Cordova Bay Station web pages require a JavaScript enabled browser such as Microsoft Internet Explorer version five or greater or Netscape version four or greater. Alternately, JavaScript may have been turned off in your browser. Open your browser preferences and enable JavaScript. You do not have to restart your computer or browser after enabling JavaScript. Simply click the Reload button. When enabled, JavaScript has no effect on your privacy settings and no cookies will be written to your computer - William C. Slim.
       
CPR Magazine Article
Communications and Public Affairs
P.O. Box 6042, Station Centre-ville
Montreal P.Q. H3C 3E4
 

Volume 26   Number 2

March 1996


Lean and Hungry

Autonomous operating unit has authority to implement change, in quest for profitability.
EOU gets in fighting trim for renewed assault on
eastern marketplace
 
Tim Humphreys - C&PA, Montreal
 
Montreal - While much of the railway's attention is focused on the transition to a Calgary-based operation, some Eastern Operating Unit (EOU) employees might feel that they've been left behind. Some are even saying EOU means "End Of Us"
 
Not so. The new EOU management team's goal is to turn around rail operations in the East.
 
"We are not walking away from our difficulties in the East", CPRS President & CEO Rob Ritchie said. "To the contrary, we have set up a strong regional railway. That unit has the mandate to succeed, not to fail".
 
"Our challenge is ambitious but achievable", said EOU President Jacques Cote. "We have about $700 million in revenue each year. It is a solid revenue base but our costs are significantly higher. We need to turn this around".
 
Headquartered in Montreal, the EOU will be responsible for operations between Montreal-Chicago-Toronto and the northeastern lines of the Delaware & Hudson.
 
"We've clearly defined our territory and responsibilities and identified our markets and strengths", Cote said. "We are now setting out our business priorities for the next few years. We are finalizing our plans to make an effective transition from the Class I railway mindset we have had to the low-cost, regional operator habits we need today and in the future.
 
"Our management structure is deliberately small, simple and lean. It minimizes bureaucracy and provides us with the tools to build a more secure business environment for the future. Its strength will come from the partnerships, ideas, and improvements each and every EOU employee will be asked to build upon in the coming months", Cote said.
 
The market in which the EOU will be competing is far different from that of Western Canada, where bulk commodities over long distances make up most of CP Rail System's business.
 
In the East, there is comparatively less traffic. Customer inventories are deliberately kept to a minimum today, and products the railway handles on their behalf must meet just-in-timerequirements. Much of the traffic is time-sensitive.
 
"Trucks are our primary competitor for this traffic", said Paul Gilmore, chief operating officer for the EOU. "Distances between key markets are well within the truck-competitive range. Highway systems in the East are extensive and trucks benefit from using them, without having to bear the full share of the costs of building and maintaining them. Currently 70 percent of freight traffic now moves over asphalt".
 
Meanwhile, the profit margins of EOU customers are thinning as they struggle to remain contenders in their respective markets, so they are demanding more from the railway - for less. Moreover, market and regulatory pressures have reduced rail freight rates by more than 30 percent from what they were seven years ago.
 
"We have a mandate and, more importantly, strong support from Canadian Pacific to put our balance sheet in order", Cote said. "The EOU is an autonomous operating unit and it has the authority to begin implementing the changes needed to make its operations profitable. Our success will ensure a stable future and help stem the losses of employment the industry has witnessed over the years.
 
"The EOU has a lot going for it. We have a strong position at the Port of Montreal. The D&H gives our Canadian customers seamless access to the U.S. northeast. And, we're a strong player in the Montreal-Toronto-Chicago traffic corridor", Cote said.

This CP Rail News article is copyright 1996 by Canadian Pacific Railway and is reprinted here with their permission. All photographs, logos, and trademarks are the property of the Canadian Pacific Railway Company.