Canadian National Railway Company (CN)
The Canadian National Railway Company (CN) is a major transportation entity in Canada, established in 1919 through the amalgamation of several financially troubled railroads. Originally a Crown Corporation, CN has evolved into the largest rail network in Canada and the only transcontinental railway in North America, facilitating crucial freight services across approximately 18,600 route miles. At its peak, CN employed around 100,000 workers; however, workforce numbers have dropped significantly due to mechanization and industry changes, with about 23,971 employees reported in 2022. The company plays a vital role in the Canadian economy, transporting goods valued at approximately $250 billion annually.
Privatized in 1995, CN has undergone several leadership changes and strategic acquisitions to enhance its operational efficiency and market reach, including significant expansions into the United States. Despite its economic contributions, CN has faced challenges, including labor disputes, safety concerns, and environmental scrutiny, particularly regarding maintenance standards and operational practices that led to derailments. In recent years, the company has prioritized safety, achieving significant milestones in employee safety and earning recognition in the industry. CN remains a significant part of Canadian infrastructure and culture, with historical contributions to media and iconic landmarks like the CN Tower in Toronto.
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Canadian National Railway Company (CN)
- Date Founded: 1919
- Industry:Railroads
- Corporate Headquarters: Montreal, Canada
- Type: Public
Canadian National Railway Company (CN) was formed by the amalgamation of two of the largest but financially beleaguered railroads in Canada, the Canadian Northern and Grand Trunk, which were merged along with two other government-run rail companies, Intercolonial and National Transcontinental, in 1919. CN was incorporated as a Crown Corporation, which is a wholly owned government entity with an autonomous management body.
After nationalization, CN became the largest rail network in Canada and eventually also the only transcontinental railway network in North America until 2023, employing about 100,000 personnel at its height. But with increased mechanization, deregulation, and, later on, the privatization of railways, the number of workers was reduced to about 25,000 by 2024. At the end of 2024, the company reported 24,987 employees and about 18,800 route miles of rail lines in North America, including Canada’s five major ports and extending into the American states of Illinois, Tennessee, Michigan, Minnesota, Wisconsin, and Mississippi, all the way to the Gulf of Mexico.
CN was privatized in 1995 in the largest privatization deal in Canadian history to that point. Privatization ensured accountability for the shareholders and operational efficiency for the railroad. Over the years, the company has emerged as indispensable to the functioning of the Canadian economy, transporting goods worth approximately $250 billion Canadian ($181.7 billion) annually as of 2024, ranging from forest goods to petroleum and chemicals, automobiles, and consumer goods.
History
Since the incorporation of CN in 1919, the fiscal and managerial leadership of its chief executive officers, including Sir Henry Thornton, Donald Gordon, Ronald Lawless, and Paul M. Tellier, has shaped the growth of the company. Thornton became the first president of the merged CN in 1923. He took the reins as the company was challenged by ballooning public debt and stunted economic activity as the world underwent the Great Depression. Thornton started working on reducing expenses and expanding the CN network into newer regions and industries. Under Thornton, CN diversified into hotels, telecommunications, and maritime services. The company expanded its freight services to profit from the silk trade thriving between Asia and North America in the mid-1930s. In order to be competitive for the silk trade, CN introduced higher-speed freight trains called CN’s "Silkers."
After a brief period of financial recovery, the profits suffered again when World War II started, as freight volumes slipped and demand for passenger services remained weak. The company brought former banker Donald Gordon on board. Gordon made substantial investments in modernization of the locomotives and replaced the steam engines with diesel engines, which saved the company about $35 million per year on average. Gordon also secured recapitalization from the government to optimize its efficiencies while catering to some of the unprofitable territories.
In the 1960s, CN was eventually deregulated to make it a commercially viable company. Canadian lawmakers passed the National Transportation Act that let the government compensate CN for the unprofitable services and lines run by the company to serve the public. The legislation gave CN the leeway to be driven by profitability and operate as a private enterprise. In 1976, CN’s non-performing passenger service was hived off into a newly formed company, Via Rail Canada, Inc.
In 1987, under the new leadership of Ronald Lawless, the company grew leaner but not necessarily more profitable. He cut 60,000 jobs and reduced the debt by C$1.36 billion. He sold the company’s telecommunications, trucking services, and hotels business, but the company continued to reel in losses. Paul M. Tellier was hired to replace Lawless in 1992.
Though Tellier had no previous experience within the industry, he was able to diagnose the problems within the company, one of the most important being poor capacity utilization. Looking at the state of affairs in the company, he predicted that the losses could mount to C$1.5 billion if corrective measures were not taken immediately. He sharply reduced the labor force to 19,400. In 1995, legislation was passed favoring privatization of CN. In order to ensure national interests, the legislation laid down conditions that the headquarters of the company would remain in Montreal, and no individual foreign investor could hold more than 15 percent of the company shares, though no such rule applied to Canadian investors. The initial public offering (IPO) raised C$2.26 billion for the Canadian government, oversubscribed by eight times. Tellier aimed to build CN into an all-service transportation company in the North American region, carrying all the goods permissible under the North American Free Trade Agreement (NAFTA).
In 1999, CN expanded its presence further into the US with the acquisition of Illinois Central Corporation (IC) for $2.4 billion. CN’s system hitherto reached as far as Chicago from Vancouver and Halifax. The acquisition allowed CN to assume IC’s lines plying from Chicago to New Orleans. Later acquisitions included the Wisconsin Central railway in 2001, the rail and marine assets of Great Lakes Transportation as well as a share in BC Rail in 2004, and the Elgin, Joliet & Eastern Railway in 2009. In 2018, CN further expanded, acquiring TransX, one of the oldest transportation companies in the world.
Impact
One of the key players in Canada's railway system from its formation, CN has long had a major economic and social impact on the country. It remained the largest rail network in Canada in the twenty-first century and was North America's only transcontinental rail system until 2023, moving hundreds of billions of dollars worth of goods and earning over $16 billion in revenue in 2023. In addition to fulfilling vital transportation needs, the company established a presence in Canadian culture through its various former side ventures. For example, in the 1920s and 1930s, CN helped develop the network of radio stations that would eventually lead to the foundation of the Canadian Broadcasting Corporation (CBC) and iconic programs such as Hockey Night in Canada. In the 1970s, the company built the CN Tower in Toronto, Ontario, which was the world's tallest freestanding structure for a year and remains a well-known landmark.
CN has also been subject to controversies, however. The company has faced problems of labor unrest throughout its history as it continued to lay off workers in large numbers with each round of mechanization. In the late 1940s and early 1950s, goods such as fuel oil, automobiles, and other critical industry goods were mostly carried by rail. In August 1950, in one of the largest incidents of labor strife at CN, about 120,000 workers went on a nationwide strike bringing the Canadian economy to a halt for two days. The strike was resolved by government injunction. Again, in 1987, about 50,000 workers from Associated Railway Union went on a week-long strike to negotiate better pay and pensions. The workers returned to work for fear of having to pay fines as required by government legislation.
Safety issues have also been a concern. In the 2010s, the company came under scrutiny for lax safety standards, poor track conditions, maintenance issues, and usage of older, unmodified tanker cars, which caused multiple derailments in a short span of time. Some of them caused considerable damage to lakes and marine life around the accident sites from oil spills and leakage of hazardous substances, and the environmental restoration was projected to take more than 50 years. Since CN is one of the major national carriers of petroleum products and chemicals, more frequent derailments became a cause of worry for residents living along CN lines. It was suspected that in order to remain competitive with other railroads, CN trains operated at speeds higher than permissible limits. In 2022, the company stated they were putting safety first. Their employees experienced six-hundred consecutive days without serious injury, according to their 2022 annual report, and the company received a 2022 Railway Association of Canada (RAC) Safety Award.
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