REGINA – There was shock Tuesday in a small town east of Saskatoon after Potash Corp. of Saskatchewan (TSX:POT) cut hundreds of jobs at a mill.
The Saskatoon-based company is slashing its workforce by about 18 per cent, affecting 1,045 people.
The biggest job cuts will be in Saskatchewan, where 440 people will lose their jobs, and most of those will be at the company’s Lanigan division, where one of two mills will suspend production by the end of the year.
“These layoffs were effective immediately. People were sent home this morning,” said Rick Suchy, an electrician at the Lanigan mine and president of Unifor local 922.
“This was the end of their shift. Some guys were supposed to come back tonight. They won’t be coming back tonight. Some guys were phoned at home. They weren’t there. And many people were coming in for the day shift and they were sent home.
“It was a really shocking experience.”
PotashCorp said the decision stems from soft demand for potash and phosphates, two major types of crop fertilizer.
The commodity and the companies that produce it have been hit hard this year after Russian-based Uralkali, one of the world’s largest potash producers, quit the Belarusian Potash Company export partnership.
China and India — key markets for fertilizer — then delayed purchases in expectation of lower prices on the world markets, and that sent shipments plunging.
Suchy said the workers in Lanigan had an inkling that something was going to happen, but had hoped for the best.
“I suspected something may be coming up in the spring in this regard, depending on markets, but I never expected anything this large,” he said.
“We’ve been running reduced tonnes here most of the year, since May, and everybody was kind of wondering how long can they hang on with this and keep everybody working. We’ve been running at about 60 per cent most of the year with full man power.”
Suchy, who was born and raised in Lanigan, said the cuts could hit the community of 1,500 hard.
“It’s kind of a little too early to tell, but it’s going to be a shock because a lot of friends here are going to have to move away to look for work,” he said.
PotashCorp was one of the biggest employers in Lanigan, about 125 kilometres east of Saskatoon.
The town’s mayor, Andrew Cebryk, said 30 per cent of the workers at the mill live in the community. He said the most junior people will be laid off, and those are generally the ones with young families in the community.
“It will have an impact, no doubt about that. But what type of impact? We don’t know. We’re not sure,” said the mayor.
The Saskatchewan government said it will try to help the workers.
Premier Brad Wall said Tuesday that rapid response teams had been sent to help affected workers get new training to find other jobs.
“It’s not insignificant, certainly,” said Wall.
“We’re thinking first and foremost this morning about 440 people who got some very bad news. It’s not a small number and more importantly, I think about them individually and the families that are involved here.”
The province could also be impacted. Saskatchewan relies on revenue from sales of the pink mineral to help keep its provincial budget in the black.
Wall said, from a fiscal standpoint, the situation was worse in late 2008 and early 2009, when potash revenue tumbled along with the global economy and that seriously affected the province’s budget.
Saskatchewan has since reduced its budget dependence on potash, said Wall. This year, potash accounts for 3.5 per cent of the $11 billion in revenue.
“We took a pretty conservative approach at the mid-term on price, I think. We may have to downwardly adjust that again for the remainder of this year. We will remain in a balanced budget.”