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Canadian Rail Strike May Mean U.S. Vehicle Shortages

GM, Ford, Chrysler, Toyota, Honda and other makers impacted.

by on May.24, 2012

Cars being loaded by CP Rail.

Shipments of new vehicles from General Motors, Chrysler Group, Ford Motor Co., Honda and Toyota have been crippled by a strike against the sprawling Canadian Pacific Railroad by 5,000 of its workers.

Teamsters Canada walked off the job just after midnight after parties were unable to reach an agreement despite last-minute negotiations, the union said in a statement.

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“We have made every reasonable effort to get a settlement,” said Doug Finnson, vice-president of Teamsters Canada Rail Conference. “Every union member knows how important the outstanding issues are. We will not walk away from the negotiation table.”

Meanwhile, the Canadian Government is threatening to step in to halt the strike if it continues into next week, which now appears likely. As the strike began, the Canadian Pacific shut down all freight traffic on its 15,000 miles of track across Canada and in the U.S.

The railroad handles a substantial amount of automotive-related traffic, including the shipment of complete vehicles produced at assembly plants on both sides of the border.

“An innovative business approach, combined with dedicated customer service, has allowed us to forge important relationships with General Motors and Ford. It has also allowed us to become the exclusive partner for the transportation of Chrysler vehicles across Canada,” as well as Honda and Toyota, the railroad’s website noted, adding that it provided an important distribution link “across Canada and the United States.“

CP serves auto assembly plants not only in the province of Ontario but also across the U.S. Midwest. And it boasts of being an essential link in the vehicle distribution chain all the way to Mexico.

Ontario, where pickets appeared shortly after the midnight deadline, is the cradle of the automobile industry in Canada and the province builds more than 1 million vehicles annually for global automakers.
Unless the strike is settled quickly, automakers could be forced to shut down assembly lines across the province.  But even before that the strike could lead to supply shortages.

Chrysler spokeswoman Katie Hepler said, “Chrysler Group uses Canadian Pacific Railway for the delivery of parts and finished vehicles. We are actively working to mitigate any impact to our operations through
alternative shipment methods. We encourage a quick resolution to this issue.”

Honda acknowledged the strike has halted shipments of its most popular model, the CRV from its plant in Alliston, Ontario.

Honda spokesman Ed Miller said, “The vast majority of finished Honda and Acura vehicles produced in North America are shipped by rail and our Canadian operations are a key part of these operations. For the vehicles built by Honda associates in Alliston, Ontario, CP Rail — the organization that is on strike — is the provider of outbound rail cars.

“While the strike lasts, Honda will not be able to ship vehicles out of Alliston by rail. We are storing the vehicles on site,” he explained.

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