I have always admired Canadian National Railways. Growing up in Melville, Saskatchewan, a location chosen specifically by Grand Trunk’s President, Charles Melville Hays because it was half way between Winnipeg and Saskatoon, I grew up in a “railtown”. From my current residence in Calder, less than a block from the Walker Yards, I have grown accustomed to, if not fond of, the sound of a train moving along a track.
The history of CNR and its legacy components is in many ways a microcosm of Canada itself. It was born in the period of chaotic rail and economic turmoil that surrounded World War I. A number of rail companies, with varying degrees of solvency and all requiring capital, were assumed by Canadian Government Railways—-in 1915, the National Transcontinental, in 1917, Canadian Northern and in 1918, the Minister of Railways became the Receiver for the insolvent Grand Trunk Pacific.
Given Canada’s vast geography and comparatively sparse population, nationalization and consolidation was inevitable and for several decades CN’s fortunes paralleled the ups and downs of the Canadian and International economies. Following World War II, Canada became a supplier of raw materials to the world and CN was well positioned to carry our valuable commodities to market. Petroleum, potash, lumber, sulfur and of course grain had unprecedented international value. Following the Free Trade and NAFTA Treaties, the Canadian economy became more continentally integrated and CN predictably took on a North-South Orientation. Currently, CN’s network extends through Chicago to St. Louis, Memphis, all the way to New Orleans and the Gulf of Mexico.
In February 1995, the Government announced it was intent on privatizing Canadian National and on November 17, 1995 occurred the largest initial public stock offering in the history of our country. Ironically, US investors had more faith in the now private company than many Canadian investors, who still incorrectly regarded CNR as an arm of the government.
A privatized CN has been much more creative and responsive to the needs of its customers. An example of this is the “Intermodal Excellence” Initiative, which involves multi-use container cars and running fewer, consistently sized trains. CN’s Intermodal Yard is located just west of Edmonton.
Last Monday, I had a great tour of the Rail Traffic Control (RTC) Center and the Walker Yards, lying between Yellowhead Trail and 127th Ave in the Edmonton-St. Albert Electoral District. The Rail Traffic Control Center manages all rail traffic and dispatching in Western Canada. In the yard, I toured the Locomotive Shop (maintenance and repairs) and the car shops. They also taught me how to throw a switch and how to derail a train in the yard (if that were to become necessary). It is an impressive operation.
In 2011, Canadian National Railways had a Net Income of $1.2 B. CN employs a total of 23, 230 employees in Canada and the US. CN has transformed itself from a high cost carrier to a profitable enterprise. Privatization turned it into a lean, competitive rail carrier. In his book on CN, author Tom Murray states that “privatization finally freed CN Management from the need to look over its shoulder to see what politicians and bureaucrats thought about its business activities.” It was free to focus on the bottom line.
CN continues to serve as a microcosm of Canada. It was once a Crown Corporation with both business and social policy mandates; but as a growing country sheds its dependence on state enterprise, CN stands as a case study in how to successfully transform an arm of the state into a profitable multinational corporation.
Brent