CP Railway plans Calgary HQ move to cut costs, say unions, source

Mon Nov 26, 2012 3:08pm EST
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By Susan Taylor and Nicole Mordant

(Reuters) - Canadian Pacific Railway is planning to relocate much of its head office from downtown Calgary, union officials and a source close to the company said, under a restructuring plan that its new chief executive will detail to investors in early December.

Chief Executive Hunter Harrison told U.S. union leaders and a Canadian union president that Canada's second-biggest railroad will move employees out of its glass-towered headquarters as part of an ambitious cost-cutting plan.

Harrison, a hard-driving, 50-year veteran of the rail industry, was appointed CEO in June to turn around the underperforming railway after a bruising proxy battle ousted his predecessor, as well as the previous chairman and several directors. He is the hand-picked choice of CP's biggest shareholder, William Ackman's Pershing Square Capital Management, who launched the proxy fight.

One union official said the head office move was to a nearby Calgary rail yard that CP owns. Details are expected Dec 4 and 5, along with an announcement of further job cuts, when Harrison outlines his plan to improve efficiency at CP.

"They're moving the headquarters to Ogden, which just makes sense," said Bill Brehl, president of the Teamsters Canada Rail Conference Maintenance of Way union.

"We're a railroad. What were we doing downtown hanging out with the oil barons? Our place is to be in a rail yard," said Brehl, who was told of the plan by Harrison.

Brehl said the company will rebuild the century-old Ogden yard, constructing offices there. CP decided last year to close the Ogden repair shop, constructed in 1912 on land south east of Calgary's city center. It moved locomotive and train car repair elsewhere.

A CP spokesman declined to comment when asked to confirm the move.   Continued...

A Canadian Pacific Railway locomotive sits at the Obico Intermodal Terminal in Toronto, May 23, 2012. REUTERS/Mike Cassese