(The following story by Pat Faherty appeared on the Budgeteer News website on March 19.)
DULUTH, Minn. — The Canadian National Railway Company hopes to complete purchase of the DM&IR next month.
Best known by its symbol “CN” and its red locomotives, the carrier announced last fall that it had an agreement to buy Great Lakes Transportation LLC.
The $380 million deal includes the Duluth, Missabe and Iron Range Railway, the Great Lakes Fleet, ore docks and other assets.
It is one of a series of acquisitions by CN, which is also acquiring another railroad in British Columbia and in recent years acquired two other domestic carriers.
“Canadian National is a funnel for products from Canada to the United States,” said James Foote, the company’s executive vice president of sales and marketing. He said that in 1995, CN was the worst run railroad in North America, and today is the industry leader in all categories of service.
“We expect to close on that transaction in April pending government approval,” said Foote. “It is our plan to continue to overlay this focus on customer service, providing the highest quality of rail product we can to our customers and grow this business is ways that have not been done in the railroad industry in a long time.
“What’s driving this business is not the strategy of downsizing, laying-off and abandonment … it’s going to pay great benefits in this region as we work very hard to make the GLT and the DM&IR a success.”
DM&IR operates 212 miles of track and has about 498 employees in northeastern Minnesota. About half work out of Proctor, where the railroad owns 28 percent of the city’s developed land
Foote cited one of the changes as the movement of iron ore from the Mesaba Range through the Canadian port of Prince Rupert for export to China.
“Who ever thought that would happen,” asked Foote, “connecting all of this, moving all of this commerce right through the Twin Ports?”
He said when steps are taken at the national level to move trains through Chicago faster, there will be local economic benefits.
Congressman Jim Oberstar said there is currently a state-federal-private $7.5 billion project to revamp regional rail service and ease the Chicago bottleneck.
Foote was of one of panelists at Oberstar’s Forum on Transportation and Technology held this week at the University of Minnesota Duluth.
While Foote was upbeat on the future of Northland rail commerce, the news on commercial air service to the region’s small markets was not as encouraging.
“The future of scheduled air travel in rural America is linked to the future of the system’s legacy carriers,” said Paul Foley, chief executive officer of MAIR Holdings, parent company of Mesaba Airlines. He called the decision to end service to Grand Rapids — Mesaba’s birthplace — “very painful.”
Oberstar said a possible solution for Grand Rapids might be high speed bus service between that city and the Chisholm-Hibbing Airport. That would serve residents of Grand Rapids and increase passenger traffic from Hibbing.
“The growth of rural air service is very much linked to the future of major carriers,” said Foley. “Rural scheduled air service will continue to decline if low cost carriers — such as Jet Blue — continue to threaten large network carriers.”
He added that since Sept. 11, security issues were prompting some passengers — about 29 percent — to prefer driving over taking shorter flights.
“In order to continue to serve small and rural communities, regional airlines must remain the low-cost producer,” said Foley. “That means that labor costs and airport costs must be at market rates.”
He also dashed any hopes of Duluth seeing a discount airline in the near future. Foote said a city has to offers 1.3 million passengers before a low cost carrier will enter the market.