Canada’s Postal Strike…was it worth it?

The recent round of rolling strikes by the Canadian Union of Postal Workers did very little to advance their cause nor did it do much for the future sustainability of Canada Post’s rapidly shrinking market share. The market of course being the vast network of media and electronic methods used to convey information, data and commerce around the globe. In the age of the Internet one would have to be awfully naïve to pretend that the Canada Post of tomorrow will simply operate like business as usual…it cannot. (Letter volumes were down another 4.2 percent last year and the average number of letters delivered to each address is off 17 percent from 2005, according to the company.)

Although Canada Post, which can trace its roots to the country’s founding, achieved a $319 million profit last year on revenue of $6.1 billion, like other postal systems around the world, it continues to suffer from declining volumes as letter writers, businesses and the public sector turn to e-mail to communicate and pay bills. As well, the use of couriers like FedEx and UPS are being used far more extensively for parcels and urgent deliveries.

On the one side of the dispute was the Canadian Union of Postal Workers who were looking for higher wages and more job security. Certainly nothing new about those demands but, they were also saying that the company was and still is ignoring their ideas of how to modernize as they too know that consumers and businesses are increasingly paying bills online and using e-mail instead of conventional letters.
Canada Post is of course the other side of the dispute. In addition to seeing demand for its services decline, the corporation is also facing an enormous impediment to its future sustainability – namely a $3.2 billion deficit in its pension system. That would be billion as in 9 big zeros billion. All of this comes at a time when more than a third of its 48,000 urban postal workers are within 10 years of retirement. Can you spell trouble with a capital “T”?

And these kinds of pension deficits are not exclusive to postal services either. We have seen this same scenario played out in the auto sector and international air carriers to name just two.
For its part during the strike, the independent, government-owned Canada Post responded by idling workers and reducing urban delivery to three days a week. It claims mail volumes were down 50 percent since the strike began and that workers’ demands will doom the company. Those demands would see the top wage for current workers going to $26 an hour while keeping its defined pension benefit system. That said, it wants a lower pay scale for new hires and there’s the rub.

The union says it understands the difficulties facing Canada Post but it accuses management of not listening to fresh ideas such as offering banking services. The union says the company is demanding other unfair concessions in areas including wages, staffing and safety.

Although in the beginning there was surprisingly little public outcry at the reduced deliveries, as the strike moved into its second and third weeks the real damage started to show through and as of this writing we are still not cleared of huge backlogs in Toronto and Montreal. The real problem for Canadian business was even if you found an alternate way to transfer funds from the payables of one company to the receivables of another – the sending company still had to have the cash in the bank from which to draw those funds. Trouble is, if they are not getting their cheques in the mail, you are not going to be getting yours from them either. Cash flow, after all, is how businesses live or die.

Canada Post will likely continue to have a relevant role to play in the Canadian economy in the more immediate term, even though volumes continue to drop. With 11billion pieces of mail being delivered each year it (Canada Post) remains a player in the field but, I would be willing to bet you the price of a postage stamp that the next time the Canadian Union of Postal Workers decides to take their concerns to a strike action, the great majority of Canadian Businesses will have already found a variety of alternate means to manage their financial transactions – many if not most on a permanent basis.

And on a final note, while the entire business community in Canada was quite taken in by the surprising showing of the NDP in the recent federal elections, I would hazard a guess that they (Canadian business) were none too impressed by the way they conducted themselves in their first opportunity in the house. The lengthy NDP filibuster that attempted to block back to work legislation did very little to help our sputtering economy and I doubt as well that it did much to improve the future lot of members of the Canadian Union of Postal Workers. The bill was adopted following a 58-hour filibuster by the NDP and the now passed legislation forces postal workers to accept wages that are less than Canada Post’s last offer. To no one’s surprise, the union will mount a legal challenge against the legislation that forced them back to work.

So in the end who wins this war of words?…….exactly!!


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