|May 2, 2006
CN to invest C$1.5 billion in its network in 2006, explains CEO Hunter Harrison
|CN held its first annual shareholders meeting outside Canada on April 21st in Memphis, Tennessee, the hometown of CN President
and CEO Hunter Harrison.
During this meeting, Harrison announced plans to invest $1.5 billion Cdn in its network later this year in its continuing effort to make
CN more efficient and profitable. Harrison said that this also includes the $100 million US announced earlier in the week (April 16) to
upgrade and expand CN's major rail yard in Memphis. This investment is the largest outside Canada. Upgrades will also be made
to computer systems to better manage railcars and traffic, modeled on systems that are already installed at CN's MacMillan Yard in
Toronto, dubbed "smart yards."
The investment also includes CN's share in the new container terminal that is under construction in Prince Rupert, B.C., which CN
will partner with the Prince Rupert Port Authority and Maher Terminals. The new container terminal is expected to be ready to receive
its first container ship in the third quarter of 2007. The Prince Rupert operation, the first container terminal at that port, will open a new
North American gateway to bring in consumer goods from China headed for CN's four major distribution centres in Memphis,
Chicago, Toronto and Montreal, explained Harrison. "There'll be no congestion at the port or on the network," Harrison states; "The
potential growth opportunities are immense." Harrison said that the new link will also provide an overseas link for U.S. cotton.
On April 20th, the day before CN’s annual meeting in Memphis, CN reported a record first-quarter profit of $362 million Cdn on
revenue of $1.8 billion. Its operating ratio, which is a measure of expenses and revenue, was 66.2 per cent, which is top amongst the
other six Class 1 North American railways.
Harrison noted that CN's shares increased “12-fold” in the decade after its initial public offering in November 1995, which opened
with shares at a cost of $27.00. CN’s cash flow went from free cash flow of negative $118 million, to $1.3 billion in 2005.
The meeting paused to observe a minute of silence for six CN employees who died in service during the past year: Four from
Mississippi, one from Black Diamond, Alberta and one from Chambord, Quebec.
The Canadian Press reported that one of two questions brought forward by shareholders at the meeting, was from Mike Wilson, who
represents an Ontario environmental group. Wilson demanded to know why CN has not cleaned up its abandoned rail line across
northern Ontario, including a section in Algonquin Park. Sean Finn, CN’s Corporate Secretary, explained that the company has been
in discussions with the government of Ontario since the mid-1990s to sell the right-of-way to the province "at a nominal fee" and turn it
into a path. "We look forward to sitting down the with the province and doing it as quickly as we can," Finn said.