Transport Committee on April 25th, 2007

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I mean why there's a disconnect between what you say and what your employees say.

[Keith E. Creel]

Let's step back for a second.

This company has gone through a tremendous amount of change. It's not a secret. Certainly we're focused on productivity and delivering service. As a result of the changes since privatization of this company, if we're guilty of any one thing over the previous years--and I'm responsible to a point--we pay for the sins of our predecessors.

This company over the years has had to deal with practices that were at best permissive. So we're attempting to change a workforce and a culture that over the years allowed permissive practices. It's okay to have a book of rules, but if you don't require employees to live up to that book of rules, you effectively have an unsafe environment.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Is there no penalty for non-compliance?

[Keith E. Creel]

No.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I take from what you're saying to me that prior to privatization this was an accident waiting to happen at least every three days, and that's still the case.

[Keith E. Creel]

I can't make that assessment. I can just tell you what I've dealt with in the past five years. I've been an integral part of trying to change this culture.

I'll take you back. I came to Canada in 2002. I came off a position in Michigan. I've been in operations my entire career. I was the vice-president of the prairie division. The very first week I was there, I knew then, going into that terminal, that I had concerns about safe work practices, about our ability, our employees. Do they truly understand that we expect them to live up to the rules, that we expect them to comply with the rules that protect their lives and protect the communities that we operate through?

So from my past experiences, the way I used to make sure, as an operating officer, that the message got delivered to the employees pulling the throttle, to the employees switching the cars, as well as to the direct, front-line officers who supervise those employees.... We have something in the industry called efficiency testing. In America the FRA mandate it; it's regulated. The government makes you do efficiency testing. There's a certain criterion that you have to meet for every employee. When I say “efficiency testing”, efficiency testing is when we as operating officers go out to the field and we either simulate, by setting up conditions of controlling a train movement, or we observe employees to make sure that, number one, they understand the rules, and number two, they're applying the rules.

When I came to Canada, we didn't have regulated efficiency testing. So one of the first initiatives I implemented myself, coming into the territory, was an efficiency testing blitz. Literally, over one weekend--Mr. Vena was in Winnipeg when this happened back in 2002--we went out and we started at 6 o'clock in the evening and we worked until 6 o'clock in the morning. We went out across the entire territory, from Saskatchewan to Manitoba, and we observed employees operating by the rules to make sure they were doing that. We conducted efficiency tests, and the failure rate was alarming, to the point that even the dispatchers we had, who worked for us in Edmonton....

The dispatchers control the train movements. When you test a train--those signals--it's no different from running a red light on the street. If you run the red light, you risk your life and you risk someone else's life. That's the way the signal systems work on the railway. So to test them, typically the dispatchers had to be involved. What you do is you talk to the dispatcher and you ask the dispatcher to control the signal. Give them the red light--hold the right light, for lack of a better term.

When we did that, I had the officers who worked in the dispatch office explain to the dispatchers what we were doing. We were out ensuring that our running trades employees were complying with the rules. We need them to hold the signals at a particular location, because once they do, the rule book tells that employee what they're supposed to do. So we were going to be in the field and we were going to be observing to ensure that this employee did do that. What happened as a result? When we did that, the dispatchers refused to do it. This is what I'm talking about: the culture.

The dispatchers felt that instead of ensuring the safe operation of our railway by engaging in these efficiency tests, they were entrapping the employees who were out operating the trains. It was all in the context that they looked at. As a result, the dispatchers walked out.

I say this so you understand the culture. We have a situation where we want to get people to ensure we have a safe operation and they won't even engage with us and won't even allow us to do that.

I'll tell you why this is so near and dear to my heart. Every time we have a major derailment in my territory, I get up out of my bed and I go to it. I unfortunately have dealt with “Lillooets” before. I was at McBride. I've dealt personally with the deaths that have happened in this region. I dealt with a death, with a head-on collision, that I had in Michigan, just six months before coming to the prairie division, when we had these efficiency tests. So these are near and dear to my heart.

When I have employees who don't understand, and the culture says we're entrapping employees because we expect them to follow the rules, I can't accept that. That's what this is all about; it's about change. It's trying to create an environment where employees in the past may have been confused because, yes, we had permissive practices, yes, we allowed them to maybe not work by the book. Today, we expect them to comply with the rules. When you expect employees to comply with the rules, sometimes you have to take corrective measures. It would be no different from having the OPP expecting you and requiring you to adhere to the speed limits. If you don't have them out there, effectively checking every once in a while, then you're going to have mass chaos and people are going to do what they want to do.

We're out there checking now. We're out there trying to educate our employees, and as a result, some of these employees who Transport Canada may speak to...they listen to these urban legends, to these stories. They don't have direct knowledge. They don't understand that we have an issue with employees who may go by those red signals. That's part of those notice and orders that you talked about.

We had an issue in Ontario where our running trades employees were going by red signals at an alarming rate. Did we get a notice from Transport Canada? Absolutely. But did I need Transport Canada to tell me that this cannot and will not happen on our railway? Have we already implemented efficiency testing to curtail and control employees' behaviour so they don't engage in that activity? Absolutely. We did.

Much of what we are talking about is change. It's not that upper management says one thing and lower management doesn't understand what we expect. We, as senior managers, have processes in place with our operating officers. Their compensation is tied to these efficiency tests. They're required to do safety blitzes; they're required to do train riding. Do they like it? Even with our own officers the change has been so fast that they don't understand sometimes. We have to explain to them, “You're ensuring the safe operation of our railway. You're ensuring the safety of the communities we operate through.”

It's not that there's a disconnect; it's that we're in the middle of changing a culture. And changing a culture is not easy, especially in an industry that has been around.... Many of our employees have worked the first 30 years of their career with an attitude of when it's convenient, they'll comply with the rule book. But for the last five or ten years it has been a condition of employment. They have to comply with the rule book.

[The Chair, Conservative, Merv Tweed]

Thank you, Mr. Creel.

Mr. Volpe.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you very much, Mr. Chair, for letting him speak for as long as he did. I think CN needs to get its position out. But he has opened up an opportunity for us to come back with a supplementary, so please put me down for the next round.

[The Chair, Conservative, Merv Tweed]

Absolutely.

Monsieur Carrier.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chairman.

Good afternoon, gentlemen from CN.

I'd like to go back to the safety system that was implemented at the railways. You said earlier that it had been in effect at your company for five years. So you've had the time to familiarize yourselves with the system and to implement it properly.

In your view, has it enhanced security measures? Has the system enabled you to improve safety, or has it forced you to do so?

[Keith E. Creel]

If you look at the numbers, the statistics show that injuries in this company have gone down consistently over the past five years.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

That was the gist of my question. I wanted to know whether the system in itself was more demanding, whether it had more constraints and checkpoints and whether it was more comprehensive, not in terms of accident statistics, but in terms of safety. Do you understand?

[Keith E. Creel]

The process itself.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Yes.

[Keith E. Creel]

The process itself requires that the officers spend their time interacting with employees and ensuring that we have rules of compliance in the field. Prior to the system and the process being implemented, officers were free to stay in offices. Officers felt the job they had to do was in an office behind a computer, instead of on the ground with the employees where the work is actually occurring.

Philosophically, there is a huge difference. The measures that we hold our employees--our operating officers, our front-line supervisors--accountable to ensures that they engage in those activities. So yes, the process is much more comprehensive and much more extensive than it was five years ago.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Did you implement the system in cooperation with Transport Canada? In other words, did Transport Canada force you to improve your management system as a whole?

[Peter Marshall]

The safety management system is a system, but it's very much a framework. There are components within the safety management system, including measurement and investigation. We work hand in hand with Transport on that. It's not a mandate as much as it is a cooperative effort. The safety audit was Transport Canada's way of going out to the field with CN and CP and the other railroads and determining whether the system itself was being put into place.

It's a bit of a two-way street here. We work hand in hand. We develop the framework together. We developed the safety management system together. We are expected to implement it and be guided by it. Again, measurement and improvement and statistics and incident investigation are just some of the components. Training is one. Policy is another. Again, I would say, Monsieur Carrier, it's a back and forth.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Since you've implemented the system, have direct inspections still been conducted by federal inspectors, or have they been replaced by a control conducted within your system itself?

[Peter Marshall]

I don't have the exact numbers, and I can't speak for Transport Canada, but I will give you my experience, which is that they have looked at trying to understand the safety management system and be out on the property with their inspectors. And their focus is on compliance with the safety management system, because again, the safety management system is more of a framework; we put the specifics against it. It's like any audit; they will test us against our own procedures and specifications. I think they have a pretty good balance of looking at the system and also being on the property.

The Transport Canada inspectors were very visible during our labour disruption where we had management people replacing conductors.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

The Department of Transport wants to implement this system in the airline industry as well. It's presenting it to us as a way to increase safety. According to that viewpoint, this management system, in addition to federal inspections, would enhance safety. Do you get the impression that your safety is increased with the implementation of this system?

It doesn't give that impression. I won't repeat the list of cases that have been mentioned here, but we nevertheless deplore a very large number of accidents, derailments.

If the Safety Management System hadn't been in place, would the situation have been even more dramatic?

[Peter Marshall]

My view is that the safety management system has made us better. Unfortunately, in 2005, we had a couple of very high-profile incidents, and a lot of attention has come on to the railways and CN. We understand that. It goes back to some of the perception. I think we have demonstrated that the trends--except in 2005 and the beginning of 2007, unfortunately--are going in the right direction. I think the safety management system has been an important tool--for transport and for the industry. I think we have to keep improving that. I would never say that 2005 was a good year. It wasn't.

[The Chair, Conservative, Merv Tweed]

Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I have to say, up until I read your bio, Mr. Creel, I thought I was the only person in the world with a bachelor of science degree in marketing and management, so it was quite a relief to read that.

I understand that you served as a commissioned officer in the U.S. army during the Persian Gulf affair.

[Keith E. Creel]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Vena, I was very impressed to see that you started as a brakeman and you actually worked your way up with the company, and as well received an excellent degree from Athabasca University, which is in my constituency. So I was very pleased to see that as well.

My question is in relation to the audit itself that identified the deficiencies. Indeed, the final audit report that was prepared by Transport Canada and was submitted to CN in June of 2006 asked for a detailed plan for corrective action, which was not submitted as required. And then a ministerial order was issued that ordered CN to submit on August 14 a detailed plan as to how you were going to correct this. On the very day the order required compliance, CN appealed that order from the minister. Earlier, you mentioned that you were working with regulators and indeed you were trying to work cooperatively with them.

Why would you appeal an order from the minister dealing with a corrective action?