(The Vancouver Sun posted the following story by Alan Daniels on its website on August 21.)
VANCOUVER, B.C. — Five major forest companies have indicated they endorse the provincial government’s plan to privatize BC Rail, a critical transporter of wood products from the Interior to the Coast and continental railway links.
But the companies — Canfor, Slocan, West Fraser Timber, Abitibi Consolidated and Weldwood — said support is contingent on creating a competitive, efficient, service-oriented railway.
Collectively, the group spent $99 million on BC Rail in 2001, according to a recent report.
Spokesman Ian May, a former vice-president for regulatory issues with the Council of Forest Industries, said the forest companies are speaking out now because there is a perception in some communities in northern B.C. that because 3,000-km BC Rail made a profit last year it should not be sold.
“While BC Rail being profitable may be a snapshot of last year’s performance, it was because we were shipping record loads to get the unit cost down to the States, and that substantially [contributed] to the banner year BC Rail had,” he said. “It is not sustainable.
“That company needs someone to take the debt away. There’s no other way of doing it.”
With assets of $915 million, the railway posted 2002 revenues amounting to $294.4 million and expenses of $189.4 million. This resulted in operating incomes (earnings before interest and taxes) of $68.9 million.
For 2003, BC Rail forecast revenues of $279.9 million and expenses of $188.7 million resulting in $52.9 million in operating income, according to a confidential “information memorandum” produced by CIBC World Markets Inc. in its capacity as BC Rail’s privatization adviser.
The province has short-listed three significant bidders for BC Rail’s freight service and hopes to conclude a deal by the end of the year.
The bidders are Canadian National, Canadian Pacific, and a partnership between two U.S. companies, OmniTRAX and Burlington Northern Santa Fe.
Opponents of the sale — including BC Rail unions and the NDP opposition — say it will result in job losses and loss of control of a rail line that has been under provincial government jurisdiction since 1918.
A poll last month commissioned by the B.C. Federation of Labour showed more than 70 per cent of Prince George respondents do not support privatization and nearly 90 per cent say the B.C. Liberals are breaking their election promise not to sell or privatize the railway.
BC Rail employs 1,279 unionized workers and 509 managers and non-union workers.
BC Rail briefing documents made public by the Vancouver Sun July 12 estimated that CP Rail would shed 1,115 jobs and CN Rail would reduce the workforce by 1,223. The Burlington Northern/Omnitrax option would result in 748 layoffs.
BC Rail had revenue of $61 million last year partly due to increased lumber shipments to the U.S., but May said revenues are insufficient to maintain service levels.
“Our provincial railway is a vital link in the transportation chain,” May said. “The forest products industry accounts for 75 per cent of BC Rail’s revenue and transportation is the second highest cost for forest products shippers.”
Meanwhile, BC Rail’s seven unions say they are prepared to go back to the bargaining table on Sept. 5, setting aside a 61-per-cent vote in favor of strike action. The Council of Trade Unions said there was a low turnout for the vote due to vacation and scheduling difficulties.
“Hopefully, this next round of bargaining will provide us with more information and results before we return to the membership,” council chair Bob Sharpe said in a release.