Thursday, December 13, 2007

 

CN management 1992-2002, 2002-2007

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PAUL TELLIER and E. HUNTER HARRISON

On Friday 13th of December 2002, Paul Tellier departed from the executive offices of Canadian National Railway. Tellier, a Canadian, had been president and CEO of CN for 10 years, 1992-2002. Shares of CN dropped by just under 2 per cent, falling $1.28 to close at $67.58. [CBC News]

CN chairman David McLean credited Tellier with driving up shareholder value by almost 400 per cent since the railway was privatized in November 1995.

"In his 10 years as CN's president and chief executive officer, Paul revolutionized the company, turning what once was a bloated, money-losing Crown corporation into a nimble, customer-focused and profitable shareholder-owned enterprise," said McLean, a strong friend of Gordon Campbell.

Outspoken and well-connected politically, Paul Tellier has held several top-level positions in the Canadian public service.

Prior to his CN decade, Tellier had been Brian Mulroney's Clerk of the Privy Council. Tellier was there when arms lobbyist Karlheinz Schreiber was embroiled in a bitter dispute with senior military officers, who were pleased with certain military vehicles already being built by GM in London, Ontario.

Federal bureaucrats also opposed the project because they saw it as an attempt by Thyssen to get around tough laws in Germany that banned weapons sales to pariah states. They were concerned Canada would be a staging ground for questionable international sales.

And the clerk of the Privy Council -- Paul Tellier -- was so dead-set against Thyssen's plans that he tossed arms lobbyist Schreiber out of his office, Norman Spector says in a recent column.

In 1992 the new management team led by ex-federal government bureaucrats, Paul Tellier and Michael Sabia, started preparing CN for privatization by emphasizing increased productivity. This was achieved largely through aggressive cuts to the company’s bloated and inefficient management structure, wide-scale layoffs in its workforce and continued abandonment or sale of its branch lines. . . The CN Commercialization Act was enacted into law on July 13, 1995 and by November 28, 1995, the federal government had completed an initial public offering (IPO) and transferred all of its shares to private investors.” – [http://en.wikipedia.org/wiki/Canadian_National_Railway]

No one should assume that the role and responsibility of the railroads is to serve farmers, shippers, or even Canada, says Canadian Business magazine. A week after the CTA decision concerning GNG the business press reported that a private equity consortium led by Brookfield Asset Management and including Goldman Sachs & Co and Caisse de dépot et placement du Québec was “stalking” Canadian Pacific Railroad.

The aim of such a buyout, of course, would be to squeeze greater profits out of CPR for the benefit of its owners. In 2006 CPR reported a profit of $796 million on sales of $4.58 billion, or 17%. That’s a great deal more than any farmer’s GIC or savings account is providing, and a great deal more than the farm itself returns. It should be noted that Brookfield is not an innocent: until 2005 it was known as Brascan, with a colorful history both in Canada and in South America.

“Brookfield Asset Management Inc., focused on property, power and infrastructure assets, has over US$70 billion of assets under management. We own and manage one of the largest portfolios of both premier office properties and hydroelectric power generation facilities as well as transmission and timberland operations, located in North and South America and Europe.” – <>

E. Hunter Harrison, CN's current executive vice-president and chief operating officer, took over from Tellier. Canadian Business describes him as a good ol' Tennessee boy who spent his youth partying with Elvis at Graceland before starting his rail career in 1964. His entry level position? Crawling under boxcars to oil wheel bearings, while attending Memphis State College.

"I love this business," the 61-year-old father of two told Canadian Business after taking over as conductor of Canadian National Railway three years ago. Harrison has other passions, including show horses and golf. But finding time to play 18 holes with Jeannie, his equally competitive wife, has been difficult since 1993, when Harrison took his first CEO job as head of Illinois Central Corp. (IC). While his golf handicap has suffered, his industry hasn't.

The aggressive cost-cutter is known for running railroads with North America's most efficient track records, and he revolutionized the freight business by running IC trains on set times back when scheduled service was considered impossible.

That's why former CN CEO Paul Tellier made sure Harrison stayed on board as COO after IC was acquired by CN for $3 billion in 1998. Harrison's annual salary is (US)$1.4 million; his annual bonus is (US)$3.9 million. He is known for aggressive cost-cutting. [Canadian Business]

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Comments:
Mary: you'll love this piece on Hunter Harrison -- CEO of The Year by Report on Business Magazine. Actually, the named him Hard Ass of the Year.

www.reportonbusiness.com/magazine

And check out the comments following the article. Yikes!
 
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E. Hunter H.'s mother must've written that huge article.

I kept reading to see if they'd risk spoiling Mr Perfect's image by mentioning the weekly train-wrecks.

They did. But only a few. Thankfully, a commentor provided a short list of the dead -- including a friend of mine, Don Faulkner -- killed in the derailment at Lillooet.

No mention of the dangerous extension of cars, from about 100 to 150.

No mention of the old railroaders' knowledge of dangerous grades in B.C.

No mention of the fish kills at Cheakamus Canyon or Sylvan Lake.

It kinda made me fume. Like "Who cares, we're making money!"

I wanted to sign in and make a comment there but, for some reason, it wouldn't accept me. [chuckle]


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