Shutdown of port sparks fears for North
BRIAN HUTCHINSON
The Vancouver Sun
Bobby de Meulles sits at his usual perch, next to a window at the Reef coffee shop, keeping an eye on Churchill’s main drag, and beyond that, the old train station and the tracks.
This time of year, railway cars filled with Prairie wheat should be rolling past the station for the Port of Churchill, 500 metres down the line on Hudson Bay. There are no grain cars today.
There haven’t been any all summer, because Canada’s only deepwater Arctic port — the only port of consequence along 162,000 kilometres of northern coastline — has suspended grain shipments, a decision made by its Denverbased owner, Omni TRAX Inc.
DeMeulles figured something was up, long before the company announced last month it was halting port operations, save for moving local freight to small communities along the Hudson Bay coastline, mostly in Nunavut.
A private transportation company with most of its holdings in American short-line railways, Omni TRAX claims none of its regular grain suppliers wanted to do business at Churchill this year. “The grain season for 2016 has passed the solutions stage,” it says. Townsfolk wonder if it ever really tried to salvage the season.
DeMeulles understands how things are done in Churchill. He spent 60 years working at the port, retiring just four years ago when he turned 75. “I worked until I couldn’t work no more,” he says. “I was well looked after.”
But things looked bleak, well before Omni TRAX pulled the plug.
“We’d always know how many ships were nominated (coming to the port) well ahead of summer,” de Meulles explains. “We’d first start to hear about the nominations in March. Grain would starting coming up in railcars around the June 15. If you don’t hear nothing, and you don’t see nothing, and there’s no grain coming, you know something’s wrong.”
He shakes his head. “It’s a terrible thing, for a small town.”
For the rest of Canada, too, says Michael Byers, professor of political science at the University of British Columbia and an Arctic expert. The port’s sudden closure won’t impact national sovereignty, as some alarmists have claimed.
“What is important, though, is the economic development of Canada’s north,” he says. “That port is on our Arctic coastline, on salt water. Any plans for our northern development — mining, shipping, tourism — have to include it.”
The way the port looks now, that seems hard to fathom. From the centre of Churchill, it’s a five-minute walk to the docks. “No Trespassing” signs and a chain-link fence warn away the curious, but the front gate is wide open and there’s no one inside the adjacent security hut. In a normal season, Churchill would see 16 to 18 bulk carriers claiming orders of high-grade Saskatchewan wheat, canola and other grains, destined for Libya, Russia, Bangladesh and other distant places. A couple of ships would be tied to the wharf; five or six more would be anchored in the harbour.
Dozens of foreign seamen would have been ashore, walking into places such as the Reef, mingling with locals and tourists. This little town on the Manitoba muskeg, with a steady population of about 800, would, for a short while at least, look and feel like a cosmopolitan trading zone.
That is what it was, how things were, year after year during Churchill’s brief shipping season, from August to early November, or until things would freeze solid.
“It’s a short season, and the elevator can only handle so much,” says de Meulles. “But we do our share here. Or we did, anyways.”
SHOCK
It was late in July, on a Monday afternoon. Some of the 73 seasonal employees were back at the port, oiling machinery, replacing broken windows, sweeping away the dust, the bird poop. Getting the place ready for ships that hadn’t yet been nominated. There was still time to arrange a few shipments, so people had hope. People were working.
A port manager called the crew into the lunchroom. He was blunt: the season was cancelled.
Only 15 seasonal workers would be kept on for the summer, along with two fulltime staff. Half the railway’s 126 workers were also pinkslipped. Everyone in the room was in shock.
“Why bring us back, if you’re just going to turn around a couple of weeks later and shut everything down?” asked Dawne Palmer, 39. There was no explanation.
Palmer spent the last eight seasons at the port. She has two kids. Her husband has a job outside the port, and they own their house, but they don’t know how they’re going to make ends meet this winter, without her port pay.
She considers herself lucky. Joe Stover, 34, is among the majority who wasn’t called back at all this summer. Like most port workers, he won’t receive any termination pay or benefits.
This would have been his 10th season at the port.
“I really liked it,” he says. “I was proud of working there, with ships coming from all over the world. We were like, ‘ We’re here in Manitoba, and this is our ocean.’ We’re so much more than an old, decrepit bunch of buildings. I thought the only thing that could stop us was the weather.”
Churchill’s mayor, Mike Spence, learned about the shutdown minutes after workers were laid off. He dialed Omni TRAX’s Canadian subsidiary headquarters in Winnipeg. Three times he called, leaving messages. No one ever replied, so he quit trying.
Meanwhile, in Winnipeg, newly elected Manitoba Premier Brian Pallister suggested Omni TRAX was playing a cynical game of chicken with his government, closing the port while trying to extract financial concessions, more treasury dollars.
“I don’ t respond to threats,” he said.
For the next few weeks, Omni TRAX ignored local inquiries from media. Finally, Kevin Shuba, its Denverbased CEO, gave a brief interview to Winnipeg Free Press business columnist Dan Lett. His remarks only caused more confusion, and anger.
“For two years we have been talking (to the federal and provincial governments) with no response,” Shuba said. “I’ll tell you why they don’t want to talk to us. Once they reach out and talk to us, they have to become accountable, and they have to be part of the solution. They also have to acknowledge the truth and the facts. And last, once they reach out and engage us, guess what, they have to make some decisions.”
Through an administrative co-ordinator based in Winnipeg, Omni TRAX turned down an interview request from the National Post. Executives were “travelling” and could not be reached. But the company did review questions put via email, and a response came back a few days later “from the desk of Mr. Kevin Shuba.”
What had he meant by his comments?
“I was referring to the fact that for two years we made numerous attempts to work directly with governments for long-term solutions as the dynamics of the grain market had shifted,” the response reads. “There was little interest by governments to pursue talks about the changed landscape.”
The company says it tried, but failed to sign any contracts with grain suppliers for the 2016 season. The Canadian Wheat Board, once Churchill’s largest and most reliable client, was long gone, dismantled four years ago by the Harper government, and Canada’s largest private grain suppliers were moving their products through their own larger terminals, in Montreal, Thunder Bay, Ont., and Vancouver.
There was nothing to move to Churchill by rail, nothing to pour into the big ships, Omni TRAX claims, only local freight that will continue to be hauled to communities in Nunavut.
“The Port of Churchill is not closed for business,” Omni TRAX said in its response to the Post.
If that’s the case, someone needs to let the town know.
STATE SUPPORT
It has always seemed a good idea, that port. A strategic asset, in the national interest. As Byers says, it has a role to play in the north’s development. As a commercial enterprise, though, it’s been mostly a flop, always tied to the public purse, at the mercy of governments.
More than a century ago, Ottawa decided it should connect the country’s central grain belt to markets overseas, using the shortest ocean route available and bypassing traditional ports in the Maritimes and in Quebec. A port on Hudson Bay would “bring the grain growing provinces of Western Canada 1,000 miles nearer their markets in the Old World,” according to promotional efforts.
Construction of a federally funded railway began in 1910, from The Pas, in northwestern Manitoba, to Port Nelson, an old trading site on the west coast of Hudson Bay. The effort was abandoned in 1918, because of wartime shortages and requirements. Work resumed in 1926, only this time, the railway was directed to Churchill, where a port and grain elevator would open in another two years. The first steamships arrived that summer.
The entire effort cost Canadian taxpayers about $12.5 million, enough to earn scorn in certain newspapers. The Montreal Star was particularly upset, forecasting the port’s legacy in one editorial cartoon as “rotting wharfs and grain elevators, and millions of the peoples’ money, gone to the bow-wows.”
Decades passed. The port managed to survive. And Churchill itself sometimes thrived. A Second World War-era military base, built by the U.S. Army Air Corps, was populated by Canadian and U.S. forces until it closed in the late 1960s. More recently, the town has benefitted from tourism. Visits have increased exponentially since the early 1990s, thanks to the increasing popularity of adventure travel, and an abundance of polar bears and beluga whales in the area.
This summer looks like one of the town’s busiest tourist seasons ever, says Spence, Churchill’s mayor for the past 21 years. He owns a hotel and a lodge. But the cancellation of the shipping season has overshadowed any of the success stories. “This is the biggest challenge we’ve ever faced,” he says.
While he won’t blame Omni TRAX directly, he says it could have been more visible in the community at large. At the very least, it could have prepared people for the bad news.
And in hindsight, handing “a piece of huge infrastructure, smack in the middle of Canada,” to a foreign company was probably a mistake. “How was this allowed to happen?” he asks. “You don’t sell your assets.”
Blame Lloyd Axworthy, some townsfolk say. That’s not really fair, but as a cabinet minister in the governments of Pierre Trudeau and Jean Chrétien, and Manitoba’s most influential government member through most of that time, Axworthy was at least peripherally involved with port of Churchill politics.
He was around when the Chrétien government passed legislation paving the way for the divestiture of federally controlled ports.
“There’s disdain now for the (port’s) private owner, but Omni TRAX had the only serious interest (in acquiring the port) at the time,” Axworthy says. “There was a small group of shippers, as well, but they had no capital. There was no one else, really.”
Omni TRAX took over in 1997, paying just $1 for the entire operation. The real prize was the 820-kilometre rail line connecting Churchill to The Pas, and from there, to the rest of the world. It remains the only land route into Churchill. The company agreed to spend $45 million on track upgrades and keep the seaport open for at least 10 years.
Since then, according to a 2013 federal- provincial Task Force on the Future of Churchill, Ottawa and the Manitoba government have spent or committed $197 million until 2018 on Churchill.
That includes $50.5 million in direct transfers to Omni TRAX, $48 million in rail line and port upgrades, and $25 million in “grain shipping incentives.”
Omni TRAX now says it’s owed even more. Manitoba has failed to live up to additional financial commitments it has made, the company told the Post in an email exchange.
“Currently, the provincial government has provided $800,000 for capital improvements in 2015,” it claims. “There was a contractual agreement between the provincial government and Omni TRAX for 2015 which requires a further payment of $1.74 million which is currently outstanding.”
Manitoba’s new government doesn’t see things that way. “Omni TRAX is incorrect,” says Cliff Cullen, minister of growth, enterprise and trade.
“The process around the 2015 agreement signed by the previous NDP government is ongoing. Omni-TRAX’s claims invite a number of questions and are currently being reviewed by auditors as part of the process …. We are not interested in continuing to subsidize the operations of Omni TRAX with money taken from Manitoba taxpayers.”
One way or another, however, it will have to resolve matters with the company.
Spence has met provincial and federal bureaucrats and politicians, and is urging Ottawa to consider “re-nationalizing” the port. It’s an idea federal Employment Minister Mary Ann Mihychuk reportedly said her government would consider, but she’s been silent on the matter since speaking out last month; some claim she’s been told to keep quiet.
The official line from Ottawa: the government is concerned and is “monitoring the situation.”
The port isn’t going anywhere. Neither, it seems, is Omni TRAX, although it’s been trying to unload its Manitoba assets for months now. A deal to sell the port and railway to a consortium of First Nations looked imminent, at least until April, when Omni TRAX filed a civil claim in Manitoba’s Court of Queen’s Bench.
The lawsuit alleges Manitoba — and Pallister’s predecessor as premier, Greg Selinger — “unlawfully” shared “confidential and proprietary financial information” and business plans to a third party. This alleged indiscretion compromised its negotiations with the First Nations.
It’s also negotiating with the Mathias Colomb Cree Nation over selling its Manitoba assets. The band did not respond to a request for comment, but few outsiders believe the First Nation, comprised of two thinly populated reserves north of The Pas, could buy and successfully operate the Bay Line and port of Churchill without financial assistance from government and a group from outside to run things.
Omni TRAX has reportedly agreed to manage the port and railway, presumably for a fee. So Churchill may not have seen the last of the company, after all. Could locals accept such a compromise? Would port workers return for another season?
Stover doesn’t hesitate. He was raised in Churchill, did all his schooling in town, wears its heart on his sleeve.
“I would go back, for sure,” he says. “But I’m sure a lot of people wouldn’t.”
© 2016 Postmedia Network Inc