Posthaste: This CN Rail strike is bad, but it’s just a symptom of our economy’s much bigger problem
Three days into the CN Rail strike and the economy is already feeling the hit. The strike that sent more than 3,000 rail workers off the job early Tuesday has cut production at Canadian factories and widened the discount on Canadian heavy oil.
It couldn’t come at a worse time for agriculture, says Dr. Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University. Over one and a half million acres of canola are still under snow, as farmers struggle with an early winter, and now access to markets has been cut off. For many farmers CN is their only option. Charlebois says Canadian contracts to export 21 million tonnes of wheat and about nine million of canola seed this year are at risk.
Business groups are urging Ottawa to intervene in the dispute, but the back-to-work legislation that has been a quick solution in the past looks less certain with a minority government and Parliament out until Dec. 5.
“Beyond the politics of it all lies Canada’s reputation in logistics. It’s just awful. Canada is known to be a land of few options, transportation inefficiencies and bottlenecks,” said Charlebois. Trading partners have already been turned off by Canada’s logistical problems and this strike will give them one more excuse to go elsewhere.
Charlebois says logistics are the backbone of our economy and Canada should have invested triple what it has since 1980. “Our government may not be keen to force an end to this trade dispute, but it certainly needs to think about how it can do a better job in providing our agrifood sector better access to market.”
Here’s what you need to know this morning:
OECD releases Economic Outlook
Ontario Securities Commission holds annual Dialogue conference in Toronto including Bank of Canada Governor Stephen Poloz, OSC chair and CEO Maureen Jensen and Ontario Finance Minister Rod Phillips as speakers
International Telecommunications Society conference on spectrum policy in Ottawa
Notable earnings: Gap, Macy’s, Nordstrom
Today’s data: U.S. existing home sales, Philadelphia Fed Index
“If there’s one thing that isn’t keeping Governor Poloz up at night, it’s inflation,” says CIBC Economic’s Royce Mendes. Data yesterday showed Canadian consumer prices rose 0.3% in October, holding the annual inflation rate steady at 1.9% for the third month in a row, pretty close to the Bank of Canada’s target. The Bank cited on-target inflation as one of the main reasons it decided against an “insurance” rate cut in October and this week’s data just reduced the odds of a cut next month. “Canada’s inflation picture is giving the Bank of Canada no free pass to trim interest rates, unlike the case in many other economies,” wrote BMO chief economist Douglas Porter. “The BoC still would respond to any serious deterioration in the trade backdrop — sadly, a very real possibility — but on-target inflation and perky household borrowing means that they can’t be pre-emptive.”