(The following report by Scott Simpson of the Vancouver Sun appeared at Canada.com on November 27.)
VANCOUVER — Canadian National Railway on Wednesday dismissed suggestions that it’s planning to shut down sections of the BC Rail line or preparing for additional layoffs after spending $1 billion this week for the right to operate freight services on the province’s rail lines.
CN has a three-year plan to cut 430 positions at BC Rail, primarily in North Vancouver and Squamish, and chief financial officer Claude Mongeau said it’s possible that further layoffs will occur among the 950 BC Rail employees who will join CN.
“As we do everywhere on our railroad, we will look for new ways of doing things, find new initiatives for productivity,” Mongeau said in a telephone interview from Victoria. “It’s possible over time with new ideas that it won’t be 950 [workers who find jobs with CN], it will be 900.”
The government’s own advisors, after examining CN’s first-round bid for BC Rail, suggested as many as 1,200 BC Rail workers could eventually lose their jobs.
Mongeau said that’s unlikely, saying that CN’s analysis of staffing levels in a merger suggests they need at least 900 workers to maintain service on the BC Rail portion of a new, integrated line.
It’s equally possible that CN’s aggressive plans to compete (with Canadian Pacific) for additional forest products business will lead to additional jobs in the British Columbia rail sector, he added.
“We have the ability to grow. We understand there might be a big announcement in the future for an OSB [oriented strand board] plant in Fort St. John, for example.”
“If that’s the case, then that requires more employees to do the switching and do the work to move the goods.”
The Council of Trade Unions of BC Rail (CTU) expects further layoffs with the eventual closure of a 350-kilometre section of line between Chasm and North Vancouver.
Government advisors suggested in September that such a closure was inevitable.
The deal between British Columbia and CN forbids the closure of any portion of the BC Rail line for five years, but Mongeau insisted there are no plans to discontinue service on that section, period.
“We have no intention of letting that line go. It’s core to the franchise we’re buying, and I really believe the speculation is false information — it’s not grounded in fact.
“About two-thirds of BCR’s traffic is local traffic. It never leaves the BCR, things like logs and pulp that start in Prince George and go to Squamish.
“That local traffic needs to continue to go on the south end of the BCR network [in] the way that it is routed today.”
He noted that CN is preparing to solicit bids from other carriers to add passenger tour trains on the North Vancouver to Chasm section, which he described as “one of the most scenic routes in the world.”
“We believe there is huge potential for us to make a little bit more money by allowing tourist train operators to go on the line and organize services, whether it’s for Whistler, Prince George or Jasper.
“There is no other choice but to go to Squamish from Prince George by using a BC Rail line.”
Meanwhile, Mongeau said the company is looking forward to expansion of business at the Port of Prince Rupert, which received financial commitments from British Columbia and CN on Tuesday that totalled $32.2 million.
Last month the port authority put out a request for proposals for a private operator to invest between $25 million and $35 million to complete refurbishments aimed at turning Prince Rupert into a high-volume container port.
Port authority president and CEO Don Krusel expects the contributions by CN and B.C. will be sufficient to attract outside investment to complete the project.
Mongeau said CN is going to promote Prince Rupert to its American customers as a fast, efficient terminal that offers shippers the quickest route to Asia.
“We need to work with the customers and convince them that a gateway like this, which is not congested, with a superior service by CN, can be to their benefit,” Mongeau said.
“It’s not going to happen tomorrow, but I’m excited that this may be the catalyst Prince Rupert needs to get this thing off the ground and have new services for containerized traffic in and out of Asia.”
Krusel said the port authority’s call for proposals is attracting “strong interest” — particularly as other west coast container ports reach capacity.
“Look at the Port of Vancouver. Last year containerized traffic grew by 27 per cent. It’s up another 16 per cent this year,” Krusel said.
“I don’t think too many people would challenge me when I say they’re reaching a critical point in sustaining that growth with the existing infrastructure.
“That’s not only Vancouver. That’s the Ports of L.A.-Long Beach, Oakland, Seattle-Tacoma.
“We’re off the launch pad now. It opens up the north to value added manufacturing. Once we have a container facility operating in Prince Rupert you can consider manufacturing facilities in Terrace or Smithers that build prefabricated modular homes for sale in China.
“We’re no longer going to be hewers of wood and drawers of water in the north.”
Meanwhile, Moody’s Investors Service on Tuesday affirmed CN’s current debt ratings, saying the company’s outlook is stable and expects it will take only 12 to 18 months for CN to return to pre-BCR financial levels.