Canadian Railroads > Major layoffs at CN

This is from the daily Globe & Mail afternoon newsletter ....

CN Rail to lay off 1,600 employees amid weakening economy, trade tensions

 Canadian National Railway Co. is laying off about 1,600 people as freight volumes decline amid trade tensions and a weakening North American economy, Eric Atkins reports.

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 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 workforce 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.”

 

Will MacKenzie
Dundas, ON

I've noticed over the past weeks VIA's Camadian has been mostly on time....albeit it  with another lengthened schedule. Could this play a factor?  I wasn't aware the "North American"economy was retracting. In the States, we still have record low unemployment and a record high stock market passing the 28,000 mark yesterday in spite of continued trade tensions with China and an impeachment hearing. The long strike at GM also provided head winds as well. 

Main Street and Wall Street are two different things. Wall Street also likes layoffs, cost cuts, and dumb things like PSR. Manufacturing has definitely slowed, various foreign economies have slowed, our unemployment metric under-counts by disregarding anyone out of work for a long time, and the under-employment rate is at record highs. More and more white collar, especially IT, people work 6 month W2 jobs with no benes because companies can't think long term anymore or any better than short-sighted Wall Street analysts and floor traders. Brick and Mortar retailers are going belly up, not just because of Amazon, but because they are simply incompetent and do not sell what people want or only wish to cater to Millenials (sound familiar- Amtrak ?) while Baby Boomers have 75% of the purchasing power. 



Edited 4 time(s). Last edit at 11/16/19 13:30 by joemvcnj.

       That is correct, unemployed in the United States are only counted for the 6 months after they get laid off, then they disappear off the list. Has always been that way and it makes your numbers look  better if you are in charge. Most people never 'see' the unemployed because they don't want to. It only becomes quite evident during times like the depression OR ifyour community is hit hard all around you. Mainly, unemployment is only important in the U.S. if it was YOUR job that was eliminated.

Denver needs operators for the light rail system.

Home every night, no worry of a 2 am call for a freight.

The Globe and Mail has reported that Canadian economic growth may not reach 2% in 2019. Compared to over 3% in 2017.

You can see evidence of that with companies ending third shift work, limiting overtime, slowing new purchases of capital equipment, etc.

Posted from Android

The huge, multi year New Jersey bus order of MCI's are for sure making Winnipeg, Manitoba and Pembina, ND very happy. 

Thankfully the labor participation rate in the U.S. is the highest it has been in many years, as many people have returned to the labor force.  People claiming food stamps is down 5M.  Likewise, the unemployment rate in Ohio, where I live, whose economy is okay, is 4.2%.  So, Columbus, OH is a hot economy, while Cleveland is okay.  Wages still lag behind, so even if you earn $15 per hour in Ohio, you struggle to exist.  Housing here is cheap.  
My friend who manages a Fed Ex facility pays $17 per hour to start.  He cannot keep employees.  They might work one day, and then never return.  
A single mom I know working for $17 per hour just bought her first house in an Ohio small town for $50,000.  It is two bedroom, kitchen, living-dining room and one bath.   Obviously a modest home of 900 sq. ft. but she is SO happy.  

MEKoch Wrote:
-------------------------------------------------------
> My friend who manages a Fed Ex facility pays $17
> per hour to start.  He cannot keep employees. 
> They might work one day, and then never return.


If you had ever worked for Fed Ex you would know why they don't come back.
Very intense job with heavy, heavy, heavy pressure for more productivity.
 

PHall Wrote:

> If you had ever worked for Fed Ex you would know
> why they don't come back.
> Very intense job with heavy, heavy, heavy pressure
> for more productivity.
>  

And when you get hurt, it doesn't take long for the company to screw you over on your benefits ....
Happened to a friend ...

 

Will MacKenzie
Dundas, ON

Do FedEx workers have union contracts?

Posted from Android

joemvcnj Wrote:
-----------------------------------------------------------------------Brick and Mortar retailers are
> going belly up, not just because of Amazon, but
> because they are simply incompetent and do not
> sell what people want or only wish to cater to
> Millenials (sound familiar- Amtrak ?) while Baby
> Boomers have 75% of the purchasing power. 

Perhaps....

I still think people just don't want to go out to the stores like they used to (for various reasons). They would rather do it from the comfort of their home.

Look at the food industry...

You can have your groceries picked and/or delivered to your house. I'm not a fan of this idea, but I know for a fact that this trend is going to continue to grow.

Posted from Android



Edited 2 time(s). Last edit at 11/16/19 18:07 by ns1000.

Oh geez, I was under the impression from reading about this stuff on here, and other forms of media, that CN's great business boom was because of PSR!!!  Isn't it the darling child of EHH's Precision Scheduled Railroading which has brought such grand prosperity to the CN over the past few years!?!?  One would think that PSR would be saving CN from such a dramatic down turn in traffic and customers even with a slowing economy...

OK, yes, I am being very sarcastic.  As I thought, CN's traffic boom the past couple of years had to do more (much more) with a booming economy and oil fields than PSR.  My bets are if, or when (my prediction for what it's worth), the North American economies slow a great deal, or a recession, all these PSR railroads are going to find what's left of their traffic decrease dramatically.  I have no doubt that their customers are chomping-at-the-bit for an alternative to railroad transportation.

Ooops, had to change Precision Execution to Precision Scheduled Railroading (PSR).  Precision Execution was EHH's goofy idea when he was incharge of operations at Burlington Northern in the early 90's.



Edited 1 time(s). Last edit at 11/17/19 11:26 by spwolfmtn.

Railroad customers don't really care how their freight is moved; rail, truck, air, water, or wagon.  They are service and price sensitive.  If the trucker can do it for less than rail, he will get the business.  Of course, trucking will almost always be faster since there is no accumulation time lag; like taking a boxcar to the yard to be switched inot a train.  Rails can have the business if they are consistent in delivery times.  The present slowdown in the economy and therefore rail business can be blamed on slow import trade, less grain being exported, and vigorous truck competition.

Norman Orfall
Helendale, CA
TIOGA PASS, a private railcar

Watch our clogged interstates with trucks sometime..??!! I wonder about the faster part...

Posted from Android

Typically in a true recession, the trucking industry gets hammered worse than the railroads.  While it is true that trucking is more time efficient, it is also structurally less fuel efficient and much less labor efficient.  In addition, trucking tends to carry a lot of the freight that is most recession-sensitive:  non-essential consumer goods (yeah, I know, people think that cell phones, big screen TV's, etc. are "essential", but in a real recession, they're not). By contrast, rail carries a lot of base commodities--farm products, fuel, etc.--that are essential no matter what the condition of the economy.  

Now, some economic facts:  We ARE headed for recession--we are always headed for a recession, just like we are always headed for another boom.  That's what economies do.  The "voodoo" of economics is predicting when, how long, and how significant those upturns and downturns are going to be.  That usually isn't definitively known until after the fact.  Economics is a very imprecise science.  Trained in economics, I always remember this old saying, "If all the economists in the world were laid end-to-end, they would never reach a conclusion."

Now, as to layoffs at CN, there could be a number of things in play: 
1.  PSR, for all its ills, has been touted as a system to reduce train crew requirements.

2.  The northern Plains of the US, and likely a goodly chunk of the Canadian Grain Belt (I haven't seen Canadian data as yet), has just suffered one of the worst grain harvests in decades.  That means lower grain traffic in CN territory.

3.  There is no question that the auto industry is having issues--the biggest one is that their product--new vehicles--simply are priced much higher than much of their customer base can afford.  Autos and auto components are another significant CN traffic source.  

4.  Even without PSR, train lengths were/are getting longer.  50 years ago, a 100-car train was unusual,  Today, 100-car trains are normal, and there are many over 150 cars out there.  That's happening everywhere in North American railroads.  CN, among all the North American Class I's, has a relatively small amount of high-ruling-grade mileage in its system, making it especially conducive to running longer trains.

5.  Coal traffic is currently down in the dumps, and likely will be for quite awhile, if not permanently.

6.  Canadian crude oil traffic to the US is likely declining, in part due to increased US oil production out of the Bakken and the Permian Basin.

All of that said, I still think that the CN is one of the more "solid" North American Class 1 Railroads.  One of its benefits, in my opinion, is that is a railroad with the least dependence on traffic to or from that increasingly dour dust/ash/trash Belt that the US West Coast is becoming.  CN, by contrast, connects resource-rich Canada (and a goodly chunk of the most productive part of the US Farm Belt) with the most booming part of the US industrial belt--the Gulf Coast that rubs right up against booming  Texas.

Lackawanna484 Wrote:
-------------------------------------------------------
> The Globe and Mail has reported that Canadian
> economic growth may not reach 2% in 2019. Compared
> to over 3% in 2017.
>
> You can see evidence of that with companies ending
> third shift work, limiting overtime, slowing new
> purchases of capital equipment, etc.
>


I heard a rosy business report on the radio a couple of days ago. A positive element cited was that consumer debt is increasing, taken as a sign of consumer confidence. Only an "analyst" can come up with that. A little more work than open a can of initial impressions and pour one out would show that folks are borrowing more because they don't have money and see no hope of getting it.

Sitting back on the impression of consumer confidence, industry proceeds to take away even more money from consumers and think everything is just fine. The emperor will be feeling cold some time and need even more new clothes.

TAW

If you keep people buried in debt, they stay "captive to the system".

Great way to live...(opinion/sarcasm).

Posted from Android

WW Wrote:
-------------------------------------------------------
> Typically in a true recession, the trucking
> industry gets hammered worse than the railroads. 
> While it is true that trucking is more time
> efficient, it is also structurally less fuel
> efficient and much less labor efficient.  In
> addition, trucking tends to carry a lot of the
> freight that is most recession-sensitive: 
> non-essential consumer goods (yeah, I know, people
> think that cell phones, big screen TV's, etc. are
> "essential", but in a real recession, they're
> not). By contrast, rail carries a lot of base
> commodities--farm products, fuel, etc.--that are
> essential no matter what the condition of the
> economy.  
>
> Now, some economic facts:  We ARE headed for
> recession--we are always headed for a recession,
> just like we are always headed for another boom. 
> That's what economies do.  The "voodoo" of
> economics is predicting when, how long, and how
> significant those upturns and downturns are going
> to be.  That usually isn't definitively known
> until after the fact.  Economics is a very
> imprecise science.  Trained in economics, I
> always remember this old saying, "If all the
> economists in the world were laid end-to-end, they
> would never reach a conclusion."
>
> Now, as to layoffs at CN, there could be a number
> of things in play: 
> 1.  PSR, for all its ills, has been touted as a
> system to reduce train crew requirements.
>
> 2.  The northern Plains of the US, and likely a
> goodly chunk of the Canadian Grain Belt (I haven't
> seen Canadian data as yet), has just suffered one
> of the worst grain harvests in decades.  That
> means lower grain traffic in CN territory.
>
> 3.  There is no question that the auto industry
> is having issues--the biggest one is that their
> product--new vehicles--simply are priced much
> higher than much of their customer base can
> afford.  Autos and auto components are another
> significant CN traffic source.  
>
> 4.  Even without PSR, train lengths were/are
> getting longer.  50 years ago, a 100-car train
> was unusual,  Today, 100-car trains are normal,
> and there are many over 150 cars out there. 
> That's happening everywhere in North American
> railroads.  CN, among all the North American
> Class I's, has a relatively small amount of
> high-ruling-grade mileage in its system, making it
> especially conducive to running longer trains.
>
> 5.  Coal traffic is currently down in the dumps,
> and likely will be for quite awhile, if not
> permanently.
>
> 6.  Canadian crude oil traffic to the US is
> likely declining, in part due to increased US oil
> production out of the Bakken and the Permian
> Basin.
>
> All of that said, I still think that the CN is one
> of the more "solid" North American Class 1
> Railroads.  One of its benefits, in my opinion,
> is that is a railroad with the least dependence on
> traffic to or from that increasingly dour
> dust/ash/trash Belt that the US West Coast is
> becoming.  CN, by contrast, connects
> resource-rich Canada (and a goodly chunk of the
> most productive part of the US Farm Belt) with the
> most booming part of the US industrial belt--the
> Gulf Coast that rubs right up against booming 
> Texas.

I agree with what you say above, however, my point is that PSR (and it's related operating philosophies) are doing exactly the opposite of what railroads need right now, driving customers away.  PSR has increased revenues for railroads (ie higher prices and penalties for customers), and cut costs (much poor service to customers), so under a traffic boom (which CN has enjoyed largely through their prime service territories (as you have noted), this has made the PSR railroads' financials look great.  But what happens when the economy slows, or goes into recession?  Many of the railroads' remaining customers are going to "jump ship" quickly and go to more reliable transportation services, which will then most likely be cheaper as the truck operators look for business.  PSR will only make this a much bigger issue for railroads; and since they have already cut their costs to the bone, the railroads will have nothing left to cut - then watch their financial reports!

Those massively long trains you talk about largely equate to poor service (I see this daily).  For the most part, the railroads seem to be totally dis-interested in getting aggressive to obtain business, since this will likely raise the "all mighty" Operating Ratio some.  The business that is out there now, and in the future, will require, at least, decent service; but more importantly, it will require consistent service reliability.  This is something that simply does not happen at Class One railroads, and PSR has made this situation much worse (regardless of all the hype they try to say about it).

CN is very lucky.  It was born as a private corporation with a "silver spoon" in hand.  Because it was a Canadian Crown Corporation, it had an infrastructure that was top notch and in prime condition.  That, and what was described above about CN's prime operating territories, this has given CN a rich system - maybe its management doesn't think it needs to try to be competitive???  However, I've got to hand it to EHH and prior CN management for one thing, they had great foresight in obtaining the Wisconsin Central and Illinois Central railroads - those have been big enhancements to an already prime system.  Hard to go wrong with all of this, but yet (using the rich kid as an analogy), those rich kids often seem to be their own self destruction.

I do agree that PSR is a gambit to increase short-term profits at the expense of long-term survival.  I have repeated many times about the bowl of lemons that the socialized, taxpayer-subsidized highway system has handed the railroad industry.  Those disadvantages are real and often insurmountable, save a massive political sea change.  That said, in that environment, the LAST thing that railroads should be doing is engaging in any practice that chases away any existing profitable business.  It's sort of like the old economic example of the buggy-whip manufacturers.  The automobile pretty much doomed most of the buggy whip manufacturers, but, to this day, there are still a few companies that profitably make buggy whips for the small remaining niche buggy whip market.  The last thing that those few buggy whip manufacturers want to do is engage in any business practice that chases away any of their few customers.