(Reuters circulated the following article by Amran Abocar on February 22.)
TORONTO — Canadian automakers and parts suppliers were hatching alternative plans to move goods on Friday as a strike hit the country’s largest railway, but the impact is expected to be modest, at least in the short run.
Nearly one-quarter of Canadian National Railway’s 23,000 employees went on strike early Friday after contract talks over wages failed.
“At this point, I’d have to stay that we’ve had minimal impact on us. I can’t say that there’s none because obviously nothing is normal right now,” said Stewart Low, a spokesman for General Motors of Canada in Oshawa.
Low said the country’s biggest automaker was in “pretty decent shape” on shipment schedules, but was closely watching the strike to gauge whether delays may heighten.
“We’ll just have to play that out on a day-by-day basis, we can’t make any predictions,” he said. “We’ll have to just wait and see how … much equipment they keep running.”
DaimlerChrysler Canada said the strike is not having a significant impact.
The automaker does not use CN to ship finished vehicles from its plants in Windsor and Brampton, Ontario.
However, it will affect parts shipments from supplier Magna International’s Milton, Ontario, facility to Chrysler’s Dodge Durango manufacturing site in Newark, Delaware, a DaimlerChrysler spokesman said.
“We’re looking at contingencies, though we don’t anticipate a disruption in business,” Dave Elshoff said from Auburn Hills, Michigan. “We can fill, if necessary, any voids with over the road trucks.”
Ford Motor Co. of Canada said its facilities were operating as scheduled and the company was looking at ways it can use alternative transportation, a spokeswoman said.
Autoparts maker Linamar Corp. said only a tiny amount of its freight is carried by train.
“However, if our customers plants are impacted, if they’re doing more in the way of supply by rail that could therefore cause a slowdown at their place within the next five to ten days, then I may see a longer-reaching impact,” Linamar chief executive Linda Hasenfratz said from Guelph.
CN said customers can expect minor delays as it enacts a plan that uses management personnel to keep freight moving.
The company’s U.S. workers and operations are not affected by the strike.
Analysts said the auto industry, which takes pride in just-in-time delivery, was unlikely to feel much pain from the strike unless it extends to two weeks or more.
Analyst David Newman at National Bank Financial said that given the importance of the auto sector to the economy — and with the country’s second biggest railway, Canadian Pacific Railway experiencing its own problems due to poor weather conditions — the strike is unlikely to be long.
“The government views railroads as being an essential service … and I can’t imagine them letting this situation proceed too long without legislating them back to work,” he said.
The auto industry, which accounts for about 10 percent of each of CN and CP’s freight revenue, is also Canada’s biggest manufacturing industry and exporter.
The strike help some in Ontario’s trucking industry as auto sector players switch shipments to the roads.
GM Canada, which moves 4,000 vehicles a day, already ships 20 percent of its goods by truck. The remaining 80 percent is divided between CN and CP.
UBS analyst Fadi Chamoun said modest delays would be the order of the day but expects few major worries for automakers.
“There is obviously prioritizing happening to make sure some of these clients, who work on a just-in-time basis are serviced properly,” he said.
($1=$1.34 Canadian)