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The Canadian National Railway ('''CN'''; AAR Reporting Mark s '''CN''', '''CNA''', '''CNIS''') is a Canadian Class I Railway operated by the Canadian National Railway Company headquartered in Montréal , Québec . CN is the largest railway in Canada, in terms of both revenue and the physical size of its rail network and is currently Canada's only Transcontinental Railway company, spanning Canada from the Atlantic coast in Nova Scotia to the Pacific coast in British Columbia . It also has extensive trackage in the central United States along the Mississippi River valley from the Great Lakes to the Gulf Of Mexico . The railway was referred to as the Canadian National Railways ('''CNR''') between 1918 and 1960 and as '''Canadian National'''/'''Canadien National''' (CN) from 1960 to present. HISTORY The Canadian National Railways (CNR) was created between 1918 and 1923, comprising several railways that had become bankrupt and fallen into Federal Government hands, along with some railways already owned by the government. In 1995, the federal government privatized CN. Over the next decade, the company expanded significantly in the United States, purchasing Illinois Central Railroad and Wisconsin Central Railway , among others. Now primarily a Freight railway, CN also operated Passenger services until 1978 , when they were assumed by VIA Rail . Creation of the company, 1918–1923 In response to public concerns fearing loss of key transportation links, the Government Of Canada assumed majority ownership of the near bankrupt Canadian Northern Railway (CNoR) on September 6 , 1918 , and appointed a "Board of Management" to oversee the company. At the same time, CNoR was also directed to assume management of Canadian Government Railways (CGR), a system comprised of the Intercolonial Railway Of Canada (IRC), National Transcontinental Railway (NTR), and the Prince Edward Island Railway (PEIR), among others. On December 20 , 1918 , the federal government created the Canadian National Railways (CNR) through a Privy Council Order as a means to simplify the funding and operation of the various railway companies. The absorption of the Intercolonial Railway would see CNR adopt that system's slogan ''The People's Railway''. Another Canadian railway, the Grand Trunk Pacific Railway (GTPR), encountered financial difficulty on March 7 , 1919 , when its parent company Grand Trunk Railway (GTR) defaulted on repayment of construction loans to the federal government. The federal government's Department Of Railways And Canals took over operation of the GTPR until July 12 , 1920 , when it too was placed under the CNR. Finally, the bankrupt GTR itself was placed under the care of a federal government "Board of Management" on May 21 , 1920 , while GTR management and shareholders opposed to Nationalization took legal action. After several years of arbitration, the GTR was absorbed into CNR on January 30 , 1923 . In subsequent years, several smaller independent railways would be added to the CNR as they went bankrupt, or it became politically expedient to do so, however the system was more or less finalized following the addition of the GTR. Canadian National Railways was born out of both wartime and domestic urgency. Railways, until the rise of the personal automobile and creation of taxpayer-funded all-weather highways, were the only viable long-distance land transportation available in Canada for many years. As such, their operation consumed a great deal of public and political attention. Many countries regard railway networks as critical infrastructure (even to this day) and at the time of the creation of CNR during the continuing threat of the First World War , Canada was not the only country to engage in Railway Nationalization . In the early 20th century, many governments were taking a more interventionist role in the economy, foreshadowing the influence of economists like John Maynard Keynes . This political trend, combined with broader geo-political events, made nationalization an appealing choice for Canada. The Winnipeg General Strike Of 1919 and allied involvement in the Russian Revolution seemed to validate the continuing process. The need for a viable rail system was paramount in a time of civil unrest and foreign military intervention. Criticism of nationalization Regardless of the political and economic importance of railway transportation in Canada; there were many critics of the Canadian government's policies in maintaining CNR as a Crown Corporation from its inception in 1918 until its Privatization in 1995. Some of the most scathing criticism came from the railway industry itself, namely the commercially successful Canadian Pacific Railway (CPR) which argued that its taxes should not be used to fund a competitor. Some argue that the CPR could afford to make this criticism, having been itself the child of government and recipient of untold wealth by virtue of land and resource grants, as well as its position as a Monopoly from its completion in 1885 until the CNoR started operations on the Prairies at the turn of the century. As a result of history and geography, CPR served larger population centres in the southern Prairies , while the CNR's merged system served as a de-facto government colonization railway to serve remote and undeveloped regions of Western Canada , northern Ontario and Québec , and the economically-depressed Maritimes . Also, CN was disadvantaged by being constituted from a hodge-podge of bankrupt rail systems that were not intrinsically viable, as they seldom had the shortest route between any major cities or industrial centres; to this day, CN has many division points far from significant industries or traffic sources. The only notable exception to this sorry state of affairs is the former Grand Trunk mainline between Montréal and Chicago. The company also became a convenient instrument of federal government policy from the operation of ferries in Atlantic Canada , to assuming the operation of the narrow-gauge Newfoundland Railway following that province's entry into Confederation , and the partnership with CPR in purchasing and operating the Northern Alberta Railways . A company-driven decision to create a radio network across Canada for its passenger train customers led to the federal government assuming total control in 1932, naming the radio network the ''Canadian Radio Broadcasting Commission'', which was then renamed and organized into a separate Crown Corporation in 1936 as the Canadian Broadcasting Corporation (CBC). CNR as a social and economic tool It is generally accepted that government policy dictated CNR commercial decisions, whether such decisions were in the nation's interest, or in the political interest of the party in power. As such, CNR lost money for many years, except during the Second World War when its extensive network reaching into the resource hinterland proved beneficial, and during the late 1980s and early 1990s following Deregulation of the Canadian railway industry. Where CNR failed to address costs was largely due to government interference, such as the requirement to purchase locomotives from all Canadian locomotive manufacturers, resulting in operational inefficiencies. CNR was considered to be competitive with CPR in several areas, notably in Central Canada , prior to the age of the automobile and the dense highway network that grew in Ontario and Québec . The former GTR's superior track network in the Montréal – Chicago corridor has always been a more direct route with higher capacity than CPR's. CNR was also considered a railway industry leader throughout its time as a Crown corporation in terms of research and development into railway safety systems, logistics management, and in terms of its relationship with Labour Union s. Deregulation and recapitalization Another problem that hobbled CNR was in the sheer number of low-volume branch railway lines which did not produce sufficient traffic to pay for their operation. Without Deregulation in the railway industry permitting abandonment or sale of a railway line, or even the ability to set prices to match those of Trucks , both CNR and CPR paid dearly for owning these inefficient lines. One tactic that CNR perfected was to ''demarket'' a line by providing sufficiently poor service to its few customers, that those customers would turn to trucks for improved service and lower costs. Once customers ceased to exist on a small branch line, the federal government would permit the line's abandonment. Had deregulation been in place several decades earlier, it is conceivable that many Canadian Branch Line s would have been viable in the hands of short line operators, saving millions of dollars for taxpayers funding highways, since the railway lines had already been publicly funded in their construction. From the creation of CNR in 1918 until its recapitalization in 1978, whenever the company posted a deficit, the federal government would assume those costs in the government budget. The result of various governments using CNR as a vehicle for various social and economic policies was a subsidization running into billions of dollars over successive decades. Following its 1978 recapitalization and changes in management, CN (name changed to Canadian National Railway, using the shortened acronym '''CN''' in 1960) started to operate much more efficiently, by assuming its own debt, improving accounting practices to allow depreciation of assets and to access financial markets for further capital. Now operating as a for-profit Crown Corporation , CN reported a profit in 11 of the 15 years from 1978 to 1992, paying $371 million in cash dividends (profit) to the federal government during this time. Cutbacks and refocusing CN's rise to profitability was assisted when the company started to remove itself from non-core freight rail transportation starting in 1977 when subsidiary Air Canada (created in 1937 as Trans-Canada Air Lines ) became a separate federal Crown corporation. That same year saw CN move its ferry operations into a separate Crown corporation named CN Marine , followed similarly by the grouping of passenger rail services (for marketing purposes) under the name ''VIA''. The following year (1978), the federal government decided to create VIA Rail as a separate Crown corporation to take over passenger services previously offered by both CN and CPR, including CN's flagship transcontinental train the '' Super Continental '' and its eastern counterpart the '' Ocean ''. CN Marine was renamed Marine Atlantic in 1986 to remove any references to its former parent organization. CN also grouped its money-losing Newfoundland operations into a separate subsidiary called Terra Transport so that federal subsidies for this service would be more visible in company statements. CN also divested itself during the late 1970s and throughout the 1980s of several non-rail transportation activities such as trucking subsidiaries, a Hotel Chain (sold to CPR), real estate, and telecommunications companies. The biggest telecommunications property was a company which was co-owned by CN and CP (CNCP Telecommunications) which, upon its sale in the 1980s, was successively renamed Unitel (United Telecommunications), AT&T Canada , and Allstream as it went through various owners and branding agreements. Another more-famous telecommunications property wholly-owned and built by CN was the CN Tower in Toronto which still keeps its original name but was divested by the railway company in the early 1990s. All the proceeds from such sales were used to pay down CN's accumulated debt. At the time of their divestitures, all of these subsidiaries required considerable subsidies which partly explained CN's financial problems prior to recapitalization. CN also was given free rein by the federal government following deregulation of the railway industry in the 1970s, as well as in 1987, when railway companies began to make tough business decisions by removing themselves from operating money-losing branch lines. In CN's case, some of these branch lines were those which it had been forced to absorb through federal government policies and outright patronage, while others were from the heady expansion era of rural Branchline s in the 1920s and early 1930s and were considered obsolete following the development of local road networks. During the period starting in the late 1970s and throughout the 1980s and early 1990s, thousands of Kilometres of railway lines were abandoned, including the complete track networks in Newfoundland (CN subsidiary Terra Transport , the former Newfoundland Railway ended freight operations in 1988 and passenger travel in 1969.) and Prince Edward Island (the former PEIR ), as well as numerous branch lines in Nova Scotia , New Brunswick , Southern Ontario , throughout the Prairie provinces, in the British Columbia interior, and on Vancouver Island . Virtually every rural area served by CN in some form was affected, creating resentment for the company and the federal government. Many of these now-abandoned Rights-of-way were divested by CN and the federal government and have since been converted into Recreational Trails by local municipalities and provincial governments. CN's U.S. subsidiaries prior to privatization CN's railway network in the late 1980s consisted of the company's Canadian trackage, along with the following U.S. subsidiary lines: Grand Trunk Western Railroad (GTW) operating in Michigan , Indiana , and Illinois ; Detroit, Toledo And Ironton Railroad (DTI) operating in Michigan and Ohio ; Duluth, Winnipeg And Pacific Railway (DWP) operating in Minnesota ; Central Vermont Railway (CV) operating down the Connecticut River valley from Quebec to Long Island Sound ; and a former GT line to Portland, Maine , known informally as the ''Grand Trunk Eastern'', sold to a short line operator in 1989. The US subsidiaries kept their identities due to their ownership. Technically, foreign governments were not allowed to own railroads in the US. However, a railroad owned by another railroad was allowed to operate, regardless as to if that "other railroad" was owned by a foreign government. Privatization In 1992 a new management team led by ex-federal government bureaucrats, Paul Tellier and Michael Sabia , started preparing CN for Privatization by emphasizing increased productivity. This was achieved largely through aggressive cuts to the company's bloated and inefficient management structure, widescale layoffs in its workforce and continued abandonment or sale of its branch lines. In 1993 and 1994 the company experimented with a rebranding that saw the names ''CN'', ''Grand Trunk Western'', and ''Duluth, Winnipeg, and Pacific'' replaced under a collective CN North America moniker. During this time, CPR and CN entered into negotiations regarding a possible merger of the two companies. This was later rejected by the federal government, whereby CPR offered to purchase outright all of CN's lines from Ontario to Nova Scotia, while an unidentified U.S. railroad (rumoured to have been Burlington Northern Railroad ) would purchase CN's lines in western Canada. This too was rejected. In 1995, the entire company including its U.S. subsidiaries reverted to using '''CN''' exclusively. ]] The ''CN Commercialization Act'' was enacted into law on July 13 , 1995 and by November 28 , 1995 , the federal government had completed an Initial Public Offering (IPO) and transferred all of its shares to private investors. Two key prohibitions in this legislation include, 1) that no individual or corporate shareholder may own more than 15% of CN, and 2) that the company's headquarters must remain in Montréal , thus maintaining CN as a Canadian corporation. Retraction and expansion since privatization 6118 (ex-IC 6118), Seen here at Senatobia, Mississippi , on December 4 , 2006 was one of many IC locomotives to be repainted in the CN Scheme.]] Following the successful IPO, CN has recorded impressive gains in its stock price, largely through an aggressive network rationalization and purchase of newer more fuel-efficient locomotives. Numerous branch lines were shed during the late 1990s across Canada, resulting in dozens of independent Short Line railway companies being established to operate former CN track which had been considered marginal. This network rationalization resulted in a core east-west freight railway stretching from Halifax to Chicago and Toronto to Vancouver and Prince Rupert. The railway also operated trains from Winnipeg to Chicago using trackage rights for part of the route south of Duluth. In addition to the retraction in Canada, the company also expanded in a strategic north-south direction in the central United States. In 1998, during an era of mergers in the U.S. railway industry, CN purchased the Illinois Central Railroad (IC), which connected the already existing lines from Vancouver, British Columbia to Halifax , Nova Scotia with a line running from Chicago, Illinois to New Orleans, Louisiana . This single purchase of IC transformed CN's entire corporate focus from being an east-west uniting presence within Canada (sometimes to the detriment of logical business models) into a north-south '' NAFTA '' railroad. CN is now feeding Canadian raw material exports into the U.S. heartland and beyond to Mexico through a strategic alliance with Kansas City Southern Railway (KCS). In 1999, CN and Burlington Northern And Santa Fe Railway (BNSF), the second largest rail system in the U.S., announced their intent to merge, forming a new corporate entity ''North American Railways'' to be headquartered in Montreal to conform with the ''CN Commercialization Act'' of 1995. The merger announcement by CN's Paul Tellier and BNSF's Robert Krebs was greeted with skepticism by the U.S. government's Surface Transportation Board (STB), and protested by other major North American rail companies, namely Canadian Pacific Railroad (CP) and Union Pacific Railroad (UP). Rail customers also denounced the proposed merger, following the confusion and poor service sustained in southeastern Texas in 1998 following UP's purchase of Southern Pacific Railroad (SP). In response to the rail industry, shippers, and political pressure, the STB placed an 15-month moratorium on all rail industry mergers, effectively scuttling CN-BNSF plans. Both companies dropped their merger applications and have never refiled. After the STB moratorium expired, CN purchased Wisconsin Central (WC) in 2001, which allowed the company's rail network to encircle Lake Michigan and Lake Superior , permitting more efficient connections from Chicago to Western Canada . The deal also included Canadian WC subsidiary Algoma Central Railway (ACR), giving access to Sault Ste. Marie and Michigan's Upper Peninsula. The purchase of Wisconsin Central also made CN the owner of EWS , the principal freight train operator in the United Kingdom . On May 13 , 2003 the provincial government of British Columbia announced that the provincial Crown Corporation , BC Rail (BCR), would be sold with the winning bidder receiving BCR's surface operating assets (locomotives, cars, and service facilities). The provincial government is retaining ownership of the tracks and right-of-way. On November 25 , 2003 it was announced that CN's bid of $1 billion CAD would be accepted over those of CP and several U.S. companies. The transaction was closed effective July 15 , 2004 . Many opponents – including CP Rail – accused the government and CN of rigging the bidding process, though this has been denied by the government. Documents relating to the case are under court seal, as they are connected to a parallel Marijuana Grow-op investigation connected with two senior government aides also involved in the sale of BC Rail. Also contested was the economic stimulus package that the government gave the cities along the BC Rail route – some saw it as a buyoff done in order to get the municipalities to cooperate with the lease, though the government has asserted that the package was intended to promote economic development along the corridor. Passenger service along the route had been ended by BC Rail a few years earlier due to ongoing losses resulting from deteriorating service. The cancelled passenger service has recently been replaced by a blue-plate tourist service, the Rocky Mountaineer, with fares well over double what the BCR coach fares had been. CN also announced in October 2003 an agreement to purchase Great Lakes Transportation (GLT), a holding company owned by Blackstone Group for $380 million USD. GLT was the owner of Bessemer & Lake Erie Railroad , Duluth, Missabe and Iron Range Railway, and the Pittsburgh & Conneaut Dock Company. The key instigator for the deal was the fact that since the Wisconsin Central purchase, CN was required to use Duluth, Missabe And Iron Range Railway trackage rights for a short 17 km (11 mi) "gap" that existed near Duluth, Minnesota on the route between Chicago and Winnipeg. In order to purchase this short section, CN was told by GLT that it would have to purchase the entire company. Also included in GLT's portfolio were 8 Great Lakes vessels for transporting bulk commodities such as coal and iron ore as well as various port facilities. Following Surface Transportation Board approval for the transaction, CN completed the purchase of GLT on May 10 , 2004 . CN today Since the company operates in two different countries, CN maintains some corporate distinction by having its U.S. lines incorporated under the Grand Trunk Corporation for legal purposes {Link without Title} , however the entire company in both Canada and the U.S. operates under CN, as can be seen in its locomotive and rail car repainting programs. Since the IC purchase in 1998 CN has been increasingly focused on running a "scheduled freight railroad/railway", meeting on-time performance with rail industry-leading consistency. This has resulted in improved shipper relations, as well as reduced the need for maintaining pools of surplus locomotives and freight cars. CN has also undertaken a rationalization of its existing track network by removing double track sections in some areas and extending passing sidings in other areas. CN is also a rail industry leader in the employment of radio-control (R/C) for switching locomotives in yards, to the detriment of employees since this results in reductions to the number of yard workers required. CN has frequently been touted in recent years within North American rail industry circles as being the ''most-improved railroad'' in terms of productivity and the lowering of its Operating Ratio , acknowledging the fact that the company is becoming increasingly profitable. Recent controversies In December 1999 the ''Ultratrain'', a petroleum products unit train linking the Saint-Romuald (Quebec) Ultramar oil refinery with a petroleum depot in Montreal, exploded when it collided with a derailed freight train between Sainte-Madeleine and Saint-Hilaire-Est, south of Montreal, killing its train crew. The train derailed on a switch frog that broke under the stress; according to many train crews, this spot was known to be defective, but even after repeated reports, management refused to effect any repairs. In memory of the dead crewmen, two new stations on the line have been named after them (Davis and Thériault). On May 14 . 2003 , a trestle collapsed under the weight of a freight train near McBride, B.C. , killing both crew members. Both men had been disciplined earlier for refusing to take another train on the same bridge, claiming it was unsafe. Subsequent inquiry revealed that as far back as 1999, several bridge components had been reported as rotten, yet no repairs had been ordered by management. Eventually, the disciplinary records of both crewmen were amended posthumously. Controversy arose again in Canadian political circles in 2003 following the company's decision to refer solely to its acronym "CN" and not "Canadian National," a move some interpret as being an attempt to distance the company from references to "Canada," particularly in the United States, where Canada's decision to not participate in the noted it could be argued the company is no longer Canadian, being primarily owned by American stockholders. The controversy is somewhat tempered by the fact that a majority of large corporations are being increasingly referred to by acronyms. Despite this, the company is still legally called the Canadian National Railway. In March 2004 a Strike by the Canadian Auto Workers union showed deep-rooted divisions between Organized Labour and the company's current management. The residents of Wabamun Lake , in Alberta , staged a blockade of CN tracks in August 2005, when they were unsatisfied with CN's response to a fuel oil spill into the lake from the derailment of a freight train. It was resolved five hours later when CN officials met with the residents. |
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