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Rail Strike Ended, But Impact May Still be Felt by Automakers, Buyers

Aftermath could take time to unsnarl.

by on May.30, 2012

Cars being loaded by CP Rail.

The rail strike that crippled freight service across Canada and parts of the American Midwest has ended, but it has left automakers with a backlog of undelivered vehicles that could take weeks to unsnarl.

More than 4,000 employees of the Canadian Pacific Railroad are expected to return to work this week, clearing the way for shipments from assembly plants operated by General Motors Co., Ford Motor Co., Chrysler Group, Honda Motor Corp. and Toyota Motor Corp. in Southern Ontario and the Midwest where the railroad operates nearly 15,000 miles of track.

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The impact of the strike varies by manufacturer, but shipping schedules have been thrown into disarray. Inbound freight – parts and components used on vehicle assembly lines — is delivered on a just-in-time schedule but outbound shipments of finished vehicles take weeks to complete and were already complicated in recent months by a shortage of car carriers.  The situation could grow worse as a result of the strike.

The good news is that the walkout, which began on May 23rd, does not appear to have gone long enough to disrupt vehicle production schedules.

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Canada Forcing Rail Workers Back on Job

Strike threatening shutdown of much of North American auto industry.

by on May.29, 2012

An idled CP Rail locomotive.

Canadian government officials are hoping to have the trains running again by as early as Thursday now that legislation has been put before parliament to order a halt in a strike by thousands of Canadian Pacific Railway workers.

CP operates nearly 15,000 miles of track in the U.S. and Canada, much of it serving the industrial portions of Ontario, as well as much of the American Midwest.  So, the walkout has already begun to have a severe impact on Detroit’s Big Three and a number of foreign-owned makers, including Honda, which heavily depend on the railroad to supply plants with parts and then ship finished vehicles to dealers across North America.

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“The strike can’t go on,” Labor Minister Lisa Raitt told Parliament during a heated session in the Canadian capital of Ottawa. “We need to get the trains running again.”

The railroad and workers have not completely broken off talks but appear stalled on a variety of issues, including pensions, work rules and fatigue management.  Complicating matters, Canadian Pacific has been locked in a bitter battle with an activist investor that led to the forced departure of its CEO Fred Green earlier this month.

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