No stomach for amalgamation in cash-strapped Wabush

With the Town of Wabush facing a serious financial crunch following the loss of its major employer, some are starting to quietly ask why the town doesn't just merge with its larger neighbour, Labrador City.

The two towns are separated by a lake and about six kilometres of roadway, and each boasts an impressive list of services, amenities and administrative offices.

• Wabush facing hefty deficit in wake of mine closure
• Lab West woes: It's belt-tightening times in Wabush

It's a legacy of a half-century of iron ore mining in the region, with each town built around mines in their own backyard.

There was never any question about self-sufficiency or dependency on handouts from the province.

We're our own community. We're very proud of our community.- Wabush Mayor Colin Vardy

But Wabush Mines closed last year, and with the industry struggling with an oversupply of ore and a cooling of the all-important Chinese market, no one is holding out hope it will reopen anytime soon.

Wabush is receiving nearly $4 million from the provincial treasury over a three-year period to help wean the town off an annual $2.1-million grant in lieu of taxes from Cliffs Natural Resources, the owner of the now-closed Wabush Mines.

Layoffs not out of the question

However, the town is still forced to slash nearly $600,000 annually from its operating budget, which is no easy feat for a municipality of less than 2,000 residents.

Some are questioning whether the town can afford to continue operating its impressive collection of recreation facilities, including an arena and a swimming pool, and the roughly $800,000-plus in salary costs just for the recreation department.

The Wabush town council is already signalling to its public works department that shift scheduling changes are in the offing in order to reduce overtime costs, which could result in some heated talks as contract negotiations begin next month.

And there are no guarantees there won't be layoffs, said Wabush Mayor Colin Vardy.

"When you take hundreds of thousands of dollars out of your revenue, you have to eliminate expenses. We want to do it in the most responsible, reasonable way that we can," said Vardy.

"We're asking our employees to help us do this and decide where the cuts should be coming from because the last thing we want to do is send people home."

'Wabush is Wabush'

Meanwhile, the sprawling mine and processing operation in Labrador City is still bustling, but it's also "at risk," an official with the Iron Ore Company of Canada said recently.

Labrador City has a population of nearly 7,400, according to the 2011 census, and an annual budget of more than $26 million.

About 30 per cent of town's revenues come in the form of grants from IOC.

So amid this new reality, what are the two towns doing to save money and live within their means?

According to Vardy, there's a strong appetite for sharing services, but don't expect outright amalgamation.

As one area resident told CBC News recently, "Wabush is Wabush, and Labrador City is Labrador City."

"We're our own community. We're very proud of our community," said Vardy.

Overtures met with resistance

During a recent visit to Labrador West, a reporter with CBC News was approached by a member of the Labrador City town council.

The councillor did not want to be identified, but asked the reporter to pose the question of amalgamation to leaders in Wabush.

Do we need two town councils and all the expense that go along with it, the councillor asked.

Labrador City has been making overtures of greater co-operation, and perhaps even amalgamation, for some time, the councillor said, but has met with resistance from their counterparts in Wabush.

Wabush at its weakest

Some see Labrador City as the larger, more prosperous town, swallowing up its smaller neighbour at a time when Wabush is at its weakest.

As for Vardy, he denies that Wabush has stood in the way of greater regional co-operation.

He believes a time will come very soon when the area will have one recreation department and a regional fire and emergency service.

He said both towns are already working very closely on waste disposal.

"We're not willing to … sell the whole shop. When things make sense and when the benefits outweigh the impacts for the people of Wabush, we'll make those decisions," said Vardy.

"But for someone to come out of Labrador City and to make comments that we're not working together or we could be working closer together, I don't think they're really in tune with what's actually happening."

• Read more articles by Terry Roberts