RISK: CP Railway to cut 1,000 jobs as profits soar

Falling commodity prices are leading to lower shipment volumes

Canadian Pacific Railway, which posted record profits and revenue last year, plans to cut almost 1,000 more jobs this year as falling commodity prices lead to lower shipment volumes.

The Calgary-based company says most of the cuts to unionized and management positions will result from attrition and kick in by mid-year.

Since 2012, the railway has cut 6,000 to 7,000 jobs in a move to boost its bottom line. In the process, it has dramatically improved its operating ratio–operating expenses as a percentage of revenue–to below 60 percent.

The railway had $6.71 billion in revenue and adjusted earnings of $1.62 billion in 2015–up from $6.6 billion and $1.48 billion respectively in 2014–although both fell below analyst expectations. Meanwhile, the company forecasts a double-digit increase in adjusted profits in 2016.

The company said it had reduced its workforce by 12 per cent, eliminating nearly 1,800 jobs last year, as shipments dropped three percent. It says attrition accounts for some 2,000 people leaving the company each year.

In addition to labour savings, the railway is cutting capital spending by $400 million.

The plan to further cut jobs takes into account changes to labour agreements in the United States that alter scheduling rules, allowing for fewer workers. Fewer workers are also needed as the railway operates longer, faster but fewer trains.

However, as market conditions improve over the longer term, CP would look to bring back employees to meet demand, said spokesman Martin Cej, who declined to say how many of the job losses will be in Canada versus the U.S.

Doug Finnson, president of the Canadian Rail Conference, which represents 3,400 CP train conductors and engineers, said he’s not aware of any planned jobs cuts beyond the 115 locomotive positions the union is fighting in arbitration.

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.