CN Picks Prince George for New B.C. North Division Office, Plans One-Million Dollar Wheel Shop Investment In City.

Business Editors

PRINCE GEORGE, British Columbia--(BUSINESS WIRE)--Nov. 25, 2003

New Chicago Express train planned; yard consolidation

opens door to downtown redevelopment

CN (NYSE: CNI) (TSX: CNR) will make Prince George home to its new B.C. North Division office and invest one million dollars in a new state-of-the-art wheel shop here as part of its partnership with BC Rail.

CN also plans to move most of its switching activities from its downtown yard to BC Rail's yard, freeing up significant city real estate for potential commercial, light industrial and recreational development. Furthermore, CN's partnership with BC Rail will generate new municipal tax revenues for the city. CN plans to work closely with city officials to phase in proposed land use changes.

Prince George-area shippers stand to gain improved market access following CN's partnership with BC Rail. The integration of the two carriers will generate a critical mass of freight traffic to introduce a new "Chicago Express" train for forest products on a schedule of 90 hours, or less than four days. This schedule is much faster than the current CN/BC Rail schedule and those of competing railroads.

CN will pay the B.C. government $1 billion in cash to acquire the outstanding shares of BC Rail Ltd., along with the right to operate over BC Rail's roadbed under a long-term lease. BC Rail's rail bed will remain in public hands, with CN assuming responsibility for rail transportation and infrastructure maintenance.

David Edison, CN's vice-president, Corporate, based in Vancouver, said: "Prince George will become a key administrative and maintenance centre on CN's network in our new partnership with BC Rail. We will strengthen BC Rail's mechanical forces here, and we are ready to work with the city on ways to redevelop CN's downtown yard. These efforts should provide lasting economic and social benefits for Prince George."

CN's new B.C. North Division office will be responsible for all B.C. operations north of Lillooet and west of Dawson Creek. Transportation, customer service, engineering, mechanical and general management employees will be located in Prince George.

The new wheel shop at the BC Rail mechanical complex will allow CN to bring back in-house wheel repairs that it currently contracts out to United States suppliers, and to repatriate BC Rail wheel work that is now outsourced in Tacoma, Wash. CN will perform wheel work from its Western Canada operations in Prince George, while its Eastern Canada wheel work will continue to be done in Winnipeg.

CN's operating plan calls for a combined CN/BC Rail workforce of 580 in Prince George by the third year of its operation of BC Rail, resulting in a decrease of only 25 BC Rail positions.

CN's plan to introduce new tour trains between Vancouver, Whistler and the B.C. North in partnership with qualified third party operators is expected to have substantial employment potential in tourism-related fields in Prince George.

CN's redevelopment plans for its downtown yard would assure continued service to nearby shippers, but also create opportunities to improve the quality of urban life in Prince George. Here are the principal elements of the plan:

- CN would retain its mainline and several storage tracks at the yard to stage traffic to and from Prince Rupert.

- Service would be maintained for existing customers abutting the yard. There is also potential for new rail customers to locate in the vicinity of the yard, in appropriately zoned areas.

- All other CN operating functions would move to BC Rail's yard.

- Surplus CN rail yard land would be available for commercial development in the downtown core along First Avenue and for light industry to the north, consistent with the city's official plan and zoning.

- CN would donate part of the yard to the city to expand the scenic Cottonwood Park and expand the area's recreational system.

- A smaller CN yard would reduce the city's cost to build a new crossing of the Nechako River. Currently, the preferred route calls for a bridge to span the width of CN's Prince George Yard.

- The VIA Rail Canada Inc. station, which currently occupies a city-owned building, may need to move to a nearby location in the downtown area to accommodate new development along First Avenue.

Information on the partnership and maps of the combined networks are available at www.cn.ca/BCRailpartnership, or click on the CN-BC Rail icon on CN's home page, www.cn.ca/.

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.