Railway restructuring the canadian experience
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Railway Restructuring: The Canadian Experience. Allan Pozniak Canadian National: 1956-1997 Lecturer, McGill University: 1978-1990 Consultant to The World Bank: !997-2002 *Note: Slides Courtesy of Canadian National and Other Sources. The Canadian Railway Environment.

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Railway Restructuring: The Canadian Experience

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Railway restructuring the canadian experience

Railway Restructuring:The Canadian Experience

  • Allan Pozniak

  • Canadian National: 1956-1997

  • Lecturer, McGill University: 1978-1990

  • Consultant to The World Bank: !997-2002

  • *Note: Slides Courtesy of Canadian National and Other Sources


The canadian railway environment

The Canadian Railway Environment

  • Vertically Integrated Private Freight Railways:

    • Canadian National

    • Canadian Pacific

    • Short Lines

    • U.S. Railways

  • Freight Railways own the Infrastructure

  • High Degree of Competition

  • 2


    The canadian railway environment1

    The Canadian Railway Environment

    • State Owned Passenger and Commuter Services

      • VIA Rail

      • Toronto GO Transit

      • Montreal Commuter Service

      • Vancouver West Coast Express

  • Passenger and Commuter Railways pay the Access Fee to Freight Railways

  • Passenger Services Subsidized by Federal and Provincial Governments

  • Some Private Operators

  • 3


    Canadian railways last 10 years

    Canadian Railways - Last 10 Years

    19912000 % Change

    Track Kilometres56,28146,491-17.4

    Employees62,45541,118-34.2

    Freight Cars (000)116104-10.3

    Locomotives33543245-7.1

    RTKM (Billions)24632230.8

    Revenue per Tonne35.5224.29-20.4

    Revenue per TKM C$.0244.0224-8.2

    RTKM/Employee (000) 3,9408,581217.8

    Operating Income (Million) 4751,576331.8

    Consumer Price Index 15.2


    The restructuring of the canadian national railway

    The Restructuring of the Canadian National Railway

    • A State Railway 1929-1978

    • A Commercial Railway: 1978-1995

    • An Investor Owned Railway: 1996…..

    5


    Cn a state railway

    CN- A State Railway

    • Monolithic Organization

    • Deficits Financed by Government

    • Mix of Commercial and Social Services

    • Many Departments and Services:

      • Hotels

      • Express

      • Trucking

      • Marine Services

      • Passenger

      • Real Estate

      • Oil and Exploration

      • Communications

    6


    Cn transition to a commercial railway stage 1

    CN - Transition to a Commercial Railway- Stage 1

    • Mandate: Commercial Business, Self Financing, Freedom to Manage

    • Creation of Via Rail and Public Service Obligations

    • Creation of 8 Subsidiaries with P/L discipline

    • Creation of internal Cost centers and Charge back systems

    • Focus on Bottom line

    5


    Cn transition to a commercial railway stage 2

    CN - Transition to a Commercial Railway- Stage 2

    • Focus on Core Business

    • Sell Subsidiaries

    • Close Branch lines

    • Customer Driven

    • Change Culture

    • Lower Cost Base

    8


    Customer driven

    Customer Driven

    • External and Internal Customers

    • Build World Class Marketing Organization

    • “Everyone Works for Marketing”

    • Extending Market Reach

      • Global Business

      • Strategic Alliances


    Culture change

    Culture Change

    • Extensive Training Programs

      • Leadership Program

        • Top 200

        • Union Leaders

      • “Managing Our Business”

        • Top 1000

      • Supervisory Training

      • Technical Training


    Lower the cost base

    Lower the Cost Base

    • Investments in Technology

    • Network Rationalization

    • Right Sizing the Work Force


    Investments in technology

    Investments in Technology

    • Information Systems- Enabling Technology

    • Communication Network Upgrades

    • Intermodal Terminals

    • Track Maintenance Automation

    • Wagon and Locomotive Control Systems


    Results of investments

    Results of Investments

    • ONE:

      • Customer Service Center

      • Operations Management Center

      • Locomotive Control Center

      • Wagon Management Center

      • Accounting Center

      • Main Shop

    • Streamline Infrastructure Maintenance


    Restructuring results

    Restructuring Results

    • Business Volume Increased

    • Significant Reduction in Resources

      • Fewer Employees

      • Fewer Wagons

      • Fewer Locomotives

      • Less Infrastructure


    Getting ready to privatize

    Getting Ready to Privatize:

    • Benchmarking CN - US Railroads

    • Adopt World’s Best Practices

    • Massive increase in Productivity: 1992-1994

    • Eliminate Regional Structure

    • Sale of Remaining Subsidiaries

    • Key Executives from the Private Sector

    15


    The final step the ipo

    The Final Step: The IPO

    • Agreement with Government

    • Hiring of Banking and Investment Advisors

    • Evaluation of Assets

    • Government Legislation

    • Making the Case: The Road Show

    • Initial Public Offering

    • New Board of Directors

    16


    The results

    The Results:

    • Continued increase in Productivity

    • Sale of Low Density Lines=Growth of Short Lines

    • Acquired Illinois Central and Wisconsin Central to strengthen North-South Routes

    • Increased Shareholder Value: 13.50 > 83.00 C$

    17


    Questions

    Questions - ?

    ?


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