07/16/2014 10:22 EDT | Updated 09/15/2014 05:59 EDT

Bombardier strike could delay Toronto streetcar delivery

A business analyst says the strike at Bombardier's light rail plant in Thunder Bay, Ont., will impact public transit plans in Toronto.

The labour dispute between the aerospace and transportation manufacturert and almost 1,000 of its unionized workers is now into its third day.

The Toronto Transit Commission (TTC) plans to launch the next generation of streetcars in August, but a senior economist at the Canadian Centre for Policy Alternatives says the Bombardier strike could delay that launch.

Now, Armine Yalnizyan said, the strike at Bombardier means a delay in a major deal.

"The most important thing about this strike is that it's going to alter the timing of the delivery of probably the biggest contract in light rail transit that this country, maybe the world, has ever seen," Armine Yalnizyan said.

But Yalnizyan said she didn't expect the delay would affect the cost of producing and delivering the streetcars.  

"The issue most people worry about when they hear strike is costs are going to go up," she said. "[But they shouldn’t worry] because these are signed, sealed and delivered contracts."

Before the strike, the Thunder Bay assembly line workers were in the midst of completing the $1.2 billion contract for 204 streetcars for Toronto. They were also working on 70 subway cars, worth another $1 billion, as well as GO trains.

Skilled labour in short supply

Yalnizyan noted the labour dispute is really about establishing bargaining power — a struggle that doesn’t always favour the employer.

If the strike goes on for a long time in Thunder Bay, she said, it could mean a loss of skilled labour to Alberta, where it is in short supply.

Yalnizyan noted the tighter labour markets might start shifting bargaining power back toward workers. How fast this dispute is settled, she said, will be a marker of how things are changing.

Yalnizyan speculated workers may be on the winning side of the dispute.

"That assembly line isn't going anywhere," she said. "[Bombardier] is in the middle of a back order … [they are] not going to pick up and relocate."

Increasing profit margins

Trimming labour costs doesn't usually translate to lower prices, Yalnizyan said. It usually means more profits.

An assistant professor of business strategy at McMaster University said companies are doing anything they can to make their profit margins larger.

Marvin Ryder said that sometimes leads to outsourcing or attempts to cut benefits, some of the key issues in the dispute between Bombardier and its Thunder Bay workers.

Ironically, it's pension funds that are primarily responsible for putting pressure on Bombardier to become more profitable, Ryder said.

"It's not rich individuals saying, 'Bombardier, you need to make more profit,'" he said.

"It is actually the pension funds [that] are managing these resources on behalf of retirees who are saying, 'Look, the retirees are giving us some grief, I need you to perform a little better.'"