Misson Terminal and the CWB

[Fransisco]

http://www.tbnewswatch.com/news/115725/Unfair-treatment

<b>Unfair treatment?</b>

By Jodi Lundmark, tbnewswatch.com

A local union president says he’s been wondering why one grain handling company is receiving more of the city’s grain than any of the other six elevators on Thunder Bay’s waterfront.

While there wasn’t a single railcar at the Viterra C elevator Thursday morning, there was a lineup of cars at the Mission Terminal.

United Steelworkers Local 650 (Thunder Bay Grain Handlers) president Tom Hamilton said Mission Terminal is the only elevator that operates a full two-shift rotation and seems to be guaranteed a fixed number of cars rather than a percentage. He said that means, as an example, that if Mission Terminal has a guarantee of 300 cars and 500 come through the city, then the other six are left to split the remaining 200.

And while Mission Terminal has 50 full-time employees, Viterra (where Hamilton works) has nine employees; 25 per cent of whom only work four months or less a year.

"We’re not sure where the problem is but we suspect there is some kind of allocation problem with the (Canadian) Wheat Board," Hamilton said. "We’re not sure if there’s blame to be assessed anywhere; we’re just interested in find out – and we think Thunder Bay should be interested in finding out – how this grain allocation is done."

Hamilton said when they ask questions, they don’t get clear answers.

Sixty per cent of the grain that comes through Thunder Bay is from the CWB and Hamilton said they suspect the Wheat Board is purposely directing to Mission Terminal and they’re wondering if there are any opportunities for competition in the city.

"We want to know how this is happening and should we have this monopoly or is it the monopoly situation that’s causing the problem," said Hamilton. "Is it something our own companies aren’t doing? We don’t know. They tell us they’re like hell to get as much grain as they possibly can through here and they’re not able to do it because the wheat board is directing it some place else, so how does this process actually work?

Canadian Wheat Board spokesman John Lyons said the board’s main goal is to get the best deal for the farmer, and thus they will be looking for the lowest prices. Lyons added that the CWB is open to business to any company that wants to talk prices.

"Our goal is to get the best deal for farmers and that means getting the lowest price," he said. "We see everyone’s prices on a daily basis and we go where the value is most attractive for farmers because that’s what we are driven by."

Lyons said the CWB could not talk about the specific claims Hamilton had made because they are part of a commercial and confidential agreement.

Mission Terminal, the only non-unionized grain handler in the city – has been operating for 10 years now and terminal services manager Paul Kennedy said they don’t receive preferential treatment from the CWB.

Kennedy also said he could not discuss the details of the commercial agreement, echoing Lyons statements about confidentiality. He added that Mission Terminal has built its business on competitive pricing and excellent customer service.

"I think that’s how anybody builds a business," he said. "We get treated the way our service and our pricing warrants we get treated."

[Fransisco]

Not mentioned in the article is that former CEO of the CWB, our old friend Adrian Meisner, is now in charge of Mission Terminal.

Is it perhaps possible that the CWB is doing whats best for Meisner instead of whats best for farmers?

[parsley]

From the voices in my head, comes a liturgy of words that must be nonsensical, aren't they, fransisco, because when I put the vision together...well, I musn't think negatively.

Unions
Lobbyists
Elevator workers
Friends of the Board
CWB Election funding
Liberal funding
Iggie funding
Back Scratching
Goodale
Measner
demmurage
strikes
pigs at the trough
monopoly

My rationale has lost its' compass, surely, with all these random words puking out of my imagination.
Pars

[ado089]

Or is perhaps that operating one terminal at peak capacity is more cost efficient than running six at 20% capacity in order to keep some union lackies working. Or maybe it's because the service, reliablilty and cost is better where the unions aren't inflating costs and excelling at mediocraty?

[newguy]

Could it be because last year more producer cars were sent by farmers and I know all my cars go to Mission. I am not one that usually sticks up for CWB either.

[Fransisco]

That's possible ado089 but lets take a look at this.


"And while Mission Terminal has 50 full-time employees, Viterra (where Hamilton works) has nine employees; 25 per cent of whom only work four months or less a year."

Whats the capacity at mission vs the others?

http://www.grainscanada.gc.ca/statistics-statistiques/geic-sgc/geich-hsgc-eng.htm

Mission is 121,000 tonnes compared to 362,000 and 231,000 at Viterra’s two terminals.

The article isn't too clear on this but lets assume the nine unionized guys working for Viterra are all working at just one of the two viterra terminals, the small one. It has pretty much twice the capacity and 20% of the labour requirement of mission. It's looking like for once the union shop is way more efficient than the non union one.

[Fransisco]

I don't know about the producer cars but industry scuttlebutt has it that close to half of grain that goes through Thunder Bay goes through mission terminal. I guess the other six get the left overs.

[Fransisco]

Oops, I meant half the CWB grain not half of all grain.

[ado089]

Storage capacity has nothing to do with handling capacity. If Mission is ,and sounds like they do turn over that facility at higher rate they are making better use of their assets, therfore operating on a lower cost basis per tonne. From the information in the article it appears that there are 4 or maybe even 5 more terminals operating than need be. As far as staffing goes what would be the employee requirments from the other facilities if they were operating at full capacity instead of 8%? (based on the other 5 facilities splitting the other 40% of the cars)

Besides that why are we even sending grain through Thunder Bay and handling twice as much when we could be sending it to Churchill and handling once considering the growing number of ice free days there now?

[jdepape]

ado089:

Of course it is more efficient to run one terminal at full capacity than all of them at much less - but the other terminal operators don't have a choice in the matter, nor do they benefit from the efficiency gains.

Inflated costs? All terminals operate on the basis of tariffs - all the terminals in Thunder Bay are within pennies of each other around $9.50/t to handle wheat. Mission has an arrangement where it pays back to the CWB a portion of its elevation - it's called a diversion fee. Could the other terminals do the same? Absolutely.

Since you are making assumptions, try this one. If you were operating a terminal in Thunder Bay and saw close to half the CWB's business going to one competitor, what would you do about it? I assume the other terminals have approached the CWB and said, "what will it take to get some of your business?"

Assuming that has taken place and the CWB has not acted, tells me that there may be something else going on here.

Incentives work. I wonder what "incentives" are driving the CWB's behaviour. If it was simply a matter of getting the best deals for farmers, the CWB would have used its leverage over the terminals and gotten an even better deal from one or more other terminals; having two or more terminals hustling for your grain would be better than just one. That would be the rational thing to do - so why hasn't it happened?

Think about this as well.

The business from the CWB is so good, Mission has applied (and received) government funding to expand. Expansion is ridiculous when you think that Thunder Bay already has way more capacity than needed. Has the CWB advised Mission to expect even more grain from them? why would the CWB push an agenda that is counter to system efficiency? What agenda would keep them from using the other terminals as they do Mission?

If this was just about negotiating the best deal for farmers, the CWB would use the capacity that is already there.

There's something else going on and I fear its not commercially driven and therefore not in the best interests of farmers.

Somebody - please prove me wrong.

[jdepape]

"Storage capacity has nothing to do with handling capacity"

you're kidding, right?

Mission Terminal didn't attract more CWB grains because it was "operating at a lower cost rate per tonne" because of the volume it was handling. That's a circular argument.

You're on the right track when you say there are 4 or maybe even 5 more terminals operating than need be. In other words, too much capacity.

So you tell me why Mission Terminal is expanding. Yes, its because of the CWB sending them so much grain. I get that.

So tell me why the CWB is doing that - and apparently has told Mission to expect more. If I was Viterra or Cargill or JRI or P&H, I would be have already bent over backwards to strike a deal with the CWB. The fact that nothing has happened and Mission is expanding would tell me that there is nothing I could do commercially to change the situation.

It's tough to compete when the only game in town appears to be looking for something I can's supply. So what is it?

(Sorry for repeating some points.)

[parsley]

Mission Terminal expansion gets Ont. funding
Staff 10/4/2010 9:00:00 AM

Thunder Bay's Mission Terminal grain elevator has picked up provincial funding toward a project to boost its handling capacity.

Mission Terminal, which bills itself as Canada's largest administrator of Prairie farmer-loaded producer cars, will get $1 million from the Northern Ontario Heritage Fund Corp. through its Enterprises North Job Creation program.

The expansion involves construction of three new storage bins and is expected to create up to six new jobs as a result of "additional volumes," terminal manager Paul Kennedy said in the province's release Friday.

"As well, additional volumes have allowed us to invest in increasing railroad trackage onsite and we are currently developing a new facility to accommodate the Canadian Grain Commission," he said.

Thunder Bay area MPP Bill Mauro described the terminal as "a tremendous asset to our area, and this expansion will help provide good jobs for our residents."

The terminal, sited at the mouth of the Mission River and feeding into the Great Lakes system, currently employs about 50 people and has a capacity of 120,000 tonnes.

Mission Terminal sources and markets Prairie wheat and barley as well as canola, barley, rye, flax, peas and oats through its handling facilities in Western Canada and at Thunder Bay.

Mission, which in August marked 10 years in operation, is an operating company within Soumat, a Winnipeg-based grain handling and trading operation that wholly and partly owns a number of primary elevators and producer car loading sites, shortline railways, grain terminals, transfer elevators and bulk storage sites.

Soumat in turn is part of the Upper Lakes Group, a privately-held Toronto firm dealing in shipping, marine and industrial services, grain trading, port facility services and real estate development."

[jdepape]

Boy, this has got me thinking.

What happens to the CWB program if:
1. Mission expands as planned.
2. Two other terminals shut down due to lack of business; the terminal operators negotiate a deal between them to run everything through the remaining elevators.
3. Mission has a serious breakdown and can't execute.
4. The CWB goes to the other terminals for relief.

How do they react? What if they don't have enough capacity since they closed down some terminals?

The rational thing for the CWB to do is keep its options open - get them to compete for the business.

Why would the CWB put all its eastern promises in one house?

Now I'm distracted......

[parsley]

It's helpful to go through these one at a time:

http://www.missionterminal.ca/pdfs/News-MTI_New_Appointments.pdf

http://www.upperlakes.com/sitemap.html

http://www.upperlakes.com/history.html

[parsley]

"Mission Terminal Inc. is the only independent grain terminal in Thunder Bay, Ontario, located on the Mission River. Mission Terminal currently has a grain handling agreement with The Canadian Wheat Board and has space available to tender to CWB. Mission also has space available for Non-board grains."