Hey there, time traveller!
This article was published 29/7/2016 (2123 days ago), so information in it may no longer be current.
With no white knight yet in sight, a group of community leaders from Northern Manitoba is taking it upon themselves to try to figure out a way to salvage the 2016 shipping season for the Port of Churchill.
Omnitrax Canada, the owner of the Port of Churchill and the Hudson Bay Railway, laid off port workers earlier in the week shutting operations before the arrival of the first ship of the season. On Wednesday, it cut rail service in half so that just one freight train per week will service the northern town on the shore of Hudson Bay.
Leaders from at least a half dozen Northern communities met with provincial cabinet ministers in a hastily convened meeting on Wednesday. Mike Spence, the mayor of Churchill, said it’s a first step and they are now trying to put together an action plan.
"The model is not working, it’s pretty obvious," Spence said. "We can’t afford to lose the shipping season. It sends a very negative message. If the asset is for sale wouldn’t you not want to do the utmost to ensure that it will be feasible as the years go by?"
Spence said they will try to work up a plan that might include some sort of lease of the facilities with temporary management and marketing support to drum up business and keep the port going this year.
In the long term, however, Spence believes the port needs to be "re-nationalized."
"Let’s build a model that is successful," he said. "Otherwise what do you do? Cut northern Manitoba off from the rest of the province and the rest of Canada? That is not acceptable."
A sense of desperation seems to be settling in. As the days tick by Omnitrax officials remain incommunicado and it seems clear that federal or provincial support is not forthcoming especially now that Manitoba Premier Brian Pallister has said as much out loud.
When asked in a press conference on Thursday about what sort of solution will be pursued on the matter, Pallister said, "Unprincipled approaches that rely on bailouts are not what we will pursue."
Sinclair Harrison, the past president of the Hudson Bay Route Association, a support group made up of farmers and communities along the so-called Bay Line, was part of the Wednesday meeting. He said a lease arrangement might make sense hypothetically.
"But Omnitrax was not in the room," he said. "When the owner is not at the table you can speculate that there are people who can run a railroad and a port but you don’t have title to either one."
The northern leaders group is setting up a meeting next week with Federal Natural Resources Minister Jim Carr, the Trudeau cabinet minister who is in charge of the Churchill file who has been on holidays this week.
It is not clear yet to what extent the port closure and diminished rail service will have on Churchill or other northern communities. Robert Janes, the mayor of Rankin Inlet, said his community is not expected to be impacted at all.
Derek Reimer, an official from the North West Company, said it will use expensive air transportation to fly in fresh produce for its Northern Store in Churchill.
"We’ll continue to assess the situation," he said. "In the short term, consumers won’t see price increases as a result of higher transportation costs."
Late last year, Omnitrax made it clear it was seeking a buyer for the assets and claimed that it had never made money on the operation of the Manitoba assets. Omnitrax has said negotiations with a consortium of Northern First Nations to acquire the assets have been going on for several months.
But the point has been made by several observers that without changing the revenue model it won’t matter who owns the assets because it will always be difficult to turn a profit.
Adolf Ng, the director of the Transport Institute of the Asper School of Business at the University of Manitoba, said, "That kind of transportation infrastructure has high fixed costs and is very capital intensive. Even if they (a First Nations consortium) took it over it will still be a small scale operation and they will still struggle to sustain long term operations."
But Ng said that the operation of the rail line is obviously crucial to the northern indigenous communities and it makes sense that they should be part of an ownership scenario. But he suggested that a joint venture with a well-capitalized international port operator might make sense.
"The fact that Omnitrax is looking to leave the market highlights the urgency that the Churchill Gateway needs to think of a way to make it more integrated with the global logistics or global supply chain," Ng said.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.