Harrison, tipped for CP Rail, shifted culture at CN rail

Fri Jan 13, 2012 4:50pm EST
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By Allison Martell

TORONTO (Reuters) - Hunter Harrison engineered a turnaround at Canadian National Railway by making his trains run on time, like dictator Mussolini promised for Italy, calling even low-ranking employees if a screen mounted in his office pointed to a problem.

Now his minority shareholder backer wants him to conjure up the same magic at rival Canadian Pacific Railway Ltd, helping the storied company improve its worst-in-class operating performance.

CP is pushing back against these proposals, from activist investor William Ackman, and CN has urged Harrison to reconsider his interest in the rival railroad.

"I'm personally convinced that he could go in and help them," said Les Dakens, who ran human resources at CN under Harrison. "Probably his best legacy at CN is that he developed his successors, the Claude Mongeaus of the world," he added, referring to the railway's current CEO.

However analysts also admit the circumstances are different for the two railways. CP's trains battle with steeper mountain grades and the company has a heavy exposure to a single big customer, British Columbia-based miner Teck Resources Ltd.

Harrison certainly transformed the culture at CN, which reinvented itself as a public company after its 1995 privatization, boosting efficiency and cutting costs.

But many of the changes that helped CN - tighter schedules, longer trains, more efficient locomotives - are already in place at CP, or planned by Chief Executive Fred Green. Many observers are unsure if Harrison's heavy-handed, detail-oriented management style can shift the culture at CP Rail.

"What could a new CEO accomplish that this one can't? I think there's a lot of uncertainty there," said Morningstar analyst Keith Schoonmaker. "It's not like Green has been sitting and doing nothing."   Continued...