Restructuring and cuts at railway a warning to Canadians about risk of Bain-style management
Edmonton – Labour advocates are taking aim at vulture capitalism in the wake of massive job cuts at Canada’s second-largest railway.
On Wednesday, Dec. 5, management at Canadian Pacific announced that 4,500 jobs — more than a quarter of the workforce —will be laid off over the next four years, with 1,700 jobs to be cut before the end of 2012.
“These are quick-buck artists trying to squeeze obscene profits by gutting companies so they look profitable in the short term,” Alberta Federation of Labour President Gil McGowan said. “Their interests are different than the interests of Canadians. Strategic companies that are crucial to this country should not be pecked to pieces by vulture capitalists.”
A US-based hedge fund, Pershing Square Capital Management, took over Canadian Pacific earlier this year. Despite the fact that CP’s operational costs were in-line with the terrain and with industry standards, the hedge fund’s backers installed a new CEO, Hunter Harrison. Harrison joined the company in June with a plan to drastically cut costs in order to increase payments to their shareholders.
“This is a railway that operates in steep and varied terrain. I have concerns about the safety cutting costs on a railway that transports dangerous goods through the pristine Canadian Rockies,” McGowan said, adding that the safe and efficient operation of Canada’s national railways is crucial to several industries.
At present, the company has not released details of how the cuts will take place, or which workers will be affected. In Calgary, there are more than 500 workers employed by Canadian Pacific Rail, in Lethbridge, there are more than 160.
“Western Canadian farmers rely on having some competition between CN and CP,” McGowan said. “A shell of a company that has been gutted for the benefit of Wall Street is not in our interest.”
“These cuts will have an effect on many communities throughout Alberta and across Canada,” McGowan said. “These are good-paying, family-sustaining jobs, and the loss of these jobs will be felt across whole communities.”