Communications and Public Affairs
P.O. Box 6042, Station Centre-ville
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Lean and Hungry
26 Number 2
operating unit has authority to implement change, in quest for
EOU gets in fighting trim
for renewed assault on
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
Not so. The new EOU management team's goal is to turn around rail operations in the
"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
"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
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
"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.