HAY RIVER - Shrinking revenues and significant overhead from its Mackenzie River route and a need to lower costs on its new West Coast shipping option are prompting Northern Transportation Company Ltd. (NTCL) to cut eight administrative positions in Hay River.

David Foster, former president of NTCL, gives a presentation at the Strategic Northern Infrastructure Symposium in Yellowknife on Oct. 15, two weeks before leaving the company. Having already eliminated one management job in Hay River and absorbed two others into its sister company Weldco-Beales, NTCL will also cut eight administrative positions in Hay River in February. - Guy Quenneville/NNSL photo

The move is leaving some in the community worried about the future of the 75-year-old company, a major driver of the local economy.

The cuts, effective Feb. 28, are in addition to the elimination of one management position in Hay River and the absorption of two Edmonton-based management jobs by Weldco-Beales, a sister company to NTCL, which is owned by the NorTerra Group of Companies.

David Foster, former president of NTCL, also tendered his resignation on Oct. 30; the company is now looking for a replacement.

The high cost of maintaining operations out of Hay River in the face of declining revenue from the Mackenzie River route - coupled with significant movement of customer traffic to the company's new West Coast route, which delivers goods to the NWT and Nunavut from Richmond, B.C. - forced the company to shrink its Hay River staff, said John Marshall, vice-president of marketing and business development for NTCL.

"Six years ago, 100 per cent of our revenue was generated from our Hay River-Mackenzie River system," said Marshall.

But that route has become a "dying" market for the company, said Marshall, with only 16 per cent of the company's current revenues generated in Hay River.

"We still continue to see the trend of Mackenzie River business shrinking," he said. "In order to offset that, we were mandated by the board to go out and find other means of transporting in the Arctic and diversifying the company so that we have a more positive revenue stream for year-round."

That's where the new West Coast route comes in.

To contend with competition from other shipping companies like Nunavut Eastern Arctic Shipping, which deliver goods to communities using large ships, NTCL is using a 10,000 tonne barge for its tug-and-barge system on the West Coast.

The company was previ- ously servicing both NWT and eastern Nunavut communities via the Mackenzie River route with a series of 1,500 tonne barges, which Marshall likened to "ordering a pallet of wood pellets and moving them by hand as opposed to moving by wheelbarrow ... our competitors being the wheelbarrow."

Since unveiling the West Coast option, NTCL has lowered its fuel costs by 80 per cent compared to 2003, said Marshall.

Despite the success of the new route, the company will remain in Hay River, only with fewer staff.

"We have no intention of leaving Hay River," wrote Marshall in a prepared e-mail statement. "We are adjusting the size of our workforce and operations here to better reflect the new reality of Northern shipping and the future size of our business."

Marshall said he doesn't expect any further cuts.

Some community members are worried about the impact NTCL's curtailed activities in Hay River will have on local businesses.

"NTCL has actually moved a few jobs out of Hay River over the course of the last year or two and we were hoping that it wasn't going to be this kind of a big hit like this," said Leah Miltenberger, co-owner of midnight petroleum. "For the community, it's a large issue. Everybody's going to feel it."

At Super A Foods, barge orders going up the Mackenzie River are down by 50 per cent, said co-owner Steve Anderson.

"I think, moving forward, with the continued direction that NTCL is going, the barge order business from our point of view is probably going to be about 10 per cent of the business we were doing previously, because all we will be able to supply is the Mackenzie (Valley) communities and Mackenzie River communities, which is a very small amount of orders," he said.