(The Canadian Press circulated the following story by James Stevenson on December 29.)
CALGARY — After a troublesome year brought on by lower grain crops, higher fuel prices, labour troubles and a failed bid to acquire BC Rail, Canada’s second-largest railway is looking for a strong 2004.
Canadian Pacific Railway Ltd. said it expects better markets for most commodities — fuelled by demand from the burgeoning Chinese economy and a stronger grain harvest — will make a significant impact on its fortunes.
“I think we’re going to see fluidity returning, big time, to the railway in the year ahead, which I’m kind of looking forward to,” chief executive officer Rob Ritchie said in a year-end interview.
“Because we struggled a little bit with the service over the fall period.”
The Calgary-based railway made several key adjustments to its work force in 2003. In June, it announced plans to shed 820 jobs over the next three years as more modern equipment leads to less maintenance throughout the system.
Still, with traffic at CP Rail growing at about 6 to 7 per cent annually, Mr. Ritchie says his rail company has actually been hiring in other areas to manage the growth, and the overall work force remains at about 16,000. And no further layoffs are anticipated for next year.
Earlier this month, the company announced a $200-million technology outsourcing deal that involved transferring 100 jobs to IBM Canada, which will now run the rail company’s computer and technology systems.
And the company weathered the effects of a seven-week strike-lockout with its 220 traffic controllers and settled with a three-year contract that gave wage, pension and benefit improvements.
Mr. Ritchie said the labour dispute was “unfortunate” but the company came out of it with several key positives.
“We learned some of the things that we were doing wrong,” he said. “People who went on strike had some complaints and when we started to do their jobs we started to realize there was a little more to it than we thought.”
A high-profile setback to the company came in November when it lost a $1-billion bid to its larger, Montreal-based rival Canadian National Railway Co. to acquire BC RailLtd. — the former provincial Crown company that is Canada’s third-biggest railway.
Mr. Ritchie says he still believes CP Rail’s bid would have been better for British Columbia.
While CN insists it will keep the BC Rail line from Prince George to Vancouver, it doesn’t need the line and won’t promote it like CP Rail would have done, he says.
In the end, Mr. Ritchie admits that BC Rail would have been a “nice-to-have” that would have added an instant 10 per cent to the company’s top line.
But CP Rail still anticipates that 2004 holds a lot of potential, with all major shipment categories improving except the auto sector, which has slowed down from the all-time highs of a few years ago.
And Mr. Ritchie does not anticipate any large-scale consolidation of the industry, which remains at only six large railways in North America, including CP Rail and CN.
“I think that the railways are starting to realize that they’ve got a lot of growth opportunities by working the alliances and the networks,” he said.
“So I think for the year 2004, it’s going to be status quo.”