MNDM needs help....desperately

The recent open letter from the Minister of Northern Development and Mines, Michael Gravelle gives some clue as to the state of ONTC transformation.

The original announcement to divest ONTC was made in March of 2012 and the subsequent change to transformation happened in April 2014.  In all that time it is most likely that ONTC management put together a plan to meet the government objectives.

Unfortunately, it is also very likely that due to the poor relationship between ONTC and MNDM, that plan was rejected outright, rather than being the foundation for a collaborative effort to bring together financial realities with government policy.  The recent departure of President and CEO, Paul Goulet, is probably a sign that exercise was unable to be concluded successfully.

MNDM is likely now relying on backroom advice from CN, the company who, under Hunter Harrison, pushed railroad efficiency to new highs.  Mr Harrison, who is now working his magic at CP, was heralded as the "best" CEO in the railroading industry for his impact on share price.  One cannot deny that Mr. Harrison understood what was holding railroads back from effectively competing with trucks.  His method of moving to scheduled service, reducing every cost that did not contribute to revenue, pushing asset utilization up and focusing on customer satisfaction resulted in short term gains that were nothing short of spectacular.

Railroading is a long term industry though, with assets that last decades, and the "Harrison effect" has not been proven over the life of those assets.  If these measures could be implemented without the culture of fear that Mr. Harrison used to effect change, and steps taken to ensure capital investments are protected, there is great potential for savings. 

CN's motives in providing advice to MNDM is suspect however....they are still interested in acquiring the ONR and will manipulate government to achieve that aim.  One only has to look at the price when CN sells rail line to the government to know who gets the better deal in any negotiation between the two.

MNDM needs someone within the organization who understands what is necessary to achieve their goals.  Anyone who knows Ontario Northland, knows that there is room for improvement and the union leaders are aware of that.  What is needed is a rail industry professional, who is committed to government policy, yet able to maximize revenue in a region that provides marginal traffic.

One would hope that Minister Gravelle is kicking that search into high gear, before the ONTC disintegrates into unrecoverable pieces before our eyes.