Wednesday, February 24, 2010

Huron Central will shut down if funds not in place by end of March

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Huron Central Railway in Canada is once again facing a deadline for an essential capital investment for track improvements needed to keep the line operating beyond August of this year, Sault This Week reports. Mario Brault, president of Huron Central, said from his Montreal headquarters that if the federal and Ontario governments do not announce funding assistance by the end of March at the very latest, the regional short line rail company operating between the Sault and Sudbury would be forced to shut down this August.

"If we haven't heard anything by then (March), I don't think we can really contemplate operating beyond our one-year interim arrangement," he said. "The position of Huron Central after August will be the same as it was in June 2009."

Brault said that while the plans were ready to begin work on railbed upgrades, there would be considerable lead time needed to order materials and hire contractors to complete the project within government deadlines for funding. The total cost for the railbed upgrades remains at C$33 million, but Brault said his company has committed to contribute 10 per cent of that total, or C$3.3 million.

And Sault Ste. Marie Mayor John Rowswell, said that with the previous commitment of C$3 million last summer split equally by the federal and Ontario governments, the actual figure now being asked of both senior governments is C$27 million. Rowswell said that the C$27 million would be used for capital investments to the infrastructure.

Any future contributions from the private sector including major customers like Essar Algoma Steel and Espanola based Domtar, or CP Railway, which owns the rail track, would be operational expenses to ensure Huron Central's long-term viability.

Brault said that his company had provided its shareholders with an update on Feb. 16. In attendance at that meeting was Sault MPP David Orazietti. Brault said that a federal counterpart had not been present, but that the recent announcement by the federal government that it was ready to negotiate financial support with the Province was encouraging.

Asked if he was worried that the federal and Ontario governments were caught up in a game of political ping pong, Brault said, "That may be, but of course, we at Huron Central do not want to be the ball. I think that at a higher level of the government there is a positive spin, but we need to see not only a commitment but an agreement between the two levels of government so we can carry on with the next steps of this project."

Sault MPP David Orazietti, however, said that the recent application to the Community Component of the Build Canada Fund, after a C$12 million application had been rejected through the Federal Infrastructure Stimulus Fund, was still a viable funding opportunity. Orazietti stressed too that an unfinished Provincial Territorial Base Fund Agreement referred to by the Federal Transport, Infrastructure and Communities Minister John Baird, in a recent letter regarding joint government funding for Huron Central capital upgrades, would not delay or hinder financial assistance needed now. He said that the Ontario government was in agreement in principle with that joint program but it was still under review by the Province.

Joe Fratesi, chief administrative officer for the City of Sault Ste. Marie and chair of the committee to secure Huron Central's survival, agreed that there may have been some political posturing at play between the Province and the federal government over a funding agreement to help the ailing rail company.

Fratesi added that when the anticipated funding from the senior governments is announced, CP Rail, with whom Huron Central has a contract, would have a role to play as well.

"Once we know that the governments are committed to the capital [investment] there is a role we will be asking CP to play to make this whole thing work," he said. "The announcement by the senior levels of government is not the final stake in the railbed. It's the second last stake. There is a role and there will be something asked of CP. I am not at liberty to say what that will be, but they will have a role to play in making sure that this solution is sound."

But for Brault and Huron Central, the immediate concern is improving the track to allow them to sustain a speed between 25 mph and 30 mph to guarantee they can be profitable for the long haul. Brault said that while their business could be better, it had improved over 2009.

He said that the company had actually increased its workforce to about 45 employees since they received the interim funding last summer.

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