“It’s VERY provoking,” Hunter Harrison said after a long silence, looking away from the Prairie farm economy as he spoke, “to be called a laggard. VERY!”
This is how I imagine Canadian Pacific Rail’s CEO, Hunter Harrison, to be feeling as I read the Globe and Mail account of his comments yesterday about the federal action on lagging grain shipments by his company and by CN.
Something about Humpty Dumpty’s prideful, dismissive and condescending attitude towards Alice springs to mind. To my mind, anyway. Perhaps this is unfair, because all I have is secondhand knowledge, gleaned through the Globe story. I haven’t run into Hunter at the dozens of farm meetings, conferences and conventions where this has been a hot topic all winter, so haven’t had a chance to hear from the man himself about how he feels his quasi-monopoly is doing in serving the farmer-customers who provide his company with much of its earnings.
Harrison seems to be provoked and outraged by suggestions his railway has fallen short on grain shipments this fall and winter and should face penalties and new legislation to ensure a bare minimum of service. And he is offended that the federal government has belatedly used accusatory language about his company’s performance. As federal agriculture minister Gerry Ritz said at the Friday press conference I attended, “This will be get-to-work legislation,” comparing new regulations and penalties for bad rail service to back-to-work legislation for union-management disputes.
“The railways have dropped the ball.”
Harrison seems to think CP’s doing a pretty good job, given the fact that it’s been a cold winter. They’ve done a pretty good job with container traffic, anyway: “Because that’s one commodity we’re sensitive to,” he is reported as saying in the Globe piece.
“It’s not like grain or it’s not like coal, (in which) if you’re a little bit late you’re still going to haul it.”
That’s exactly the attitude that’s driving grain elevator company executives crazy. They’ve been getting the sense that the railways think farmers and grain companies are over-reacting and should chill. The grain’s gonna get moved sometime, so just calm down.
I’m not an expert on this issue. Our grain transportation reporter, Brian Cross, has been doing a great series digging through this issue, so I’ll leave the complexities to him. But what I notice, as a fellow who gets out and about in the Prairie farm economy a lot, is that every other part of the Prairie grain value chain seems to be constantly pushing itself to new records, new peaks of efficiency and new potentials that were scarcely imaginable just a few years ago. Down in San Antonio two weeks ago, at the Canola Council of Canada convention, all the talk was about pushing Prairie canola production to 26 million tonnes by 2025 – something few believe is impossible, even though that’s a 40 percent boost in production from this year’s record crop. The canola council does this time and again: sets a bold target and drives itself to achieve it.
Remember seven million tonnes by 2007? I doubted they could hit that, but they got there early. Ditto 15 by 15. That’s how a high-functioning industry operates. Everyone in the value gets together and figures out what it’ll take to get there, and then knuckles down and does it.
The lingering worry under the new canola goal is the rail mess. If our national railways can’t get an 18 million tonne crop to market, why shoot for 26? Other commodities aren’t going to be sitting still. In crop ag we always talk about trend line yields, which is comparing everything to a rising baseline rather than a flat one, assuming there should be a relatively predictable rate of production growth.
Somehow I get the sense that the railways think they’re doing a good job if they just reach or come close to previous record levels. I have no doubt they’d like to haul more and more, because that’s how they make money, but when you hear that both CN and CP have laid off staff and gotten rid of locomotives in the last couple of years you really wonder how much they are committed to exceeding previous performance. Do they even want to reach new peaks of performance, or are they happy with “good enough for you” levels? That’s something we’d all like to hear a bit more about – from the railways.
I’ve just gotten done my busiest time of the year, which is covering dozens of meetings, conferences and conventions that occur from October until about now, when farmers get ready for seeding. Other than at the University of Manitoba’s Transport Institute conference, Fields on Wheels, the railways have played almost no role. Perhaps they are active behind the scenes, trying to get a sense of how they can play a dynamic role in pushing Prairie agriculture to the next level, but that’s not the sense I get from others in the industry.
The railways are virtual monopolies, so they don’t don’t need to beg and lobby for farmers’ business. Perhaps that’s why they’re not more active getting out there and communicating with the farmers they serve and to whom they have an obligation. It was certainly odd to see a big ad in the Globe and Mail last week from Harrison but no real attempt to communicate through the newspapers that serve farmers. But if railway potentates want to avoid the coming federal legislation from being truly punitive, perhaps they should get out there and talk to their customers.
At the moment, the railways have managed the near-impossible achievement of outraging and alienating both a non-interventionist federal Conservative government and right-of-centre farm groups that normally don’t like anyone monkeying with the marketplace or free market players.
“How they comply (with the government’s new penalty regime) will probably dictate the nature of the legislation,” Blair Rutter of the Western Canadian Wheat Growers Association speculated to me.
“If they don’t comply, you can expect that this legislation will be far more onerous than they would ever imagine.”
So maybe in the coming days Harrison will get over his irateness and hurt pride and join the rest of the Prairie agriculture business in trying to hit new peaks of efficiency and stop acting like OK-in-our-eyes service is acceptable. If he doesn’t, his legacy could be one of a railway business hamstrung by regulations he and his colleagues provoked. The railways are balanced on a thin wall right now. They should attempt to avoid being toppled.
(By the way, our editor, Joanne Paulson, has an excellent column on this subject on page 11 of the March 13 edition, perhaps in your mailbox right now. I just had to make a similar point, because I feel most provoked by Harrison’s recent comments after a winter of frustration for everybody else.)