St.Lawrence & Hudson Railway
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Creation of the STLH
In a major News Release on Nov. 21, 1995, CP Rail System announced a system reorganization and the creation of a new eastern operating unit. (exerpt...) "A new management group responsible for the company's operations in the east, including the Delaware & Hudson Railway, will be headquartered in Montreal. The eastern unit will be responsible for turning the railway's operations between Montreal, Chicago and the U.S. Northeast into the most efficient, low-cost provider of railway services in the region. The new eastern unit will allow the railway to aggressively address the persistent losses it has sustained on its operations in the region. Its creation follows earlier efforts to merge with CN in the east and to acquire CN's eastern operations. The new unit will have autonomy to determine its own equipment requirements, network rationalization and labour relationships."
(April 2, 1996) (exerpt...) "CP Rail System's (CPRS) eastern operating unit -- an internal unit of CP Rail System created in a major reorganization announced last year -- has been named the St.Lawrence & Hudson Railway (SL&H), it was announced April 2. Named after the two rivers that first carried commerce to the heartland of its associated railways -- the Canadian Pacific Railway and the Delaware and Hudson -- the St. Lawrence & Hudson will continue to anchor vital container/freight links between Montreal, the Northeastern U.S. and the American Midwest."
(October 1, 1996) (exerpt...) "Effective today, the St. Lawrence & Hudson Railway Company Limited, a wholly-owned subsidiary of the Canadian Pacific Railway Company has become an operating railway. Also effective today, all Canadian assets, lines, operating interests and associated facilities previously identified as comprising the St.Lawrence & Hudson Railway Company (StL&H) are transferred by the Canadian Pacific Railway to the St. Lawrence & Hudson Railway Company Limited. The assets, lines, operating interests and associated facilities that are being transferred to the new railway company consist of the Canadian portion of the StL&H network that lies between Quebec City and Chicago through Montreal and Toronto; and between Montreal or Toronto and Albany, New York City, Philadelphia, Baltimore and Washington. The U.S. assets being operated as part of the StL&H will not change their present status."
(December 5, 1997) Due to substantial financial improvement and new
opportunities in the U.S. Northeast, Montreal-based St. Lawrence and Hudson Railway
(StL&H) will remain a part of the Canadian Pacific Railway (CPR) and will be fully
supported in its efforts to build its market franchise in the East. "Legal niceties
aside, the CPR will operate as one railway," says CPR President and Chief Executive
Officer, Rob Ritchie, in an address to the Toronto Railway Club here tonight. "The
StL&H will continue to ensure the presence of the CPR in the East. I hope that with
that clear statement, we can bring to an end the rumor and speculation about the sale or
breakup of the StL&H." Since its creation in 1995, the StL&H had been under
strong pressure to dramatically improve its performance and reduce its costs. Mr. Ritchie
says creation of the StL&H was the culmination of more than 10 years of frustrated
efforts to attach woefully inadequate returns and skyrocketing costs in the East. The
StL&H was created as a separate company for two reasons. The first was to give a
strong dedicated management team freedom to deal with the highly competitive eastern
market. The second was to provide the CPR with options if the turnaround didn't make the
Financial Turnaround - He says by year-end the StL&H will have dramatically reduced its operating ratio to 90 or lower and that new agreements with the Norfolk Southern and CSX railroads in the U.S. will give the StL&H's Northeast U.S. subsidiary, the Delaware and Hudson Railway (D&H), new business opportunities in the Northeast market. "CPR management is extremely pleased with the progress shown in the East," he says. "The StL&H is no longer a financial drain on its owner and there is every reason to believe the StL&H can reach its four-year goal of having a competitive operating ratio and an operating income of $100 million." Mr. Ritchie says he is counting on organized labor to help make this happen. He says the CPR continues to believe that there should be different approaches to labor on the StL&H and was pleased that unions had agreed to a dialogue.
4th Corridor - Mr. Ritchie describes the StL&H's Montreal/Chicago corridor as integral to the CPR's long-term strategy as a transcontinental carrier, particularly for intermodal and automotive traffic. "CPR has determined that it will remain a transcontinental carrier and it will maintain a strong competitive presence in the East," he says. However, he is somewhat less categorical about the U.S. Northeast corridor. "For the first time since we have owned it, the D&H has the potential for long-term viability," he says. "It is not there today and will take a couple of years following the Conrail change of control, but our market access agreements are solid and our haulage agreements place us in a good position for improving our business results. "In short, Montreal to Chicago is `the fourth corridor' of our network and the D&H is potentially an extremely valuable network feeder," he says. The CPR's other three corridors are Moose Jaw to Vancouver, Moose Jaw to Toronto and Moose Jaw to Chicago.
Competitive Imbalance - In his speech, Mr. Ritchie also says the railway was currently spending record amounts for capital investments including $700 million for 261 new high horsepower AC traction locomotives, about $150 million for service improvement programs and about $200 million for new information systems. But he says he is frustrated by a public policy bias that penalizes railways for their investments while publicly funding an ever increasing highway system used by the railways' main competitor, the trucking industry. He also says U.S. railroads have significant competitive taxation and regulatory advantages over Canadian carriers such as the $200 million more in taxes that Canadian railways pay than they would if they operated in the U.S. "We have to move now -- right now -- toward an environment where Canadian transportation is at least on a par with the American system," he says. "We are not asking for subsidies or tax breaks, we are asking for policy changes that promote modal balance and give us a fighting chance to compete with our U.S. cousins."
Other STLH Information
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