UpdateCanada rail strike could trigger chem plant shutdowns

23 May 2012 17:12  [Source: ICIS news]

A rail yard(updates with comments from Canada's chemical industry trade group)

TORONTO (ICIS)--The rail strike at Canadian Pacific (CP) that began on Wednesday could force some Canada-based chemical producers to shut down their plants within days, a chemical industry trade group said.

CP has shut down its freight train operation across Canada after its engineers and conductors began work stoppages in a dispute over work rules and pension plans.

David Podruzny, vice president of business and economics at chemical producers Chemistry Industry Association of Canada (CIAC), told ICIS that many chemical producers have only limited storage capacities at their sites.

Some larger chemical companies that are shipping high volume products such as ethylene glycol (EG), styrene or polyethylene (PE), may only have room to store three or four days of storage capacity, Podruzny said.

“Once that’s full, once your rail sites are full, and nobody is taking that product away, you pretty much have to shut your operations down,” he said.

Plant shutdowns, and subsequent restarts, are not only costly but they also involve site security and safety risks, he said.

CIAC has written to Canada’s federal transport minister, asking that the government take action to ensure that rail – which for the chemical industry is an essential service – is not disrupted if CP and the union fail to reach a negotiated settlement.

CIAC is not picking sides in the labour dispute, Podruzny said.

“We are simply saying that rail is an operation that we cannot be without,” he said.

Canada’s chemical industry transports close to 75% of its annual shipments on the country’s railway system, with about 70% of CIAC member companies relying exclusively on rail shipments, he said.

Moving product by truck over long distance can cost anywhere from four to 17 times as much as shipping by rail, which makes truck shipments uncompetitive, he added.

Federal transport minister Lisa Raitt said that the government is concerned about the strike’s impact on the country’s economy.

“We are prepared to act in the interest of the national economy,” Raitt added.

Prime Minister Stephen Harper’s government has been quick to end recent strikes actions – including a strike at Air Canada – with back-to-work legislation.

CP and its competitor, Canadian National, are Canada’s largest rail carriers.

By: Stefan Baumgarten
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