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Changes likely with rail merger. (Transportation).

Canadian National Railway (CNR), the new owners of the Algoma Central Railway (ACR) and its Chicago-based parent company Wisconsin Central (WC) are deferring any decision on the future of the Sault railway and any possible restructuring changes until after Oct.9.

That is when the merger between the Canadian Class I carrier and the U.S. Midwestern regional railway officially takes effect, some 30 days after regulatory approval was granted by the U.S. Surface Transportation Board early last month.

Though news of the $1.2-billion US merger was announced Jan. 30, a CN spokesman was keeping mum on any future plans saying no immediate changes are in the offing.

"It's status quo," says Ian Thomson, director of communications. "We have no plans to make any changes at this point.

"We will be reviewing the whole operation until we officially take over (in October), but we have no further comment as of right now."

He provided no information on what their new business plan for the ACR would be, or what synergies might be available to boost volumes on the line. But the company does plan to meet with customers along the 475-kilometre Sault-to-Hearts line sometime this fall.

Canada's Competition Bureau had already cleared CN's acquistion of WC on July 10.

How the merger will affect the 260 employees of the ACR and its locomotive and rail car repair shop in Sault Ste. Marie remains unclear. Wisconsin Central maintains large maintenance shops in Fond du Lac and Stevens Point, Wis., along with other repair facilities at Green Bay and Gladstone, Mich.

Apprehensive employees in the Sault shops, who have seen their numbers steadily dwindle in the last decade since Wisconsin Central acquired the ACR in 1995, say that they feel left in the dark.

"Nobody knows anything because they haven't told us a darn thing," says Frank Sauve, secretary with the International Association of Machinists Union Local 585. "We're always having to read between the lines (and have had to) for the last six years."

The ACR now becomes CN's sixth operating division known as the Wisconsin Central division. Gordon Trafton takes over the helm as the new vice-president in charge of the division. He had previously held senior management positions at Illinois Central (an earlier CN acquisition in 1998) and before that spent 18 years with Burlington Northern Railroad in a variety of positions.

One ACR shop employee, who did not want to be identified, says there has been a 60 per cent across-the-board job cut since Wisconsin Central acquired the ACR in 1995.

Workers in the diesel shops, which used to number between 60 and 70 under the old Algoma Central Railway regnue, now account for only 12 employees, he estimates.

The rail car shop with more than 50 employees about 10 years ago, was pared down to 26 with the Wisconsin Central takeover and now numbers are down to 14.

The employee says there is a distinct lack of trust among his membership toward Wisconsin Central since 1995 and wants no part of being lumped into the WC division instead of Canadian National's eastern division.

"They don't have any answers why we're not being put in the eastern sector and. that's what worries us. We're all Canadians, why wouldn't we be pooled with Canadians?"

Sauve echoes that sentiment, adding Wisconsin Central's management style of insisting workers be "self directed" is a union-busting tactic that has caused conflict on the shop floor. "They've threatened to break us from the beginning."

Major work programs have also shifted to Wisconsin Central's non-unionized facilities south of the border.

We used to do all the work up here, but ever since WC's taken over we've lost a lot of it," says Sauve. "We were rebuilding locomotives from scratch. Since they've taken over it's just minor repairs."

CN regards the addition of WC as a new opportunity for revenue growth, improved shareholder value and employee advancement.

The acquisition fills a critical gap in CN's system, linking the Pacific and Atlantic coasts, through Wisconsin, with the Gulf of Mexico.

The railway insists the merger is a good deal for customers along the Algoma Central line by providing single-line services across Canada and the eastern half of the U.S. The merger also provides greater operating efficiences and assurances that service on the combined CN/WC network will be as good, or better, than before, says Thomson.

The latter claim should be welcome news for customers considering WC received this year's "Quest for Quality" award in receiving the highest overall score for customer satisfaction among North American railroads as selected by readers of Logistics Management and Distributive Report magazine.
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Title Annotation:Canadian National Railway and Wisconsin Central Ltd. hold off on Sault railway
Author:Ross, Ian
Publication:Northern Ontario Business
Geographic Code:1CANA
Date:Oct 1, 2001
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