Montreal Port Lockout May Spark Abitibi Layoffs, Cascade Investment Delays

A lockout of workers at the Port of Montreal may trigger layoffs at exporters such as AbitibiBowater Inc. and delay an investment project at Cascades Inc. if an agreement isn’t reached within days.

AbitibiBowater, North America’s largest newsprint maker, ships a “significant” portion of its paper and lumber through the port, said spokesman Jean-Philippe Cote. The company has been forced to store products in warehouses and may need to make temporary layoffs should the lockout drag on, Cote said.

“We really didn’t need this problem,” said Cote. “We are trying to find alternative routes wherever we can, but it’s not possible for all our shipments and it comes with additional costs.”

The Maritime Employers Association, which represents shipping companies and negotiates with port workers in Montreal, Toronto and other Canadian cities, on July 18 imposed a lockout on 850 longshoremen in a dispute over wages. Negotiators for both parties will meet with government-appointed mediators July 22 and 23, said Gilles Corriveau, a spokesman for the association.

“We are available to negotiate day and night if required,” Corriveau said today in a telephone interview. “We are very conscious of the impact of the current situation.”

Daniel Tremblay, president of Local 735 of the longshoremen union, said his group is “always willing to sit down at the negotiating table.”

Second Largest

The Port of Montreal is Canada’s second largest after Vancouver, handling 1.25 million twenty-foot equivalent units, or containers last year, according to its website. Besides containers, the port handles liquid bulk such as gasoline and jet fuel, and dry bulk such as iron ore and raw sugar. The lockout is costing member companies of the employers association about C$800,000 ($757,000) weekly, Corriveau said.

AbitibiBowater has 31 plants in Quebec, including eight newsprint and paper mills and another 23 that process lumber, according to its website. The Montreal-based company and several units sought bankruptcy protection last year after U.S. lenders refused to accept a proposed debt restructuring.

Bombardier Inc., the world’s second-largest trainmaker, usually gets parts shipped via the Port of Montreal, said spokeswoman Isabelle Rondeau. Shippers working for the train and aircraft maker may deliver the parts through alternative ports such as Halifax, Nova Scotia, she said. Bombardier doesn’t have any containers stuck in Montreal, she said.

Project Timing

Paper maker Cascades may delay a C$20 million investment at one of its Quebec plants because some of the parts for machines are stuck inside a container at the port, spokesman Hubert Bolduc said.

Cascades fell 2 cents, or 0.3 percent, to close at C$6.34 on the Toronto Stock Exchange, while Bombardier gained 22 cents, or 5 percent, to C$4.65.

“We may have to re-evaluate the timing of our project,” Bolduc said in a telephone interview. “We had planned to have our contractors start work in August, but we’re not sure how this is going to play out if the dispute drags on.”

About half of the goods destined for Canada’s eastern-most province of Newfoundland come through the Port of Montreal, according to a provincial government statement. Due to the lockout, St. John’s, Newfoundland-based Oceanex Inc. will redirect its ships to Halifax, Chairman Sid Hynes said.

“We could see this was coming weeks ago, so we have been preparing,” Hynes said in a telephone interview. “Halifax can handle a lot of extra business. These are kinds of possibilities we always think about.”

Should the dispute persist, Hynes said Oceanex may set up cranes at other ports on the St. Lawrence River to offload its ships.

“There are loads of options we could look at if this were to drag on,” he said. “We’ll do what we have to do. There are no winners in a work stoppage.”

To contact the reporter for this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.

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