Calgary Alberta - Starting tomorrow, Canadian Pacific Railway Limited (CP) will lay off more than 500 of its maintenance workers.
 
The announcement follows as the railway giant struggles to post revenue in the second quarter (2Q) this year.
 
The company's shares are trading 2.56 percent up at $126.77, as of 14:30 EDT.
 
CP already informed its workers about the layoffs earlier this month in order to control costs and streamline its workforce, thus, aligning its supply of railway services with declining demand levels.
 
In total, the railway industry has been facing prolonged weakness in the economy, along with depleting commodity prices.
 
Although agricultural grain shipments have been comparatively higher than historical averages, yet, lower car load volumes and declining demand for railway services have taken their toll on CP's top line.
 
In regard to the layoffs, Assistant VP for Public Affairs and Communications at Canadian Pacific, Martin Cej, said:  "The economy is slow. The economic growth in North America right now is slow. Farmers aren't shipping grain right now. There's an expectation that the crops will be very large, but nobody is shipping anything right now."
 
However, the job slashes could cause widespread safety concerns for the company, as it will have fewer officials monitoring and maintaining its railway tracks.
 
The President of the Teamsters Canada Rail Conference (TCRC) - Maintenance of Way Employees Division, Gary Doherty, said:  "From what we've been informed by the company, the grain has already went lower. I don't know if it's because the volumes haven't been there to transport."
 
The company generates most of its revenue from transporting agricultural grains.
 
It said that over the year, it has transported 4.8 percent more grains, 10.4 percent more than the three-year average, and 16.7 percent more than the five-year average.
 
CP also blamed the strengthening Canadian dollar, as well as the wildfires in Alberta for the expected revenue decline.
 
Additionally, the Street expects the company's revenue to decline 12 percent in the 2Q this year.
 
CP's Efforts to Increase Revenue Go in Vain
 
During the 1Q, CP tried its level best to bring consolidation in the US railway industry.
 
It looked for an acquisition in the US railway market, trying its luck on both, Norfolk Southern Corporation (NS) and CSX Corporation (CSX).
 
However, the deals did not work out and it faced severe resistance from both the parties and government officials.
 
After a failed attempt in the US, CP announced it would focus toward better serving its shareholders and customers.
 
Although the company might face some hurdles during 2Q, we expect it to steer itself out of prolonged weakness in the economy.
 
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