Transport Committee on June 12th, 2012

[Gregory Aziz]

In summation, replacing the current obsolete and inefficient grain car fleet will increase the efficiency of grain delivery, enhance the performance of the entire supply chain, and lower the carbon footprint of the sector, because we're moving far more grain with far less equipment and far fewer train starts. It will create over 15 million hours of direct employment across Canada and will deliver innovation, yielding enhanced competitiveness for all stakeholders. It will elevate the supply chain performance to compete in the 2020 global marketplace, and it will provide Canada with the most modern grain car fleet in the world.

We'll take questions now.

[The Chair, Conservative, Merv Tweed]

Thank you.

Go ahead, Ms. Chow.

[Olivia Chow, NDP, Trinity—Spadina, ON]

What barriers are you experiencing in trying to upgrade your technologies or in getting the new cars onto the market?

[Gregory Aziz]

We're not experiencing any barriers in the United States. As a matter of fact, we've manufactured these cars for several of the American railroads. We'd like to see them in the existing Canadian fleet, which comprises approximately, I think, 11,000 cars now.

[A voice]

They've been reduced from 16,000.

[Gregory Aziz]

This fleet originally had over 20,000 cars that were built in the 1970s. It's currently down to about 11,000 cars through attrition. We'd like to see this fleet replaced entirely.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Why isn't it being replaced? It sounds as if you sell a lot more to foreign markets than to domestic ones. Am I correct in that, or is it 50-50?

[Gregory Aziz]

No, you'd be correct in your original assumption. We sell more rail cars in the United States than we do in Canada. But to be fair, that's a much larger market. There are more railroads in the United States than there are in Canada. But we sell quite a bit of equipment in Canada. We're currently manufacturing box cars for Canadian National, for instance.

[Olivia Chow, NDP, Trinity—Spadina, ON]

How many units do you produce each year now, domestically, for Canada.

[Gregory Aziz]

It depends.

[Olivia Chow, NDP, Trinity—Spadina, ON]

What is it, on average, over the last five years?

[Gregory Aziz]

Do you mean for Canada?

[Olivia Chow, NDP, Trinity—Spadina, ON]

Yes, and what do you project for the next 10 years?

[Gregory Aziz]

That's a very difficult question.

[Olivia Chow, NDP, Trinity—Spadina, ON]

How about the past?

[Gregory Aziz]

In the past, we've manufactured literally tens of thousands of cars for CN, CP, and BC Rail, when it existed as a separate railroad.

[Olivia Chow, NDP, Trinity—Spadina, ON]

What about the last five years or so?

[Gregory Aziz]

The last five years have not been good to the rail car building industry because of the worldwide recession we've just been through, and perhaps are going to go into again. In a good year—

[Olivia Chow, NDP, Trinity—Spadina, ON]

What about the last five years? You haven't been able to build new ones?

[Gregory Aziz]

We've been building equipment for the United States and Canada over the last five years.

[Olivia Chow, NDP, Trinity—Spadina, ON]

What about in Canada?

[Gregory Aziz]

As I mentioned, we're building for CN right now. We've built a fair amount of equipment for the new resurgence in iron ore mining in Quebec and Labrador. Most of the rail cars that are transporting iron ore to Sept-Îles are built by National Steel Car, and that numbers in the thousands. We've built a lot of cars for the potash industry, PotashCorp of Saskatchewan, Canpotex, and those sorts of things.

[Olivia Chow, NDP, Trinity—Spadina, ON]

How many units, approximately, are you building per year, on average—in the last five years or so? I'm just trying to look at that and then project where it's going.

[Gregory Aziz]

We have a capability of building in excess of 12,000 cars a year, in a good year, in a robust economy. We will be in the 7,000- to 8,000-car range this year.

[Michael Hugh Nicholson]

I would say the average over the last 10 years would probably be 6,000. The market is very cyclical.