Transport Committee on April 25th, 2007

[The Chair, Conservative, Merv Tweed]

Good afternoon, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities, meeting number 46.

Pursuant to Standing Order 108(2), this is a study of rail safety.

Joining us today from Canadian National, we have Keith Creel, Peter Marshall, and Jim Vena.

Gentlemen, the process is basically that you have an opening statement and then we'll start with questions and answers from around the table. I'm not sure who is going to take the lead.

Mr. Creel? Welcome, and I would ask you to begin.

[Keith E. Creel, Senior Vice-President, Eastern Region, Canadian National]

Thank you, Mr. Chairman. We appreciate the opportunity to meet with your committee today. We apologize that we were not able to meet with the committee sooner, but we trust you understand the challenges that a recent strike put on our operations.

I want to start by stating that safety is extremely important to us at CN. We welcome the chance to give you an overview of the measures we undertake to ensure that we do run a safe railway. I know that most of you are familiar with CN; however, given some of the information that has been circulating recently, I want to take a few minutes to make a few key points about our company.

CN was privatized in November 1995. In the intervening years, CN has acquired a number of railways in both Canada and the United States, including the BCRC, the Illinois Central, and the Wisconsin Central. We are a widely held company, with approximately 60% of our shares currently held by Canadian-based shareholders. Our chairman and the majority of our board are also Canadian. Our CEO, Mr. Hunter Harrison, is American and works out of our head office in Montreal. Our operations centre for North America is located in Edmonton, Alberta.

Safety is one of the five principles that guide CN's business, together with service, cost control, asset utilization, and people. They are the constants in our planning and operating decisions. They are both the business and the cultural context of this company. We're never satisfied with our safety record. I am, however, pleased to report that CN's Transportation Safety Board, or TSB, main track accident ratio decreased by 30% in 2006--110 in 2005, reduced to 75 in 2006.

Overall, when we include yards as well as main track, we experienced an 18% decrease. We also improved significantly with regard to the severity of the accidents. Half of these main-track accidents involved only one or two cars. This improvement had a dramatic effect on our bottom line as well, because derailments are expensive. In 2006, our derailment-related costs plummeted from $91 million to $48 million, as compared to the previous year. In addition, and most importantly, employee injuries in 2006 were down by 25%, which also represents a very significant improvement.

While there have been fluctuations from year to year and from quarter to quarter--for instance, there's no question that 2005 was not a very good year for CN--the trend line shows a clear improvement in CN's safety performance.

Our safety program is based on three pillars: people, process, and technology. The first pillar of CN's safety program is focused on people initiatives. These are programs aimed at transforming the way people work in developing a safety culture through training involvement, communications coaching, and recognition. An example of this is the introduction in 2006 of our employee performance scorecard. This is a system that ensures each employee's performance is graded and that he or she meets with his or her immediate supervisor at year-end and reviews performance as it relates to safety and other measures. This provides an opportunity for a two-way discussion; it provides an opportunity to identify and discuss together any areas of concern.

The second pillar is process. The key area here includes trend analysis, safety auditing, risk assessments, and contractor safety. Trend analysis allows us to identify top causes of accidents so that resources can be mobilized in the most effective and focused manner possible. Audits and efficiency tests are performed across our system by supervisors and audit teams. More than 300 efficiency tests are conducted each day across the CN system.

The third pillar of our safety program consists of technology initiatives where CN takes full advantage of technology to reduce risk. On the engineering side, we focus on rail flaw detection, track geometry testing, and slide and washout detectors. Ultrasonic rail testing has increased by over 60% over the past four years to about 120,000 miles per year, which means we inspect our core route four to ten times per year. This is much higher than the minimum regulatory requirement, which is once per year. Track geometry testing has also increased, and we are acquiring a new $5-million track geometry test car to further increase testing. We also use a wide range of state-of-the-art technology on the mechanical side of our business, which includes hot bearing detectors, hot wheel detectors, dragging equipment detectors, cold wheel detectors, wheel impact load detectors, and wheel profile detectors.

CN has one of the highest densities of these detectors of any railway in North America. For example, across North America, the six major railways have about 75 wheel impact load detectors. CN alone has 30 of these 75. All detectors are connected to a central location that monitors the data continuously on a 24-hour, seven-day-a-week, basis and enables us to spot developing trends and take proactive actions before incidents occur.

CN is also an industry leader in the safe handling of dangerous goods. In 2006, we hired one of the leading experts in North America to head up our department. This has led to the establishment of 11 new dangerous goods officer positions across our system who are fully trained and outfitted to respond to any dangerous goods situation.

We have also taken the initiative in setting up many joint exercises with local and provincial police, fire, environmental, and other responders.

The rail business is extremely capital intensive. This year CN's capital investments are increasing to $1.6 billion. About half of this investment goes toward track safety, with the replacement of rail, ties, bridges, and other items. We've been making this scale of investment in our system year after year to ensure that our plant is in top condition.

While we can make these investments because we want to protect our employees and the public at large, there is no question that at the end of the day they are good business as well. Operating a safe railway ensures that we can serve our customers efficiently, protect their products, keep our systems fluid to avoid service disruptions, and at the same time it saves the company and our shareholders a great deal of money. Starting at the top, our entire company is dedicated to running a safe railway.

Yes, absolutely, we've had some very high-profile derailments, accidents that understandably have raised public concern. However, overall, our record has been good, and the trend lines we'll share with you today indicate it's headed in the right direction.

We understand and appreciate your interest in these issues, and we'll be pleased to answer your questions.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Bell.

[Don Bell, Liberal, North Vancouver, BC]

Thank you.

Gentlemen, thank you for coming. As you can appreciate, when this committee was formed, one of our prime goals was safety in marine, air, and rail. We were aware of problems that were developing in terms of an increase in the number of derailments in 2005. The minister at that time under the Liberal government, Jean Lapierre, as a result of the spike of incidents that you acknowledged in 2005, Mr. Creel, ordered two studies. One was the phase one study, which was the targeted inspection of your operations in terms of the details of the safety incidents. The second was phase two, which was the audit of the safety management system you had implemented to determine, as you mentioned, the difference between employees and process.

In the concerns I have in phase one--and I'll go through the questions and you can take note and then decide who wishes to respond. A lot of my questions will be related to western Canada, so, Mr. Marshall, it may be more appropriate for you to respond.

On page 6 of the phase one report it refers to the contributing factors to your main-line derailments. It talks about two of the major contributing factors having been track and equipment. It says, for example, that 37% of the main-line track derailments were identified with equipment being the contributing factor. This is where CN is both the track owner and the train operator. It also refers to track conditions as being the contributing factor in 27% of the derailments listed.

When we get into page 14, a little farther up, and then page 16, we're talking about two of the issues relating to equipment. One is on page 14; it talks about freight cars. They're talking about a defect rate of 20.6% of a little over 3,000 freight cars that were inspected. They talk about a variety of things, but some of those are defective breaks, break issues that create additional risk.

The other issue on page 16 refers to locomotives, and 53.9%, almost 54%, of the 232 locomotives again had safety defect rates assigned between 32% and 68.9%--again, misaligned break shoes, breaks being head worn, excessive piston break travel. They're not all extremely serious, but what concerns me in having read the report is that even with the significant number of what might be called relatively minor issues, it indicates perhaps a lack of attention overall. If the little things aren't being attended to, then it reflects that likely the big things aren't being attended to.

The other issue that was mentioned there, on page 17, was the consists. In the presentation you provided for us today, in the background material you talked about wanting to work with local authorities, municipal authorities, hazmat teams, and the fire and police services that have to respond when there is a serious derailment. One of the issues is there's a 14% violation rate in having accurate or inaccurate consists. The consist, as I understand it in this context, is saying what's in the train and where it is in the train, so that if there is a derailment, local authorities are able to determine are there particular products they should be concerned about, and where are they located within the train. And we've got a 14% inaccuracy list, or incomplete list. That's worrying to me, for example, as a former mayor for a community in north Vancouver, where we have hazardous goods going through our community very close to residential properties on a daily basis.

When we go into phase two, which is the safety management systems, there were a number of things that were of concern to me. You're familiar with them. I've heard you talk about in your presentation the commitment to safety that you have as a company. But it talks here about a disconnect between senior management and front-line supervisors and employees in understanding management's commitment to safety. So there was the commitment, there was the talk being made, but the question is whether that was being walked--if you want to call it that--at a track level. The responsibility of the management of a company if they have policies, if they have goals, is to ensure that they're not just articulated but in fact are being enacted and being followed through by employees. It talks about the need for a comprehensive review of safety performance by senior management, and one that's not primarily based on American standards, but Canadian standards.

It says here:

...it was found that the evaluation of safety performance at the senior management levels is heavily focused on accidents that meet the United States Federal Railway Administration (FRA) reportable accident criteria. The FRA accident numbers only represent a small portion of the actual number of CN accidents in Canada.

That reflects back onto the evaluation of the standard of the monetary level, which I think in the U.S. is $7,700, so items that are below that are not reported, yet they can still be significant as to safety. It could be the handles, the gradings the workers stand on, the locomotives. So I have concerns about that.

It talks about how data from day-to-day operational monitoring systems could be used more frequently to trigger formal risk assessments. What they suggest is that the data is being gathered but it's not being used to trigger the required assessments that should be ongoing. It talks about how more thorough tracking of details is necessary to improve the management of risk mitigation strategies. Again, it says, “the audit team could not find documented details describing the risk mitigation controls”. This is contrary to the intent of CN's corrective action, safety and measurement plan--SMS plan. It also says, “The effectiveness of CN’s safety culture improvement initiatives needs to be reviewed”.

Again, it's the question of the focus on training, involvement, communications, and coaching were reported as not being effectively implemented. This was raised most predominantly in the mechanical services department, and we have written testimony and information contained in these reports that indicate that this is a concern of employees being penalized in fact for reporting injuries, for example, that they may have as a result of equipment that is not up to level--

[The Chair, Conservative, Merv Tweed]

I'm just going to interrupt you. Your time is almost up. If you have a question....

[Don Bell, Liberal, North Vancouver, BC]

I will get to it, thank you.

The report was damning in that what appears to happen is that there has been the application of water grade railways, flat level railways, basically, like you may have in the U.S. and in parts of Canada, and I'm speaking now from British Columbia, being applied to B.C., where we have some of the most significant grades and some of the tightest curves in North America, and that when you took over BC Rail, there were locomotives that, for example, had dynamic braking, which is a back-up system for braking and could have resulted in saving, perhaps, the lives of those two gentlemen who died in Lillooet, yet those engines were either sold and moved away or else the dynamic braking was taken off or deactivated.

I would like to know, where did those engines go and why were they taken out of the B.C. market in particular? Is it true that in fact employees, in your understanding, feel intimidated when reporting injuries and in fact working within the safety culture you want to create?

Thank you.

[Peter Marshall, Senior Vice-President, Western Region, Canadian National]

Thank you, Mr. Bell.

I think your questions could be answered by any three of us on the panel, to be honest with you. We're all in the front-line operating roles. The phase one and phase two audits were effectively a cross-section of the Canadian system. So any one of us could answer, and I think we'll probably all end up addressing some of the questions.

I tried to take quick notes here, as best I could, so hopefully we'll cover the points off.

I think the safety management system exercise, phase one, was very comprehensive, and we worked with the regulators. Through the course of the audit we exchanged views and notes, and at the end there was a draft report put together. This is true for phase one and phase two. I believe that many of our thoughts and ideas were incorporated. I wouldn't say they were all incorporated.

Some of the interpretation and the judgment I think is from their view, and that's fine. We learned from that, and we continue to work with the regulators on all the aspects you've talked about, and I will address some of them here individually.

I think it's important to recognize that we are governed by Transport Canada and the Transportation Safety Board in Canada. Yes, we have operations on both sides of the border, and yes, it's a different regulator in the U.S., but we are governed by very good regulations here in Canada and we work with the regulators on a daily basis. There's an extremely good exchange between the railways, not just CN, but CP as well, and the regulators.

In regard to some of the references you noted about the number of cars being defective or the number of locomotives, I think a good analogy might be a vehicle. You buy a brand-new car and in a few weeks you might have a bulb burned out and that's considered a defect in the regulations. Things like brakes--we could have a brake shoe that needs to be replaced on 100 cars. That doesn't make the train defective, but the brake shoe needs to be replaced, and we recognize that. And we have, again, processes to address the defect points. On the locomotives—they have some systems in there—the microwave could be not working, and that is considered to be a defect. We adhere to the regulations. Yes, there are things that need to be repaired and fixed as they go from point A to point B, and we have a regular inspection process for that.

We have good processes and good technology that support the safety items you've raise, and I think, again, it's an ongoing exercise. As Mr. Creel pointed out, nothing is more important to us than safety. We work very hard on the safety role and we are disturbed when we have safety incidents. It is a service disruption, it is an injury to an individual, it is a disruption to the community. These are things that take us away from what we do best, and that's to move traffic efficiently and for our customers. So safety is something that we're not going to back away from, that we need to continue to improve, and that's in everybody's interests--ourselves, the unions, the communities. As Mr. Creel pointed out, we spend a lot of time with communities; we spend a lot of time with the unions.

In regard to the comment about the disconnect, I think in phase two we have an improving and a very solid base for involvement with employees. We have local health and safety committees, we have regional health and safety committees. The three of us today, actually this morning, came from our policy, health, and safety committee meeting, which the three of us sit on with union leaders from across the country. And we address issues such as these. We talk about the safety audit, the SMS audit, phase one and phase two. Those are things that are important to us as an organization, not just management, not just union, but us collectively.

As Mr. Creel pointed out, we introduced an employee performance scorecard last year, which is an opportunity for us to review with every individual employee--not just management employees, but every individual employee on the railroad--what their contribution is relative to their craft, whether they're a locomotive engineer or a clerk or a conductor. We take them through areas of safety, productivity, attendance, and we have a good frank exchange about things they're doing well, and the majority of them are doing an outstanding job. And there are exchanges of information, and fact-based exchanges where we say we might need to improve there, and we ask for ideas.

So I believe there is a very strong penetration of communication to the individual employee. Can we do better? We can always do better, and we encourage contributions and ideas from everybody in the organization.

Just quickly on the FRA versus TSB in phase two, the Federal Railroad Administration, FRA, in the United States is the governing body. We keep statistics for both the Transportation Safety Board, TSB, and FRA. The reason we keep FRA is that we're a North American company, and we need to be able to compare our performance against North American railroads. The TSB criteria are different. They're actually more stringent in many cases. We keep that data as well. Mr. Creel referred to some of the Transportation Safety Board statistics, which improved from 2005 to 2006.

We could exchange a lot of information, a lot of factual information, that would be helpful. We will try to do our best today to answer those questions for you.

I didn't catch all the notes, and maybe Keith or Jim Vena can answer.

[The Chair, Conservative, Merv Tweed]

I'm going to Monsieur Laframboise. We have a time factor here.

Monsieur Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you very much.

[The Chair, Conservative, Merv Tweed]

I'm going to give you a signal of one minute, and I'll be fair to balance out how we started, but I'm going to tighten it up a bit.

Mr. Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

You sent us your brief on rail safety. You're making a nice speech; you're paid to come and tell us that things are going better.

I'll tell you from the outset that I put the question to the representative from the Transportation Safety Board, who appeared before our committee on SMS in the air industry. I asked him directly whether he had observed a reduction in the number of accidents since SMS had been implemented in the rail industry. He was unable to confirm that for me. It is too soon for the Transportation Safety Board to confirm that the Safety Management System has a direct effect on accident reduction.

I'm quite willing for you to tell me that things are going better and that you are performing well and have a business culture. The problem is that, in Quebec, in Montmagny, among other places— and that wasn't in 2005, because you had an increase in the number of accidents in 2005—in 2004 and 2007, there were derailments. You're telling us today that these events were given extensive media coverage. Following the 2007 derailment, you could see a tanker a few feet away from a house. I can understand why it got media coverage. These weren't minor derailments that occurred in Montmagny.

I wonder how you can manage this situation. You know that the mayor came and told us about the mood in his community: people in Montmagny no longer believe Canadian National. There was a major accident in 2004. You said that everything would be fine, and another major accident occurred in 2007. A psychosis has arisen in the community over rail transport. I'm willing for you to talk to us as you are doing today, but you've understood that you have a confidence problem in the communities where there have been repeated accidents, like Montmagny. The population doesn't believe that your safety, equipment maintenance system. or whatever, is effective after two accidents: in 2004 and 2007. These weren't minor derailments: we're talking about 26 cars in 2004 and some 15 in 2007. Those aren't minor derailments.

I'd like you to try today to give me back, to give the community of Montmagny back a feeling of safety.

[Peter Marshall]

Again, I think we all need to respond.

You're very correct that we have had a number of high-profile incidents, and we are not happy about these. They are very disconcerting to us.

One way we will rebuild the confidence is to continue to invest in our infrastructure and our people, and continue to demand that we, as an organization, get to a better place. We feel good that 2006 was a good start on a journey.

Regarding Montmagny, while I'm not from eastern Canada, I was aware of those incidents, though I'm in the west, because any incident in the system at CN is reviewed and discussed. And when Montmagny came up a second time, we stood back and said, is there something systemic here? I think the particular issues in Montmagny—which I think Mr. Vena should probably respond to because it's his territory—were different issues. That doesn't mean they weren't high-profile ones, and we're not happy about that.

But again, I think what we need to do is focus on the future and focus on what we are doing today. The results we have had in the last 12 months show us we are on the right track to improving that trend. And we need to continue that, because we need to gain the confidence of the communities and the media and our constituents out there, because this is critically important to us.

Jim, do you want to respond?

[Jim Vena, Vice-President, Operations, Eastern Region, Canadian National]

Yes, you bet.

Just bear with me for a second here, as I take you back. You talked about the confidence of the people who live in and around Montmagny and that area—and I met with the mayor. Any time we have an incident happen, it's an issue. As far as we're concerned at CN, if there's one incident, we have to find out what happened. We have to find out if we have to do something differently than we're doing today, to make sure.

We were concerned, just as other people were, to make sure that the residents and people in and around Montmagny understood what was happening. That's why I personally went with a small group of people. We had people who work on the track, we had people who work with cars, and we had the public affairs people with us to review with the mayor, and a group of people he had invited, what we were going to do about it.

We put in some interim steps right away, I think on January 11, a few days after the derailment, to make sure we took it step by step before we returned service there at the normal pace. So what we did was to review it.

Do we have a cause? Yes. It's from our own internal investigation, but we're waiting for the TSB to give the final review of the accident and tell us what happened.

But I think we took it one step at a time to make sure we did the right things.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

If the community asked you, as the mayor asked us here, in committee, to limit train speeds to 40 miles an hour until the final report of the Transport Safety Board was made public, would you agree to do that? Would you be prepared to meet that request in order to reassure the community, precisely because there have been repeated accidents, one in 2004 and another in 2007? Would you agree to wait for the final report of the Transportation Safety Board before increasing speeds from 40 to 60 miles an hour? Could you keep it at 40 miles an hour until the report is made public and the community can feel safe because the real causes of the January 2007 accident have been explained to it? Would you be prepared to accept that recommendation from our committee?

[Keith E. Creel]

So the question is whether we are prepared to allow the speed to stay at 40 miles an hour until we get the findings from the TSB report. That's certainly something we can take under advisement.

First and foremost, we feel strongly that speed had nothing to do with that derailment. We understand the sensitivities of the public. We understand the sensitivities of the citizens of Montmagny. Mr. Vena was not here at the last derailment at Montmagny. I was here. I personally went to where we had the derailment, east of the bridge. We had an issue with a truck component in a car that derailed before the bridge, and then the train dragged the car out onto the bridge. So I was there at that derailment.

This derailment occurred in January. I too got on a plane, and I was there and met with the mayor. I was part of the fact finding and got to the cause of that derailment.

So we feel strongly that speed was not an issue. The facts indicate, when you look at the report, and I have a copy of a report that has been developed by an independent research firm and submitted to Transport Canada as well as TDG--Transys Research. The science says—and this can get technical—that speed has nothing to do with the lateral forces of train derailments. Speed has something to do with longitudinal forces as far as how far they travel when they do derail, but side to side, typically, is not an issue. That being said, we will take it under advisement, and we will strongly consider keeping the speed at 40 miles an hour.

We have been very cautious. We have gone in and eliminated every potential issue. When I went to the first derailment, and when I went back the second time, I myself, being concerned, just as the citizens are concerned, asked what I could have done to prevent this derailment. The answer was that because of the cause, there was nothing I could do. However, the thing I learned and took away from that was that the cause was a defect in the switch we derailed on in January. Behind the bolt hole there was a crack in the steel that ultrasonic testing could not detect, that the visual eye could not detect, unless we were to take the entire track infrastructure apart to inspect it. That was the cause.

So if I ask myself if three years ago I missed an opportunity to prevent this derailment, the thing I walk away with is this: Did we need the track there, did we need the switch there, in the first place? The answer is no. We had a switch in Montmagny that was put there some years ago for a business reason. It was a team track where you typically transfer goods to a particular customer. But the reality is that we do not use that team track anymore, other than for our own equipment, sometimes. So we took the switch out of service. We took it out completely. The switch is gone. So we have mitigated the likelihood that it's going to happen again.

We've kept the speed. At this point, we will take it under advisement, and we'll get back to you quickly about whether we're willing to.... I can tell you now that my gut reaction is that we will keep that speed. It all depends, though. I don't know how long TSB is going to take to come back with its findings. I don't know if it's going to be a year or if it's going to be two years. But we will take that request under advisement.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

As a result of the speed you were travelling at, one car stopped a few centimetres away from a house and nearly crashed into it. Don't come and tell me that speed isn't important in Montmagny. People think the train goes too fast. Had it not been for the speed of that car, the accident would have been much less extensive and no one would have been afraid of losing his house.

You say you've conducted a study, that you paid for it yourselves. However, for politicians and the public, the Transport Safety Board is the neutral agency that is supposed to make a recommendation following an accident. Be aware that, until that report is made public, the population will not trust what you say. I hope you understand that. That's what's at the heart of the notion of safety. If you can't restore the public's trust, well, try to operate in another way.

The public is asking you to limit your speed to 40 km an hour, as you are currently doing. You recently increased it to 40 km an hour. Until the Transportation Safety Board's report has been made public, the public is asking you to stay at 40 km/hr, which will make everyone feel safe. Then we'll work with the Transportation Safety Board. You should understand the syndrome you've caused in the Montmagny community.

[Keith E. Creel]

We certainly understand your concerns, and we will take the request under advisement and keep the speed at 20 miles an hour until such time as the report is made public.

[The Chair, Conservative, Merv Tweed]

Mr. Julian.

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

Thanks, Mr. Chair.

I come from British Columbia, gentlemen, and I appreciate your coming here today. People in B.C. obviously are very concerned about the safety record of CN.

I saw the report you tabled with us and I listened attentively to your presentation, but it seems to me it's very much what we've heard each time there's been a major accident, each time there's been environmental devastation, each time there's been loss of life.

I want to start by asking, do you not admit that there is a real perception among the public, and I'd say particularly in British Columbia, that safety is not a concern at CN and that it's going to take more than public relations to address what is a very legitimate public concern when they see loss of life and environmental devastation?

[Peter Marshall]

We understand there is a perception in B.C. and in other locations, and we don't take that lightly. We want people to have confidence in the railroad. Again, I have to express our view that we take this extremely seriously and we are working very hard to change the perception and change the results. We don't feel it's of value to debate in the media. We feel it's important to work with facts and continue to invest in our business through people, processes, and technology, and demonstrate through results that we are making a difference.

I appreciate that 2005 is not that long ago; in the minds of some of us it feels like yesterday. But we have made some very solid progress, in B.C. specifically. I work in Edmonton but look after western Canada. I spend a lot of personal time in British Columbia and speak to a lot of communities, and I get the concerned citizens, just like Monsieur Laframboise is speaking about Montmagny. We understand this. We don't take it lightly, and we are working very hard to change the perception and change the results. In B.C., the results are changing.

There has been some testimony before the committee that refers to the former BC Rail and CN. There is lots of documentation that we have examined and been through. I think it's important to recognize that the former BC Rail was a good railway, yes, but it had its share of accidents too. Until it became part of the CN system it did not have to report in the same fashion as a national railway does. So the statistics we see from BC Rail are not all that public. We've had to recreate some of the statistics to make sure we had an apples-to-apples comparison. We did the best we could.

As an example, on an FRA basis, because we didn't have TSB data from BC Rail, we've reduced the amount of FRA accidents in BC Rail between 2003 and 2005 by almost two-thirds. Those are things that don't get communicated. We're not going to go to the media and put that in play. We want to spend time here with the committee. We spend time with the Railway Safety Act people. I will be with them tomorrow in Edmonton. Mr. Vena has already spoken to the committee. We have, again, ongoing dialogues with the TSB, with Transport Canada. They spent a lot of time out west, as we have incorporated and merged with BC Rail, the Savage railway, Mackenzie Northern, and two other short lines, one in 2006 and one in the beginning of the year. We spend a lot of time, and we take to heart what they are feeding back to us.

Again, I understand there is a perception out there. And I would not disagree--none of us would disagree--that we have work to do on the perception side. The way to get through it is with results.

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

We have the increasing accident rate, with main-line track derailments up in 2005, a bit of a plateau in 2006, but now a spike up in 2007. That is a matter of legitimate concern. Mr. Laframboise talked about accidents in Montmagny. There have been accidents in British Columbia, with loss of life. There is a generalized concern that is matched by the facts as well.

We have Mr. Gordon Rhodes, who came forward and said that as an employee he thought that previously in CN, safety was number one, and now he sees safety as being the number four priority. We have the Transport Canada report that says many employees feel pressured with productivity, workload, and fear of discipline to get the job done, and that compromises safe railway operation.

The facts I think are very clear. I guess what we're struggling with and what we want to hear from you is how senior management is changing its practices. How is it changing that disconnect, where people feel pressured and feel that safety is not a priority? And this comes from within the railway itself. Do you admit there have been mistakes at CN, perhaps in laying off too many staff, perhaps not having enough personnel to get the job done? How is senior management changing its approach to managing the railway so Canadians can feel safer?

[Peter Marshall]

I understand that Mr. Rhodes has provided testimony here, and I recognize the SMS, the safety management system. You refer to them as facts. I think that is documentation. People are entitled to their opinions, and the collection and conclusions that Transport Canada has...again, we respect that.

We're not happy about how we started off in 2007. Unfortunately, we've had the most severe weather conditions that we have experienced in many, many years, and weather has an impact on the operation.

What have we done as managers? As a senior leadership team, we spend a significant amount of time on safety. It's built into our goals and objectives at the highest levels. It is, as Mr. Creel pointed out, one of the five core principles, and we do not go into the business without thinking about safety, without looking at it. We are confident, again, that what we are doing today is a lot better than what we were doing last year, and two years ago, and three years ago, and I think the statistics over time will show that. Since privatization, there has been a significant amount of improvement in rail safety at CN in terms of accidents and personal injuries.

I'm going to repeat myself here, but on the issue of people feeling pressured for productivity, etc., we set policy and we have standards—safety standards, I'm referring to. We have expectations that no job is done without it being done safely. That is an expectation. That's in our rule book. It is absolute. You do not do anything on the railroad unless you know it's going to be a safe operation. We need to continue to drive that culture, and again, we've been seeing improvements.

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

But driving the culture means assuring that there is personnel in place and that the infrastructure is there for them to do the job. It's not enough for senior management to say you have to take safety first, and then cut back on the number of staff positions and cut back on the investment, change locomotives, put them into inappropriate situations. All those elements are decisions that senior management makes that make the difference between something that is simply put forward as a precept and something that is actually administratively carried on right throughout the organization.

You understand what I'm getting at?

[Peter Marshall]

I do, and I think, again, we've invested a significant amount of money and time into the organization. I don't accept that a reduction of employees has a direct feed on safety.

The BC Rail transaction, which you referred to a few times, was a merger of companies. There were obviously some redundancies in some administrative roles. We size the railroad. We look at the railroad, first and foremost, from a safety perspective and we build from there. I think it's inappropriate to make a cause and effect on that basis only.

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

What I'm saying is senior management has to change its approach to running the railway. It seems to me, and I'll put this question to you, that in 2006 the light was on, on CN operations. You had the audits. You had a lot of conversation and discussion around here, at the transport committee and otherwise, and that seemed to have made a difference, at least temporarily, in the safety of the operations.

Now we're seeing, in 2007, regardless of whether you attribute it to weather conditions or not, a degradation in the safety standards, and we're seeing the results of that.