HCR president’s fall color is rosy; C$30 million will do the job

Mario Brault, president of Huron Central Railway, sees on the horizon for the first time, a profit for his company, Sault Ste Marie This Week reports. He doesn't look for huge sums of money. Brault, upbeat and forthcoming, pointed out few companies can survive without "a little bit of profit," and a C$33-million contribution from the Government of Canada and the Province of Ontario has opened the way.

His company will share
its good fortune.

One hundred per cent of
the work to restore the rail line between Sault Ste. Marie and Sudbury will go
to tender. It’s typical of the industry in Canada, "in my
experience," when government becomes involved, Brault said during a
telephone interview from his office in Montreal.

Huron Central will not receive
money for regular maintenance. HCR employees will do regular maintenance of the
track and along it. The recently-announced C$30-million fund "will not
solve a maintenance-of-way problem," he explained. "It will allow us
to operate at 25 miles an hour," an industry standard for short-line,
freight railways. The money will go toward reinforcing the structure. Huron
Central has not up to now been able to invest in the railway because it has
consistently lost money, Brault said. "The improvements will bring our
speed up from 10 miles an hour."

The money will go for
replacement of "well over 100,000 ties . . . miles of rail. It’s a major
program." Could one contractor take all of it on? "I’d be surprised
if one company could do it." The work requires a series of different
specialties; he said and expressed his hope that local contractors would bid on
the project.

First Nations along the
route will have an even chance to compete. "We can’t establish a definite
percentage but will give them as much work as they can do if they set up a
company to do it," he said. The railway will choose its contractors based
on price and specifications, Brault said.

Brault expresses as
"commitments" or "obligations" the strings attached to the
government funding and deals made with the company’s two major shippers, Essar
Algoma Steel and Domtar’s paper mill in Espanola. HCR and the federal
government have not finalized the details of their arrangement. The company
will have "some commitment" with the province to maintain operations.
Huron Central expects to run the line "for many more years" than the
five years over which the program will remain in effect, Brault said.

What might happen is
"always contingent on having traffic." The railway company would
readdress the business plan if Essar fails. Action to take in the event of a massive
failure is in the details of the arrangement, Brault said.

HCR has had a lease
agreement since 1997 with Canadian Pacific Railway to insure exclusive use of
the line, Brault said. "We have extended the agreement to long beyond 2017
(end of HCR’s 20-year lease)."

Brault, as president of
Genesee & Wyoming Canada Inc., also controls two other shortlines in Canada
and running into the United States. Quebec Gastineau Railway and St. Lawrence
& Atlantic Railroad Co. consistently turn a profit. G&WCI leased the
Huron Central track before acquiring the other two rights-of-way, which the
company owns.

How G&WCI would
divest itself of Huron Central would depend on business developments, Brault
said. He gave the idea short shrift. He looks, instead, toward the long-term
survival of the Sault Ste. Marie- Sudbury link.

Right now, Essar and
Domtar are the railroad’s majority customers, accounting for 80 per cent of
freight, he said. The railway "will become more aggressive in developing
sidelines." What sidelines he has in mind are proprietary information
because of competition, but Brault vows, "The future looks more
promising."

Huron Central has never
made a profit for G&WCI "because of a combination of issues, largely
due to a limited market," and year-over-year, the company has been able to
do only "a patchwork" on track repair. Short on money, it couldn’t
invest, Brault said.

Does the company expect
to make money now?

"Yes," Brault
said.