Canadian Pacific Railway Ltd. CEO E. Hunter Harrison said yesterday the workforce reduction will come from all areas of the company as slumping cargo volumes caused a 29 percent decline in fourth quarter profits.
Canadian Pacific Railway Ltd. CEO E. Hunter Harrison said on an investor earnings conference call that the company will cut 1,000 jobs in response to falling profits and revenues. The company also plans to decrease capital expenditures by $400 million this year.
CP reported yesterday fourth quarter 2015 net income and revenues were down 29.3 percent and 4 percent, respectively, from the fourth quarter of 2014.
Like most North American freight railroads, CP’s bottom line was hit hard by slumping cargo volumes, especially in raw commodities like coal and crude oil.
CP has slashed about 12 percent of its workforce over the past year and currently employs around 12,800 people in Canada and the U.S. The company also laid up about 600 locomotives and thousands of rail cars as Harrison continued his transformation of the railway from one of the worst performers in the industry to arguably the best.
“I think this model of ours outperforms the competition, maybe even more in hard times than it does in good times,” Harrison said Thursday.
Despite its struggles, Canadian Pacific has been actively pursuing a purchase of number four U.S. railroad Norfolk Southern Railway. Norfolk, Va.-based NS has rejected three separate acquisition offers from CP, deeming the estimated $30 billion stock and cash bid as “grossly inadequate” and unlikely to win regulatory approval from the Surface Transportation Board.
Harrison said that due to mounting opposition and political pressure, CP may change its strategy to acquire NS. CP last week asked the U.S. Justice Department to investigate what it says is a “collective campaign” by North America’s other Class I railroads to block the deal, which has also been met with public opposition from members of Congress, unions and even NS customers.
“When you’re playing the game and somebody changes the rules on you, you have to review your strategies,” said Harrison. “If this is a political contest and we’re going to forget about the process that was designed, and we’re going to let the legislative branch take over, the rules are all changed.”
Harrison declined to elaborate further on how CP’s strategy might change going forward, but company officials previously indicated they would be willing to take the offer directly to Norfolk Southern shareholders and engage in a proxy fight to install new leadership at NS.
“I would say that when you try to anticipate what we might do, you are probably going to get ahead of us a little bit,” he said. “Those of you who have figured out what we’re going to do, you ought to tell me, because I haven’t figured it out yet.”
CP to cut 1,000 jobs, change strategy in NS bid
