Transport Committee on April 25th, 2007

[Keith E. Creel]

If I could elaborate for just a minute, you have to take in context, number one, that the improvement in 2006 versus 2005 represented about a 30% reduction in main-track accidents. Granted, if you compare year-to-date 2007 numbers versus 2006 numbers, you would think, if you don't understand the data, that there may be an issue.

The reality is 2006's numbers were phenomenal numbers. If you compare 2007's numbers to 2004 and 2005, they are 40% better. In 2006 we had a very mild winter, and as much as I understand your comments about weather, weather plays a huge impact when it comes to steel wheels, steel rails. If we have extremely adverse weather conditions, the likelihood of an incident occurring when it comes to rail failure increases. We can't change the metallurgical components of steel; that's what happens.

If you look at the trend now, from March 1 through to yesterday, and I'll tell you through the first quarter, if we compare 2006--keeping in mind that was a phenomenal quarter--the improvements exceeded much more than 30%. Annually, we improved 30%.

If I go back and look at the first quarter of 2006, we had a total of 67 TSB accidents on the CN railway compared to 76 in 2007, and the gap is growing closer. Today, through April 24 or 25, we've had 85 in 2006 versus 89 in 2007. As I've stated before, 2007's numbers are still a 40% improvement over 2004 and 2005.

While if you don't understand the data, it could raise a concern--and you may think the focus is not there that was in 2006--you have to take into account that 2006, number one, was phenomenal. The year 2006 had a very admirable winter in that we had temperatures not even coming close to what we just experienced this year. So the trend or the concern is going to dissipate; the momentum is going to continue.

The focus is still there. The numbers? We still feel very confident that 2007 will generate the same types of improvements year over year versus 2006. It's simply not fair to take a look at the first three months of 2006--when there are so many differences between 2006 and 2007--and make your assessment based on just that.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

What I'm saying is that Canadians are quite rightfully concerned because they see the derailment rate going up. You've said you're taking care of this issue, but the evidence suggests otherwise.

If you come back and say there are mitigating circumstances for this year, you understand that it strains credibility. When Canadians are already concerned about the past and we're being told that essentially you're taking care of the safety of your operations, and then we see this spiking up in 2007.... Do you understand where I'm coming from?

[Keith E. Creel]

No, no, I understand.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Canadians have legitimate concerns. I don't hear from you that you're changing how senior management, as identified in the audit report, has changed its practices to meet those concerns.

[Keith E. Creel]

I understand the concerns and perceptions, but I'm very confident that when Canadians look at the facts they understand that the severe winter weather we just went through, 100-year type of weather, would have an impact on some of the circumstances that caused some of these derailments.

[The Chair, Conservative, Merv Tweed]

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Gentlemen, with respect, there are very few things that Mr. Julian and I agree on, but I would agree with him, speaking as a British Columbian, that the railway industry, and, if I might be so bold as to say, CN itself, has lost the trust of Canadians when it comes to safety. That's a perception out here. Quite frankly, so far the picture that's been painted by the witnesses we've had confirms that picture.

One of you, I believe, implied that railway safety in Canada is better than it would be in the United States. Is that correct?

[Keith E. Creel]

Absolutely.

[Ed Fast, Conservative, Abbotsford, BC]

Why is that? Is that because our standards are higher in Canada?

[Keith E. Creel]

They're different. To take the standards of FRA versus the standards of Transport Canada, in some cases--and I've worked on both sides of the border--I would agree, Transport Canada's regulations may be superior. Likewise, if I go to the FRA and I look at some pieces of the FRA, they're superior standards.

I can give you one specific issue: train brakes. We talk a lot about train brakes, the braking effort of the train. In Canada, the regulations allow a train to leave the initial terminal with 95% working brakes. So that means 5% of that train can have defective brakes and still not impact the ability of that train, under the law, to be able to leave and safely operate across the Canadian region and generate these train accident numbers, which are incrementally better than the U.S.

However, the FRA requires 100% effective brakes. So at CN we've applied the most stringent of the standards. In many processes, it's not the lesser of the standard; we take the greater of the standard because we have to operate our trains cross-border.

[Ed Fast, Conservative, Abbotsford, BC]

I'm going to challenge you on that. We had testimony from Mr. Rhodes and I believe it was John Holliday on this whole issue of taking bad-ordered trains and putting a defect mark on the train. In some instances, in fact, supervisors would then come along when these supposedly defective trains had been marked and they would take the card off and those trains would be repaired to the American standard, to a lower standard, in fact, so that the trains could continue to run. That's not only reflected in the testimony we had from those two individuals, it's also reflected in phase two of the audit report that was done on CN.

I'm going to just refer to that:

Over 75% of Car Inspectors interviewed from four locations stated that it was not uncommon for a car that had been bad-ordered to have the defect card removed by the supervisor, and the car allowed to continue in service.

That is out of the audit report. You're talking about always trying to apply the higher standard. The report doesn't reflect that. The evidence we've had from two witnesses who are employed by your railway doesn't reflect that.

How do you justify the statement you've just made, that you're always trying to achieve the highest standard?

[Keith E. Creel]

With all due respect, the testimony that I've read from the witnesses who have presented to this committee is anecdotal evidence. There are no specific issues, and in fact the testimony that I read stated “they heard of this”, “they heard of these things”, “they heard of these rumours”. If in fact we caught a supervisor doing that, we would take action with that supervisor. We would take exception with that supervisor.

[Ed Fast, Conservative, Abbotsford, BC]

But 75% of the car inspectors from four different locations confirmed that, and that is reported in the actual audit that was done. So how do you justify that?

[Keith E. Creel]

There is no way to justify it. Number one, we would not accept it, but at the same time, we have no evidence of it other than anecdotal employees in these audits. In a very uncontrolled environment people went out and questioned employees. We're talking about a workforce that has gone through--

[Ed Fast, Conservative, Abbotsford, BC]

Are you saying that 75% of those inspectors are wrong?

[Keith E. Creel]

Well, 75% of the time or 100% of the time...if we knew that occurred, we would take corrective measures with it. That is not something we would tolerate.

[Ed Fast, Conservative, Abbotsford, BC]

I just don't buy that.

[Peter Marshall]

The process for car inspection does allow for a car, in a car man's judgment, to be bad-ordered. It could be a handhold. A car man could be walking by the car, he sees it, visually, in his judgment that the handhold...you have to have a two-inch space between the car body and the handhold, so this could be a ladder. A supervisor can come by, or another car man, for that matter, and actually inspect the handhold in a more detailed fashion and find out that in fact it's 2.1 inches and actually meets the standard. He can take the card off.

[Ed Fast, Conservative, Abbotsford, BC]

That's not what the audit report says. It says that “when the BO car audit count was high, cars were not repaired to AAR standards in an effort to reduce the defect car count”. That tells me you're looking for the lowest standard as opposed to the highest standard.

I want to refer you to something else that's contained in the submission you made to the Railway Safety Act review panel. That's 17 April.

[Peter Marshall]

What page is that on, please?

[Ed Fast, Conservative, Abbotsford, BC]

This is on page 2, and I'll refer you to two statements.

First of all, in the second paragraph, in the second to last sentence, the statement is, “That is why, at CN, we view safety as every employee's responsibility, and work diligently to create and improve a culture of safety awareness and safe practices”.

Going on to the fourth paragraph, the first sentence says that “CN has always placed the highest priority on safety. Safety is one of the five Core Values of the company.”

Yet what I've heard from two witnesses and what I've seen in the audit report seem to indicate that you're willing to accept a lesser standard when it suits you. Unless you're challenging the findings of the audit report, I believe what I'm saying is correct.

[Peter Marshall]

We don't view it that way, and this is our approach. This is our philosophy, and this is how we do business.

[Ed Fast, Conservative, Abbotsford, BC]

Let me approach it a little differently.

The safety management system, or SMS, is used in the airline industry, in aviation, and apparently it's being applied within the railway system in Canada as well. It's a new level of accountability, a new level of safety that's imposed under existing regulation.

I will go back to the comments made by our witnesses. We asked them to compare the safety environment within CN versus CP. Mr. Rhodes responded, after stating that CP apparently had changed their management style and was finding out that they were much more successful, that:

No, CN has gone in the opposite direction. They're very adversarial. I call it the poisoned work environment, because that's what it is. Nobody wants to go to work there. Everybody's counting the days, the months, and the years until they're gone, until they're out of there. That's not the way it was, and that's not the way it was at B.C. Rail.

So here it's very clear. We're dealing with safety management systems where the front-line employees are supposed to be involved in identifying deficiencies, finding safety defects. And yet the response from the employees is not, hey, we're working together with management here. Instead, they're afraid for their jobs.

In fact, the same witnesses confirmed that they're afraid of getting fired if they identify deficiencies in any of the rolling stock you have.

[Peter Marshall]

I have one question about Mr. Rhodes' reference to CP. I'm just not clear on where he would get that experience or information from. I'm not aware of him being a CP employee at any point. But maybe he provided testimony to that effect.

[Ed Fast, Conservative, Abbotsford, BC]

Actually, it was also Mr. Holliday who referred to a culture within CN that was not conducive to allowing SMS to be implemented properly. I believe Mr. Holliday himself had worked for a number of different railways over the years.

In fact, Mr. Rhodes had worked for BC Rail before it was taken over by CP. There's a guy with a fair bit of experience who talked about the days when he worked for BC Rail where there was accountability, where the opinions and the concerns of employees were taken at face value and were acted upon. Suddenly there's a new culture imposed upon them by CN that is poisonous, that is working actually counterproductively to what we had hoped would happen under SMS.