13 November 2008
CPR Shakes Up U.S. Unit
 Canadian Pacific Railway Ltd. has appointed one of its
executives to head a strategically important division in the U.S. Midwest, asking Vernon Graham to make the American trains run more
efficiently and review a proposed coal megaproject in Wyoming.
CPR, which will hold a four-hour conference in Toronto today for institutional investors, plans to whip Dakota Minnesota
& Eastern Railroad Corp. into shape.
In an internal memo to staff, CPR chief executive officer Fred Green named Mr. Graham as DM&E president, replacing Kevin
Schieffer, who resigned last month.
"There are significant opportunities to reinforce the DM&E's profitability by leveraging our information and operating
systems, our purchasing power, and our safety practices," Mr. Green said. "There is considerable work ahead."
CPR placed DM&E into an independent voting trust in October, 2007, after it bought the regional railway for
US$1.5-billion from a group of private equity firms.
DM&E, which began operating as a separate entity within CPR two weeks ago, sought in the past to embark on a massive Wyoming
venture to haul thermal coal, which is used to fuel plants that generate electricity.
Mr. Graham, CPR's engineering vice-president in charge of transition plans for DM&E, will be based in Minneapolis, a
key CPR hub in the U.S. Midwest, although an office is being maintained in DM&E's South Dakota headquarters in Sioux Falls.
Mr. Graham reports to Kathryn McQuade, CPR executive vice-president and chief financial officer.
Calgary-based CPR has made no decision on whether to proceed with the coal expansion route, but analysts say the railway
will need to find partners to help finance the $6-billion required in capital spending, including installing and
rebuilding tracks from Wyoming's Powder River coal basin to DM&E's South Dakota lines.
Trains would carry coal from Wyoming to South Dakota and Minnesota, en route to coal-fired power plants farther east.
It could take five to 10 years before CPR makes a decision on the Powder River project, assuming it is able to win over critics such
as the Mayo Clinic in Rochester, Minn., where civic leaders are opposed to increased freight traffic on tracks near the renowned
hospital.
At today's annual CPR investor conference, topics are expected to run the gamut from plans for DM&E and diesel surcharges to
pension funding and talks over freight rates with Teck Cominco Ltd.'s Elk Valley metallurgical coal operations in British Columbia.
Metallurgical coal is sold to steel manufacturers in countries such as Japan, South Korea, Taiwan, and China.
In other appointments, Jane O'Hagan, CPR's vice-president of strategy and external affairs, has been named senior
vice-president of strategy and yield. Gord Pozzobon, assistant vice-president of engineering, will replace
Mr. Graham as engineering vice-president.
"There is a rapidly emerging need for the application of new technologies, new infrastructure standards, and for increased
compliance to both internal and regulated standards, both in the U.S. and Canada," Mr. Green said.
CPR won U.S. regulatory approval for the DM&E deal in September and took control two weeks ago. The purchase of the largest
regional railway in North America added 4,000 kilometres of track to CPR's rail network in the United States, nearly doubling its U.S.
Midwest footprint.
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