CN Rail cuts jobs while weakening the economy is bad for goods volumes

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The Canadian National Railway Co. has confirmed that it is reducing jobs as freight volumes and revenues continue to fall into a weakening US economy.

The company stated in a statement that it "will adapt its resources to the demand", which means that it will put some workers on leave and "reduce the number of both managerial and union jobs".

About 1,600 workers will be laid off, the Globe and Mail reported Fridayand layoffs have already begun.

"CN would like to express gratitude to the employees who will leave the company and thank them for their service," reads the statement released on Friday afternoon.

This happens after last month the Teamsters Railway Conference in Canada declared that its 3000 members voted unanimously to participate in a strike, which could begin on November 19th.

The workers have no contract since July 23rd.

The CN employs around 24,000 people through a rail network that crosses Canada and parts of the United States.

In an interview with BNN Bloomberg last month, the president and CEO of the CN alluded to looming layoffs.

"At a time like this where the North American economy, at least everything but the consumer, is slowing down, this means that we need to reduce the capital program. We will do it in 2020. And we must also have less rolling stock and probably fewer employees, "said JJ Ruest.

The layoffs come when the company cut its profit prospects last quarter, citing a weaker economy and lower transport volumes.

Pedro Antunes, an economist at the Conference Board of Canada, said the issue is directly related to a broader economic decline.

"The problem is that if we do not have the goods to ship, we do not have the capacity to produce the goods to be shipped, this is where essentially the transport sector, CN, is seeing a drop in demand for its services," Disse Antunes .

In September, the Canadian National Railway Co.'s finance director stated that the company's volumes and revenues had been damaged by the global economy crisis, as well as by the US-China trade war.

The layoffs are proof of how much Canadian jobs count on the strength of international markets, according to James Moore, a former industry minister under Stephen Harper's conservative government.

"One in five Canadian jobs depends directly on trade. And we have the problem of a collapse of market access with the rest of the world, with the United States, "said Moore.

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