(Adds oilseed industry impact, analyst quotes)
May 30 (Reuters) – Canadian oilseed processors weighed production cuts while miner Teck Resources said it was drawing up contingency plans after nearly a quarter of Canadian Pacific Railway Ltd workers staged a walk-out late on Tuesday, demanding better employment terms.
Canada is the world’s biggest grower of canola, also known as rapeseed. Crushers process it into vegetable oil for foods such as salad dressings and margarine, and into meal to feed cattle.
CP railroad workers, whose collective agreement expired late last year, are asking for more predictable schedules to combat crew fatigue, among other demands. The company employs 12,500 workers. Canadian Pacific is a leading shipper of grain, crude oil and frac sand in North America.
The strike comes at a time of tighter rail capacity in Canada, with CP and rival Canadian National Railway facing strong demand for shipments of grain, potash and other commodities.
The Canadian Oilseed Processors Association said plants that rely only on CP’s service are particularly vulnerable to the strike. Production curbs are likely within “a matter of days,” said Chris Vervaet, COPA executive director.
Four Canadian oilseed crushing plants rely entirely on Canadian Pacific, Vervaet said – two Bunge Ltd plants in Manitoba and one Bunge plant in Saskatchewan, and a Richardson International plant in Alberta.
Talks between Teamsters Canada and Canadian Pacific are ongoing and the labor union is working with federal mediators to reach a negotiated agreement, the Teamsters said on Tuesday, adding that commuter train services will not be affected.
Canadian Pacific did not respond to a request for comment on Wednesday.
Industry bodies representing the mining, aluminum and fertilizer industries said the strike would hurt their operations, and urged the government to step in.
“Large railroads are necessary building blocks of a country’s economy and it is worse right now because the other railroad operator, Canadian National, has had very tight capacity,” Loop Capital analyst Rick Paterson said.
Prime Minister Justin Trudeau said in an interview with Bloomberg on Tuesday that his government supports the right to strike and would not intervene, as his predecessor had, “early and often” in labor disputes. But he would not rule out back-to-work legislation.
“We believe in working things out at the bargaining table… and we’ll use all sorts of levers to enforce that.”
Labor Minister Patty Hajdu’s office also said that the Liberal government believes in “the collective bargaining process.”
CP reached an agreement with unions in April to postpone a strike, which would have been the third in six years at the railroad. (Additional reporting by Rishika Chatterjee in Bengaluru, Allison Lampert in Montreal, Anna Mehler Paperny in Toronto; writing by Nivedita Bhattacharjee; Editing by Shounak Dasgupta and Dan Grebler)
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