deteriorate.

As a response, the government introduced legislation this week to order 1,700 unionised employees back to work and send the dispute to binding arbitration. It claims the strike could have "serious repercussions" for a still-fragile economy.

Canadian Chemical Producers' Association president Richard Paton has commented that the the strike could threaten the economic recovery, with manufacturers potentially forced to scale down production and lay off workers.

As this blog has noted, the post-recession 'new normal' is chracterised by a very fragile recovery with sustained periods of lower volumes and reduced margins but punctuated by periods of high volatility caused by oil and currency markets.

So for the Canadian Chemical Industry, a significant problem with logistics would be a disaster. This issue, on top of all of the other challenges that the industry is facing, may be enought to push some manufacturers over the edge. Hopefully a solution will be found quickly.

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