Speed bump

Posted on August 14, 2014 | Atlantic Business Magazine | 0 Comments

Federal program changes threaten future of 40-year-old P.E.I. trucking company

Jack Kelly started Bulk Carriers Limited in 1973. Back then it was a one-truck company hauling bulk petroleum throughout his home province of Prince Edward Island.

Based in Clyde River, the company has since made a number of transitions, in both its size and the cargo it hauls. In the late 1990s, Kelly switched to refrigerated cargo, mainly food. Today, the $22-million company pulls cargo in every province and state, its 70 trucks packed daily with items ranging from potatoes and vegetables to fresh lobster.

But Kelly now faces a new transition – one he says has the potential to shrink or even ruin his four-decade-old family company.

The federal government is making changes to its Temporary Foreign Worker program, which Bulk Carriers Limited uses to hire more than half of its drivers.

“It’s the biggest challenge I’ve ever faced in the years I’ve been in the business,” says Kelly, a member of Atlantic Business Magazine’s Top 50 CEO Hall of Fame. “It has the potential to put us out of business.”

In June, Jason Kenney, the federal employment minister, announced significant changes to the Temporary Foreign Worker Program. The program allows Canadian employers to hire foreign nationals to fill temporary jobs when qualified Canadian citizens or permanent residents are not available.

In Atlantic Canada, the number of temporary foreign workers (TFWs) has grown significantly, from 3,500 in 2005 to 10,900 in late 2012.

The changes put forth by Kenney, however, place a cap on the number of low-wage TFWs a company can use. Effective immediately, a company can only have 30 per cent of its workforce comprised of low-wage TFWs. That percentage will drop to 20 per cent on July 1, 2015 and to 10 per cent in 2016.

In a CBC interview, Kenney said: “The government could then decide to go to zero per cent and eliminate the low-skilled stream, but we’re trying to do this in a prudent way where the adjustment costs are moderate and we don’t just end up causing devastation for thousands of businesses.”

Yet Kelly says the changes are sure to devastate his company. At the end of June, 35 of Bulk Carriers’ 70 drivers were TFWs (10 more were in training). The company has a driver vacancy rate that runs between 5-15 per cent, meaning the use of TFWs is key to the company’s operation.

Why does Bulk Carriers – and its trucking competitors – struggle to hire Canadian drivers? “Long-haul truck driving is a very tough career. You’re away from home a lot,” Kelly says. “There’s a big turnover of people in this industry because they can’t handle being away from their families.”

Thus the use of TFWs is essential for trucking firms. “The business is there. And we have the technology. But we need bums in the seats,” Kelly says. “If the trucks aren’t rolling the cash doesn’t flow.”

The federal changes will significantly limit the ability of Bulk Carriers to hire TFWs. The problem, according to Carl Chapman, Bulk Carriers’ Vice-President of Finance, is that long-haul truck drivers are considered low-wage workers. But they shouldn’t be.

He notes that Bulk Carriers’ drivers make between $20-22 an hour and most drivers earn close to $60,000 a year. Chapman says those pay levels are typical across the industry. The median wage in P.E.I., he adds, is $17.26 an hour. Thus it makes little sense to classify long-haul drivers as low-wage workers.

The company is lobbying the federal government to remove long-haul drivers from the low-wage category. If implemented, the change would remove companies such as Bulk Carriers from having to use fewer TFWs.

The alternative, Kelly says, would not be good for the trucking industry. The number of available trucks would be diminished and “a bidding war would start” for local trucking services.

“From an economic point of view it would be a disaster, not only for my company but for the region in general.”

Both Chapman and Kelly insist their call for change is about more than merely ensuring their own company’s survival.

Chapman says workers secured through the TFW program should not simply be viewed as “temporary”. The goal is to have those workers secure permanent residency and, eventually, bring their families to Canada.

For a region in need of a major population boost, the TFW program should be seen as part of a much-needed remedy.

“It is a challenge to keep people in this region,” Chapman says. “We want our temporary foreign workers to become permanent residents. We want them to buy homes and help the economy remain vibrant. We want them to be part of our community.”

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