CALGARY, Alta. -- Canadian Pacific Railway is set to slash roughly 4,500 jobs by 2016, with about 1,700 of those jobs expected to be eliminated by the end of the month. The job cuts – which will include both employee and contractor positions – will be achieved through job reductions, natural attrition and fewer contractors, according to CP.
CP president and CEO E. Hunter Harrison made the announcement yesterday as part of CP’s “go-forward plan,” which he said was designed to improve service, increase efficiency, lower costs 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.”
Besides job cuts, Harrison outlined additional future plans for CP going forward, including:
• A new longer sidings program, designed to improve asset utilization and increase train length and velocity. Officials say 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;
• Exploring options to maximize full value of existing and anticipated surplus real estate holdings;
• Relocating CP's current corporate headquarters in downtown Calgary to new office space at CP-owned Ogden Yard by 2014;
• Reviewing options for the Delaware & Hudson (D&H) in the US Northeast, while maintaining options for continued growth in the energy business; and
• 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.
Harrison also provided various examples of steps CP has taken over the past five months to become more competitive, including a new executive team, revamped service offerings, and the closure of several hump-switching yards and intermodal terminals in an effort to reduce both costs and footprint.
“We are hearing feedback from customers that they are seeing and liking the results,” Harrison said. “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.
"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."