Canada’s rail system was under stress Tuesday as Via Rail cancelled passenger service on key routes and Canadian National Railway Co. warned it will be forced to close “significant” parts of its freight network unless blockades impeding its lines are removed.
Via Rail cancelled service on its Montreal-Toronto and Toronto-Ottawa routes because of a blockade near Belleville, Ont., in support of opponents of the Coastal GasLink pipeline project that crosses the traditional territory of the Wet’suwet’en First Nation in northwestern B.C.
“Although we remain hopeful that a resolution will be reached, in view of the current uncertainty, VIA Rail is cancelling all departures until Thursday end of day on the Montreal-Toronto and Toronto-Ottawa routes, in both directions,” Via spokeswoman Marie-Anna Murat said in an email.
A blockade near New Hazelton, B.C., means normal rail activities are also being interrupted between Prince Rupert and Prince George, she said.
Via Rail’s announcement followed the warning from CN, which has halted more than 150 freight trains since Thursday evening, when demonstrators set up the blockades in B.C. and Ontario.
The Montreal-based railway said Monday that long-distance freight shipments in Central and Eastern Canada were already at a virtual standstill.
Chief executive JJ Ruest stressed the limited parking space in its network, with traffic backed up from Halifax to Windsor, Ont., and in parts of B.C. approaching Prince Rupert.
“CN will have no choice but to temporarily discontinue service in key corridors unless the blockades come to an end,” he said in a statement Tuesday.
“The impact is also being felt beyond Canada’s borders and is harming the country’s reputation as a stable and viable supply chain partner.”
The ongoing blockades are near Belleville, Ont., and New Hazleton in B.C.’s northern interior, while demonstrations cropped up Tuesday in locations ranging from the Halifax port to the B.C. legislature.
The Canadian Chamber of Commerce called on all levels of government and police to work together to bring an immediate end to the blockades and to restore all rail service.
“From propane to grain and food and consumer items, Canada’s supply chains are being severely damaged by the continuing interruptions to Canada’s rail services by protesters,” the chamber said on Twitter.
“The rail system affects the entire Canadian economy and Canadians everywhere, including people trying to get to and from work. They must be allowed to continue to serve the thousands of businesses that depend on them.”
Industry groups expressed concern about the shutdown as shipments to and from the U.S. and China are delayed or cancelled.
“It’s a real crisis,” said Joel Neuheimer, head of international trade with the Forest Products Association of Canada.
Wood, pulp and paper producers have lost tens of millions of dollars so far, he said.
“We ship massive amounts of pulp to the United States and to places like Asia, so big negative impacts there,” Neuheimer said in a phone interview.
“We have members whose customers aren’t placing orders right now in the U.S. because they know that it’s not going to get there as soon as it needs to get there.”
Olin Corp., a Missouri-based chemical maker with a facility near Trois-Rivieres, Que., cautioned Ottawa that its tight distribution schedule means the 50-odd Canadian companies it serves will soon stop receiving chlorine — used in part to treat drinking water — which it says is only shipped by rail.
“Olin is alarmed by the current freight rail situation in Canada, and we are concerned that customers and municipalities will not receive shipments of vital chemicals including chlorine within one week,” chairman and CEO John Fischer said in a letter to federal Transport Minister Marc Garneau on Tuesday.
The Canadian Manufacturers and Exporters Association, whose members typically load about 4,500 rail cars a day, is urging government officials to work with police to restore service on the tracks.
“In Canada there’s not really other alternatives to move stuff around. The highways and trucks — especially in Quebec and southern Ontario — are already at a very, very high utilization of available capacity,” association president Dennis Darby said in a phone interview.
Stakeholders from chemical companies to Dannon Yogurt called this week to raise concerns, he said. “They can’t get their stuff out.”
Garneau said he is working with the railways and his Ontario counterpart Caroline Mulroney to find a solution, and that blockage of tracks is “dangerous and illegal.”
Despite the countrywide impact, he underscored that responsibility for enforcing court injunctions against the anti-pipeline protesters lies with provincial politicians and police.
“Obviously we hope it’s going to be resolved, but it is up to the provinces to make those injunctions effective by taking action,” Garneau told reporters in Calgary. “It’s having an important impact on the economy of the country.”
Earlier Tuesday, Via Rail said 157 passenger trains have also been cancelled, affecting 24,500 travellers on its Montreal-Toronto, Ottawa-Toronto and Kingston-Toronto routes.
Ontario Provincial Police said officers are in talks with protesters behind a blockade that sits metres from the tracks, though not across them.
OPP spokesman Bill Dickson said an officer of the court read an injunction to the protesters Tuesday morning ordering them to abandon the blockade, which bisects Tyendinaga Mohawk Territory, about 20 kilometres east of Belleville.
While CN obtained the injunction on Friday, Tuesday marked the first time it was read aloud in accordance with court procedure, Dickson said.
Mohawks of the Bay of Quinte Chief R. Donald Maracle expressed solidarity with the Wet’suwet’en community in northwestern B.C. and called out actions by the RCMP, which has been enforcing a court injunction on the First Nation’s traditional territory and arresting those attempting to block access to the pipeline route.
“We call on both federal and provincial governments to demand the RCMP immediately reconsider how it addresses peaceful protests and demonstrations, and allow the opportunity for sound discussion with a common sense approach to achieve peaceful outcomes,” Maracle said in a statement.
Brendan Marshall, head of economic and northern affairs at the Mining Association of Canada, said buyers of natural resource products were as vulnerable as producers — some of whom are already curtailing production.
“If you’re a facility that’s reliant on rail service in order to get your product to a site, then it’s kind of like sand through the hourglass — when it runs out, the plant can’t work anymore,” he said.
— With files from Michelle McQuigge
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Oil prices fall as market weighs coronavirus demand impact – CNBC
Oil pumpjacks in silhouette at sunset.
Oil prices fell on Tuesday, tracking losses in financial markets on lingering concerns over the economic impact of the coronavirus outbreak in China and its effect on oil demand.
“Oil prices remain heavy as energy traders may have been overly optimistic as to the crude demand impact of the coronavirus, and in fading optimism that OPEC + will come through with deeper production cuts in March,” said Edward Moya, senior market analyst at OANDA.
“Optimism that China would see a return to normalcy in travel and trade next quarter was probably wrong… The rest of world is exercising caution on virus spreading fears and that will do no favors for crude’s demand outlook.”
U.S. stock futures slipped from record levels on Tuesday after Apple Inc, the most valuable company in the United States, said it will not meet its revenue guidance for the March quarter as the coronavirus outbreak slowed production and weakened demand in China.
The number of new coronavirus infections in mainland China fell below 2,000 on Tuesday for the first time since January, Chinese health officials said, although global experts warn it is too early to say the outbreak is being contained.
The International Energy Agency (IEA) said last week the virus was set to cause oil demand to fall by 435,000 barrels per day (bpd) year-on-year in the first quarter, in what would be the first quarterly drop since the financial crisis in 2009.
Still, with some Chinese independent refineries snapping up crude supplies after being absent from the market for weeks, traders held out hopes that China’s demand could recover in coming months.
Investors are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will approve a proposal to deepen production cuts to tighten global supplies and support prices.
The group, known as OPEC+, has an agreement to cut oil output by 1.7 million bpd until the end of March.
Oil output from Libya has fallen sharply since Jan. 18 because of a blockade of ports and oil fields by groups loyal to eastern-based commander Khalifa Haftar.
Libya’s national oil corporation, NOC, said on Monday that oil production was at 135,745 barrels per day as of Monday, compared with 1.2 million bpd before the stoppage.
Pier 1 Imports closing all Canadian stores as it files for bankruptcy protection – Global News
The Texas-based company has been struggling with increased competition from budget-friendly online retailers such as Wayfair.
Pier 1 says it will pursue a sale, with a March 23 deadline to submit bids.
The company last month announced it would close 450 stores, including all its Canadian locations.
Pier 1’s Canadian website now directs customers to a short statement announcing the closures and thanks them for their loyalty.
The company is also commencing creditor protection proceedings in Canada.
Osler, Hoskin & Harcourt LLP are serving as Canadian legal advisers.
In a statement Monday, the company said it will continue to shutter stores as part of its bankruptcy proceedings. The company, which was founded in 1962, is also closing two distribution centres.
A hearing is scheduled for Tuesday at the U.S. Bankruptcy Court for the Eastern District of Virginia. In the meantime, Pier 1 said lenders have committed approximately $256 million in debtor-in-possession financing so it can continue its operations during the Chapter 11 proceedings.
“Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company,” Pier 1 CEO and Chief Financial Officer Robert Riesbeck said in a statement. Riesbeck, an executive with previous corporate turnarounds, joined Pier 1 last summer.
Pier 1’s sales fell 13 per cent to $358 million in its most recent quarter, which ended Nov. 30. It reported a net loss of $59 million for the quarter as it struggled to draw customers to its stores. Pier 1 has been trying to declutter its stores, improve online sales and draw in younger customers.
Pier 1’s shares have fallen 45 per cent since the start of the year. They closed at $3.58 per share on Friday.
— With files from The Associated Press.
© 2020 The Canadian Press
Bombardier to sell train unit to France’s Alstom, shedding biggest division – Toronto Star
MONTREAL— Bombardier, the supplier of Toronto’s signature streetcars and subways, has reached a US$8.2-billion deal to sell its rail business to French train giant Alstom SA. Both the TTC and Metrolinx say the sale won’t immediately impact their operations.
The company is narrowing its focus to commit itself solely to business jets while casting off its largest division, in part to help pay down US$9.3 billion in debt.
“Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading US$7 billion business aircraft franchise,” CEO Alain Bellemare said in a statement Monday.
The news comes only weeks after the TTC took delivery of the last of 204 new Bombardier streetcars. All the maintenance of those vehicles is done in-house at the TTC, said transit spokesperson Stuart Green.
The $1.25 billion streetcar order was believed to be the biggest in the world when it was announced in 2009. But the 11 intervening years were an especially problematic chapter in the city’s long transit history with Bombardier.
The first two cars arrived in Toronto in 2014. But a series of manufacturing defects and missed delivery targets caused tempers to flare at the TTC and city hall. At one point the first 67 streetcars had to be recalled and repaired. Meantime, the TTC was desperately trying to extend the life of its old CLRV streetcars and run buses to supplement service on routes that desperately needed the new, bigger vehicles.
Toronto’s newest subways, the $1 billion Toronto Rockets, were also made by Bombardier. Ordered in 2006, they proved controversial for former Toronto Mayor David Miller, who defended the sole-source contract because it supported jobs at Bombardier’s Thunder Bay plant. The subways arrived late due to the bankruptcy of Bombardier’s New York door manufacturer but entered service in 2011.
Metrolinx said that “initial indications from Bombardier suggest it is business as usual,” with its order for Bombardier light rail vehicles for the Eglinton Crosstown, GO buses and the operation of GO and Union-Pearson Express trains. Most of GO’s locomotives are built by U.S.-based MotivePower.
The Finch West and Hurontario light rail lines are being furnished by Alstom, said spokesperson Anne Marie Aikins.
“We look forward to continuing with all of our rail delivery partners to bring better transit to the region,” she said.
Toronto transit historian Ed Levy said the sale of Bombardier’s train division is the end of an era that was for decades a happy match between the city and the company.
“They really screwed up on the streetcar thing but not on the very large orders of the subway cars over the years. When they started doing off-shore stuff that’s where their problems began,” he said.
The acquisition also signals an effort by Alstom to scale up amid rising competition from China’s state-owned CRRC, the world’s largest train maker.
The transaction will see the Caisse de depot et placement, which owns a 32.5 per cent stake in Bombardier’s train division, become Alstom’s largest shareholder.
The deal converts the Quebec pension giant’s investment in Bombardier Transportation into Alstom shares, handing the Caisse about 18 per cent of the Paris-based company with an investment of up to $4 billion, depending on closing conditions. The transaction includes an additional Caisse investment of $1 billion.
Bombardier said net proceeds from the deal will be between US$4.2 billion and US$4.5 billion after deducting the Caisse’s equity position of roughly US$2.2 billion, as well as adjustments for debts and other liabilities.
The deal is expected to close in the first half of 2021 if it can move through regulatory hurdles.
Alstom’s purchase is expected to come under intense scrutiny from antitrust regulators in the European Union. Last year, EU authorities blocked a proposed merger between Alstom and the train division of German industrial conglomerate Siemens AG, arguing the proposed tie-up would result in higher price tags on signalling systems and bullet trains.
Montreal-based Bombardier has sold several divisions since Bellemare took the helm in 2015, including its turboprop and aerostructure segments as well as its commercial airline unit, once touted as the company’s crown jewel.
Bombardier announced last month it was working to reduce debt and pursuing strategic options, which analysts and other observers suggested could include the sale of the company’s rail or business jet units.
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Bombardier shares have fallen about 70 per cent since July 2018 while Alstom’s have risen by more than 50 per cent over the past two years, including 3.5 per cent Monday.
The announcement was made after the Paris Stock Exchange closed Monday. The Toronto Stock Exchange was closed for Family Day.
The new deal and other recent transactions will leave Bombardier with between US$6.5 and US$7 billion of cash on hand, “putting the company on a brand-new footing” to deal with its sizable debt, Bellemare said.
The company has already ramped up production of high-margin business jets, which it expects will drive double-digit revenue growth with 160 unit sales in 2020 amid a $16.3-billion backlog. But delays and “some volatility” continue to plague several “large, challenging” rail contracts, Bellemare said last Thursday.
While its business jets are now at full production, analysts highlight the cyclical luxury market of private planes in comparison to the relatively stable field of rail car and network construction, which is fuelled by government infrastructure projects.
Nonetheless, hefty production costs and lower margins remain an issue in the rail business, said Jacques Roy, professor of transport management at HEC Montreal business school.
“You can see the fixed costs increasing all the time, because they pretty much have to establish facilities everywhere they sell equipment,” Roy said, pointing to Bombardier’s plant in Plattsburgh, N.Y., which makes trains for U.S. clients.
“If they were a little bit better at this they would be able to compete with the Chinese. They could brag that, ‘Okay, we’re not as cheap as the Chinese, but we produce much better quality, we deliver on time.’ But they don’t. That’s a concern to me,” he said.
The rail and business jet divisions represent Bombardier’s only remaining revenue streams — about 53 per cent and 47 per cent, respectively, of $15.76 billion in revenue last year — after Bombardier sold its waterbomber unit, Q400 turboprop business, CRJ regional jet program and flight-training enterprise over the past four years.
And last week, Bombardier announced the sale of its remaining stake in the A220 commercial jetliner program — formerly known as the C Series — as it reported quarterly results last Thursday, marking the end of its failed bid to take on the commercial aircraft duopoly of Airbus SE and Boeing Co.
Bombardier, founded in Valcourt, Que., in 1942 as a snowmobile manufacturer, now stares down a US$9.32-billion debt load — nearly 60 per cent of it due within five years.
The rail business, Bombardier Transportation, is based in Berlin. In Canada, it employs some 1,000 workers at factories in Quebec’s Bas-St-Laurent region and in St-Bruno-de-Montarville, on Montreal’s South Shore.
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