75 locomotives in CN's 1007 budget

Railway Age, March, 1997

Seventy-five new locomotives ordered this year from GE and GM will accelerate CN's program to replace 543 older units (pictured). Canadian National has adopted a 1997 capital investiment budget totaling $530 million (c). (A Canadian dollar on the day CN announced its program, Feb. 18, was worth .7423 U.S. dollars.)

The biggest item in the budget is $150 million for 40 new locomotives from General Electric of Erie, Pa., and 35 from the Diesel Division of General Motors of Canada Ltd. CN also said it would spend about $100 million on new freight cars but did not give details.

CN President and CEO Paul Tellier said the locomotive order will bring to 180 the number of new units acquired by CN since the beginning of last year. "As a result of these investments, our fleet will be among the most efficient in the North American railroad industry," said Tellier. He said the new power accelerates the railroad's program to replace 543 older units and will be delivered in time to ensure reliable service next winter.

Tellier said the order might have been larger if Canadian railroads enjoyed the kind of accelerated depreciation available to U.S. carriers.

"We have long stressed that Canadian railroads are at a considerable disadvantage in relation to the rate at which we can depreciate equipment, not only with respect to our U.S. counterparts, but also with respect to other Canadian industries such as trucking," said Tellier. "U.S. railroads can depreciate their equipment in as few as eight years, while Canadian railroads must wait as long as 20 years. With a level tax regime, overall we would have purchased up to 20 more locomotives for the benefit of our customers."

CN also announced last month that it is closing its revenue management (billing and accounts receivable) centers in Edmonton, Detroit, and Montreal, and consolidating them into the center at Toronto. This will eliminate 40 permanent and 93 temporary positions and save an estimated $40 million (c) over the next five years. CN will also centralize its accounts payable activities in Montreal, eliminating eight positions in Winnipeg and transferring eight others to Montreal.