Hunter...so far

[cptrainman]

Paul:

I know about the same as you about expressway. I am in the west and this initiative is in the east. I guess EHH likes it or at least see potential in it as it would have been chopped by now.

[cptrainman]

Ed:

Now, before I get into why CP decided to implement local agreements, we must understand what are the two most costly items on the books at any railroad: first is labor and second is fuel.

It was about the time of the last recession that we saw a proliferation of local agreements across the system (I can only speak about Canada. I don't know what happens down south.). A bean counter in Calgary had figured out that if they could implement 12 hour road switchers in a yard, we could save labour and fuel. Instead of 3 shifts in the yard during a 24 hour period, they could implement just 2 shifts at 12 hours. This translates into a saving of 3 people and a locomotive consist. Such a change to the collective agreement would have required a “material change” in working conditions which in-turn would have required a lot of red tape to cut through and payouts to employees so affected by the change. A way around this was “local agreements” which were already provided for in the collective agreements.

The company was so eager to implement these road switchers in the yard that they were giving just about anything to get them through quickly. The locals asked for the world and they got it. However, each local agreement had an escape clause that could be utilized by the company or the union whenever they felt the need to get out of the agreement.

Even before EHH arrived the company started to utilize the escape clause to get out of these local agreements. The local agreements had the company's hands tied. They were not flexible. Even if there was no work to be done, the crews would be paid the same rate. As long as they did not book rest or leave the property, they were paid for 12 hours of work. The company must have looked at the collective agreement again and realized the definition of a road switcher is much more flexible and pays at a much lower rate than these road switchers from the “local agreements”. The collective agreements already allowed for road switchers to work the yard. There is a clause in the agreement that states, “if a road switcher does not leave the terminal area, they will be paid at yard rates.”

Today, with EHH, he is obviously attempting to simplify the business and get everybody on equal ground. All local agreements are gone. Everybody works from the collective agreement.

The company saves money because the collective agreement rates are lower and the definition of a road switcher is more flexible. For example, I am now paid 175 miles at road switcher rates for 12 hours on the job. The local agreement would have paid me 200 miles at yard rates for the same job. Simple math shows a 12.5% decrease in miles paid, and factor in that road switcher rates are lower than yard rates, then I am reaching the 20% reduction in pay for the same work. In addition, there is a guarantee of 8 hours of pay a day rather than 12. If I finish my work in 10 hours, the company has the choice to send me home with 10 hours pay or keep me for more work up to 12 hours. However, the cost to the company is I have the option to book rest after 10 hours work.

This is the way I see it. I might be wrong about my assumptions of the company's views as I am not a HQ employee.

For me, when we had the local agreements, I could not hold these road switchers. Just the last 3 months before they were cancelled I was able to hold a couple of them on vacancies. They paid very well. Now, because the local agreements are gone and the company is fully utilizing road switchers everywhere, I am able to hold a pretty good road switcher. Like I said before, my hourly rate of pay is lower than what I am used to working in the yard, but my gross pay is higher because I am getting more hours.  

Do you know what's ironic about all these changes? We went full circle! We went from working the collective agreement to working the local agreement back to working the collective agreement. Yes, we needed management change at CP. It is as clear as a blue sky. 

[Paul_D_North_Jr]

cptrainman - Thanks for this update - I was wondering about it all just a few days ago, so this is very timely.  It is a very forthright, candid, and honest assessment of how you see it - good, bad, and/ or indifferent.  As such, it's far more valuable than anything put forth by the 'spin doctors' for either side or anyone with an axe to grind.   

Any word, insights, or speculation on the future of the Expressway service ?  See: http://www.cpr.ca/en/ship-with-cp/what-you-can-ship/expressway/Pages/default.aspx 

http://www.cpr.ca/en/customer-centre/shipping-guides/Pages/expressway.aspx 

http://www.cpr.ca/en/contact-cp/specialized-services/Pages/expressway.aspx 

The "Properties" info (meta-data) for the brochure on it at this link: http://www.cpr.ca/en/customer-centre/shipping-guides/Documents/expressway-operating-procedures.pdf - says that the brochure was recently created on Jan. 23, 2013, so perhaps its position is secure ?

Thanks again !

- Paul North.   

[MP173]

CP:

Your observations and writing skills are outstanding.  You have given a very good review of the changes at CP.  Thanks for reporting.

The key is your last sentence "The company is healthier".  Change such as this hurts individuals.  There is no doubt about it.  It sounds like these changes were needed. 

Perhaps you can touch on all of these "local contracts" and why these were established.  Did these "locals" apply only to certain districts, or specifically to certain jobs within the district?  What avenue gave EHH the ability to cancel these locals?  I always thought that collective bargaining meant both sides were required to negotiate and agree.  Did these locals have an escape for CP?

Hopefully you have company stock and will take advantage of these changes.

 

Ed

 

[cptrainman]

Its been a couple of months since I felt the need to spew or get something off my chest.

The changes here at CP are touching everybody and  every functional group of the business. Many jobs have been eliminated and many talented people have been laid off, given severance, or bridged to pension. Even the titles of functional groups within the company have changed. There is no stone left unturned  in EHH's CP.

Now it seems EHH is simplifying the structure of the business and putting everybody on equal ground. The expectations are being laid out for all to see. I can work here or anywhere else and the expectations and labor agreements will be the same. Previously,  with all the local agreements, it was very confusing for me as to what was allowed and what was not and it must have been a administrative nightmare for the company trying to figure out what was legal and what was not legal in each city.

Most  senior T&E (train and engine personnel as we are now called) have had to absorb large pay decreases. Some of the older guys working the sweet assignments have had their pay cut by 20%. This was possible because of the way union contracts have evolved over the years. The last few years CP avoided the general contract and created many local agreements. Hunter came in an cancelled all the local agreements, thus, we were all subject to the provisions of the general contract which is not as generous as the local agreements. 

Our pensions have been cut and a cap put in place that is nearly $20,000 less than the old cap. However, an employee who has his pension time already accumulated will not be affected. I am affected with this new cap and I am grandfathered with this cap. A new employee will have even a lower cap than mine.

As the way things in general are, one action has a equal but opposite reaction. Employees such as myself and younger will see either an increase in gross pay or no change at all. I find myself in a position now of being able to hold jobs that I could not before. The hourly rate is less than before, but I am able to work more hours. Previously, I was mostly able to hold yard assignments but now I am able to hold road switchers. 

In the end I am working more hours and getting more gross pay, but each hour pays less than before. Strange indeed. I don't know if I should be happy or mad?

The changes at CP have had a huge impact on people. So many people have lost their jobs and I am sure more will lose their jobs as time passes.

However, a loss of work at one place has become an increase of work at another. 

The amount of work that needs to be done as a whole is still the same as before EHH, but with the restructuring of operations, it appears that my terminal has become very, very busy. The work that was previously humped in Calgary and Winnipeg has been spread to other cities. Where some cities are seeing huge layoffs, my city hasn't laid off a single person (yet).

Strange indeed the way people and work are now being distributed.

When I started this post I was worried about the changes. I have to say so far, other than the pay and pension issues, I don't feel much different than before. This is my experience but I know there are others whose lives have been changed for the worse because of EHH, For me, so far so good.

There is no doubt as to the success of EHH so far, CPs stock has gone from about $70 a year ago to about $115. I remember when it was around $40. 

The company is healthier.

[Paul_D_North_Jr]

CPTRAINMAN - Thanks for your candor and forthrightness in sharing your thoughts on this, unpleasant or uncomfotable as they may be.

Since you're able to separate yourself from the events, may i suggest that your keep good notes of all this.  it might make for a good book or article along the lines of "An Operating Employee's Observations of Change at CP" (clever titles are not my forte, I readily acknowledge, but hopefully you get the idea).  In a few years it might be a valuable resource for rail historians, business school case studies, "Railroad Reading" articles in Trains magazine, etc. 

- Paul North.    

[cptrainman]

AgentKid

Now for my take on the announcements.

Centralized Decision Making - Decentralized Execution

It is the correct policy, but over a century of operating practice means it will be a difficult thing to do. It will mean a radical shift in attitudes on both sides of the equation. Eliminate vertical top down micromanaging, and horizontal buck passing. In the pdf slide show on the CPR website they talk of the War on Bureaucracy, let's hope it can finally be won.

Layoffs

The local media have quoted EHH as saying that at present the company is experiencing about 5,700 retirements/resignations a year, so the 4,500 announced job cuts should be able to be dealt with through natural attrition. However, there is the one chokepoint of 1,700 job cuts in the next month, let's hope cptrainmen makes it through.

EHH isn't the first CPR CEO to talk this talk - let's hope his management team can walk the walk.

Bruce

Bruce thank you for your concern about my future employment. I have enough seniority that I have very little to worry about. What I am worried about is whether I will hold an engine or not. Small beans, really, compared to other's who are worried about their employment. 

My work attitude has always been pretty good so I am not worried about being fired for being non-productive. The Trainmasters here know I get the job done, and I do what I can to keep the wheels turning. If my reputation was noted as being lazy or argumentative, then I would be worried about my job. They are going after those guys as we speak.

I am sure you noticed the change at Alyth? At least 65 people have lost their jobs due to the closing of the hump and the redistribution of work.  Calgary is just a run through terminal now.

 

[cptrainman]

dakotafred

cptrainman

Oh I forgot to mention. EHH's address is a two day event in New York. My fate is in his hands. 

 

Better there than in the hands of the previous administration? (Remembering your many frank posts about the bad railroading that went on previously.)

After reviewing the notes and slides from the CP website, I have to think this presentation was anti-climatic. There is nothing new there. This thread and others have already disclosed/predicted the same as in the presentation.

Putting a number to the layoffs is a bit of a shock, but we all knew there were going to be cuts in people. Like I have been telling my junior coworkers who are now worried about their future, "The work is still there. It has just been moved to other places." Those "other places" will be where the company expects to see productivity improvements. Like the presentation says over and over again, "Do more with less." So we get some of the new work due to the closing of Calgary and Winnipeg but no new people to do it, and perhaps even fewer people in the future.

My previous posts were quite frank. My frankness helped me vent my frustration about watching my company be driven into the ground. Now I can say we are starting to railroad again. The new guys are still learning how to railroad efficiently but that is expected as they were trained under the old adage  "Nobody moves, nobody gets hurt." We are starting to believe, "Keep the wheels turning, this is how we make our money, and never sluff a customer."

There are still too many managers with too soft of jobs. However, there is a change coming. It can been seen with some managers. Some are becoming more hands on and more proactive. Some are just counting the days until they are gone.

Overall, I like what EHH is doing. No doubt CP will become a better company. 

[AgentKid]

Now for my take on the announcements.

Centralized Decision Making - Decentralized Execution

It is the correct policy, but over a century of operating practice means it will be a difficult thing to do. It will mean a radical shift in attitudes on both sides of the equation. Eliminate vertical top down micromanaging, and horizontal buck passing. In the pdf slide show on the CPR website they talk of the War on Bureaucracy, let's hope it can finally be won.

Layoffs

The local media have quoted EHH as saying that at present the company is experiencing about 5,700 retirements/resignations a year, so the 4,500 announced job cuts should be able to be dealt with through natural attrition. However, there is the one chokepoint of 1,700 job cuts in the next month, let's hope cptrainmen makes it through.

EHH isn't the first CPR CEO to talk this talk - let's hope his management team can walk the walk.

Bruce

[Paul_D_North_Jr]

VerMontanan

PNWRMNM

I agree, no surprise. I never thought there was a business there for DME or CP. This charge is a public anouncement that CP management does not expect to continue the project. 

  I also agree.  There never was any merit in building into Wyoming even before coal demand tanked.  But one can only wonder what a mess this would be now had the DM&E received their government loan and started construction!

There's a technical term for this kind of railroad - built just to extort money from an existing railroad by being a competitive threat, with not so much intent to actually operate the line - but I can't remember it right now.  When the Nickel Plate was built, it was viewed as that kind of a railroad to the New York Central.  In retrospect, the DM&E proposed line seems to be of like kind.

- Paul North.   

[dakotafred]

cptrainman

Oh I forgot to mention. EHH's address is a two day event in New York. My fate is in his hands. 

 

Better there than in the hands of the previous administration? (Remembering your many frank posts about the bad railroading that went on previously.)

[CNW 6000]

From CP's website - http://www.cpr.ca/en/news-and-media/news/Pages/cp-outlines-new-vision-for-the-future.aspx

Canadian Pacific outlines new vision for the future 

December 04, 2012  |  New York  

Railway on track to achieve mid-60s OR for 2016

Canadian Pacific (TSX:CP)(NYSE:CP) President and CEO E. Hunter Harrison today outlined CP’s go-forward plan for change that will greatly improve service, increase the railway’s efficiency, lower cost and grow the business.

“Momentum is building at Canadian Pacific and the organization is driving to a culture of intense focus on operations.  Service will be what drives this organization, by providing a premium, reliable product offering through a lower cost operation,” Harrison said.  “We have initiated a rapid change agenda and have made tremendous progress in my first 160 days, and we are only getting started.”

Progress Already Underway

Harrison provided various examples of steps taken over the past five months highlighting CP's evolution to a more competitive railway, including the following:

• New executive leadership team now in place including a new Senior Operations lead team with a mandate for centralized planning and decentralized execution, to eliminate bureaucracy and have service decisions made faster and closer to the customer;
• Revamped intermodal and merchandise train service resulting in faster transit times for customers -  example of new intermodal services connecting Vancouver to Chicago or Toronto;
• Closure of hump-switching yards in Toronto, Winnipeg, Calgary and Chicago - producing significant cost savings and more efficient operating practices;
• Closure of intermodal terminals in Milwaukee, Obico (Toronto), and Schiller Park (Chicago) - reducing footprint and operating expenses while also facilitating efficient operating practices and reduced end-to-end transit times;
• Improved train service and network velocity resulting in the need for 195 fewer locomotives and 3,200 fewer leased rail cars – current stored, year-to-date lease returned and declared surplus locomotive units total 460.

Harrison continued, “We are hearing feedback from customers that they are seeing and liking the results.  The reduced number of assets and the decentralized decision making within the organization will allow us to appropriately size to any changes in market conditions. I have always maintained that by focusing on the best possible service, along with appropriate cost containment, the operating ratio will take care of itself. CP is no different; we already see the service and related bottom line benefits of our early actions.  It's an exciting time to be a part of this great franchise.”

The Plan for Change Going Forward

“We now have a leadership team that understands the urgency of making change and improving the culture of this organization” Harrison said.  “CP has many talented railroaders who want to win.  Together we are squarely focused on improved service and becoming the low cost carrier.  This will allow us to continue to grow with our customers.”

Moving forward, Harrison outlined various plans CP will execute to continue to improve service reliability, increase the railway’s efficiency, and grow the business.  Key highlights include:

• Reduce roughly 4,500 employee and/or contractor positions by 2016 - through job reductions, natural attrition and fewer contractors.  We have already made progress on this front and expect 1,700 positions to be eliminated by year end;
• New longer sidings program will improve asset utilization and increase train length and velocity – The plan will allow CP to move the same or increased volumes with fewer trains, and is expected to save over 14,500, or 4%, crew starts;
• Explore options to maximize full value of existing and anticipated surplus real estate holdings;
• Relocate CP's current corporate headquarters in downtown Calgary to new office space at CP-owned Ogden Yard by 2014;
• Review options for the Delaware & Hudson (D&H) in the U.S. Northeast, while maintaining options for continued growth in the energy business;
• Announced earlier, CP is seeking expressions of interest on the 660-mile portion of the former Dakota, Minnesota & Eastern (DM&E), west of Tracy, Minnesota.

"I am excited about what we've achieved to date, but we have only just started this journey to being a more competitive railway. We will continue to drive our service offering while focusing on taking unproductive costs out of the business.  We see a strong earnings profile and solid free cash flow picture emerging." Harrison added. "Canadian Pacific is a great franchise with strong growth upside and we are more confident than ever that we will drive shareholder value long into the future."

Financial expectations on CP's journey to 2016 include:

• Compound annual revenue growth of 4% - 7% off the 2012 base
• A full-year operating ratio in the mid-sixties for 2016
• Cash flow before dividends (*see Non-GAAP Measures below) of $900 million - $1,400 million in 2016
• Annual capital spending in the range of $1.0 - $1.1 billion over the period

Key Assumptions

• Average fuel cost per gallon of $3.45 U.S. per U.S. gallon
• Defined benefit pension expense of $140 -  $150 million through 2016
• Defined benefit pension contributions between $100 - $125 million through 2015 increasing to $200 - $300 million in 2016
• A tax rate of 25 - 27%
• CP becomes fully cash taxable during the four-year period
• Canadian to U.S. exchange rate at par

Fourth Quarter 2012

As previously noted on December 3, 2012, CP anticipates taking a fourth quarter estimated pre-tax non-cash charge of approximately $180 million ($107 million after tax) on its option to build into the Powder River Basin.  CP also anticipates taking a charge related to labour and other restructuring activities, the amount of which is under review.

[CNW 6000]

cptrainman

CNW 6000

Tune in tonight from 5-6 PM EST for the plan from da man.

Oh I forgot to mention. EHH's address is a two day event in New York. My fate is in his hands. 

I don't envy your position right now.

[cptrainman]

CNW 6000

Tune in tonight from 5-6 PM EST for the plan from da man.

Oh I forgot to mention. EHH's address is a two day event in New York. My fate is in his hands. 

[cptrainman]

CNW 6000

Tune in tonight from 5-6 PM EST for the plan from da man.

A hint of what's to come..

Selling off west end of DM&E...

http://www.cpr.ca/en/news-and-media/news/Pages/CP-expression-of-interest-for-DME.aspx

[CNW 6000]

Tune in tonight from 5-6 PM EST for the plan from da man.

[VerMontanan]

dakotafred

Yes; even if traffic had remained the same, the effect would have been to drive down rates for everybody, to the ultimate loss of stockholders and the industry.

 

Actually, even assuming that DM&E could have wrestled some coal traffic away from UP and BNSF from the PRB to places like Wisconsin and Chicago interchange (iffy at best), it wouldn't have any effect on coal from the PRB going to Texas, Louisiana, Kansas, Arkansas, Oklahoma, Colorado, Missouri, Arizona, Georgia, Alabama, Washington, or British Columbia because DM&E didn't go there and even CP doesn't go to those places or has an uncompetitive circuitous route.  In other words, to the vast majority of destinations for PRB coal, the DM&E/CP couldn't even be a player.  It's hard to even imagine how this whole thing could have ever been conceived in the first place, really.

[dakotafred]

Yes; even if traffic had remained the same, the effect would have been to drive down rates for everybody, to the ultimate loss of stockholders and the industry.

[VerMontanan]

PNWRMNM

I agree, no surprise. I never thought there was a business there for DME or CP. This charge is a public anouncement that CP management does not expect to continue the project. 

 

I also agree.  There never was any merit in building into Wyoming even before coal demand tanked.  But one can only wonder what a mess this would be now had the DM&E received their government loan and started construction!

[PNWRMNM]

I agree, no surprise. I never thought there was a business there for DME or CP. This charge is a public anouncement that CP management does not expect to continue the project. 

The accounting charge will depress earnings in the current quarter, but is obviously an extra-ordinary charge attributable to the previous management. It will also reduce the asset base by the amount of the charge. That will increase retern on investment going forward even if earnings are flat. Now is the perfect time for Harrison to take the charge.

Mac

[jeaton]

And not surprised.

[jeaton]

cptrainman

Its been a while since the last update but today and tomorrow should be interesting. Today there is an announcement on CP's website about PRB. It is officially dead.

http://www.cpr.ca/en/news-and-media/news/Pages/CP-to-write-down-Powder-River-Basin-option.aspx

Tomorrow EHH is supposed to present his plan for CP to the public.  

Activated

[cptrainman]

Its been a while since the last update but today and tomorrow should be interesting. Today there is an announcement on CP's website about PRB. It is officially dead.

http://www.cpr.ca/en/news-and-media/news/Pages/CP-to-write-down-Powder-River-Basin-option.aspx

Tomorrow EHH is supposed to present his plan for CP to the public.  

[cx500]

I imagine the major work programs (ties, ballast, or rail) were approved, scheduled and material ordered before EHH joined.  Next year is when we will really see his stamp.

John

[cptrainman]

Ulrich

CP here in the East has been getting a much needed upgrade...westbound lines out of Toronto have received new ties and really heavy ballasting. Maybe an upgrade for a sale, but i don't think so.

We have been seeing it out here too. A lot of cosmetic stuff is being fixed up. Actually, it is nice to see.

[cptrainman]

trainboyH16-44

So, what trains are being classified currently at Alyth besides local traffic, and where will they be classified in the future?

As to the first question I don't know exactly, as  for the second question the switching is being performed at elsewhere. Quite vague, but I am not in management so I don't have access to the operating plan.

[cptrainman]

Ok I need to correct my previous post. The Alyth rumor is not a rumor and from I learned last night the implementation of Alyth as a run-through terminal is currently underway. I can only speculate as to what the eventual goal is, but I believe 12th St will be physically gone within a couple of years replaced by a locally controlled interlocking, or if there is enough money, build a fly-over. Perhaps the hump will be buried forever and only a small classification yard will be left.

[Ulrich]

CP here in the East has been getting a much needed upgrade...westbound lines out of Toronto have received new ties and really heavy ballasting. Maybe an upgrade for a sale, but i don't think so.

[trainboyH16-44]

So, what trains are being classified currently at Alyth besides local traffic, and where will they be classified in the future?

[cptrainman]

Lately it has been quiet in my part of the woods. I guess we are all waiting for the 1st week of December. That is when EHH will disclose his operating plan for CP.

There is one big rumor going on around here. Alyth is going  to become a run-through terminal. Say good bye to train classification in Calgary except for the local traffic. Makes sense to me as Alyth is just a big bottle neck.

The property has been getting a face lift. It looks much better around here than it used to. 

I am feeling exhausted. We are all working so hard with little or no breaks and with little recognition. All this for the pay cut we are going to receive when our contract finally settles.