Hunter Harrison is finally getting a closeup view of what used to be enemy territory.
The new chief executive officer of Canadian Pacific Railway Ltd. has been getting acquainted with the company’s train yards since being named to the top job in late June.
For the former CEO at Canadian National Railway Co., the first 100 days as CP boss will be a time for mending fences and crafting a turnaround strategy.
After U.S. hedge fund Pershing Square Capital Management LP won a bitter proxy fight against CP, the Calgary-based railway went through a seven-week recruitment process to hire a new CEO. Pershing Square CEO Bill Ackman had touted Mr. Harrison for months as the best candidate, and the executive search campaign came to the same conclusion.
“I feel relieved that the proxy contest is all behind us and we can turn the page now and focus on the business of running a railroad and serving customers and creating shareholder returns and values. That’s the fun part of the exercise,” Mr. Harrison said in a recent interview after accepting a four-year contract to head CP.
He said he is proud to be given the opportunity to lead CP, and emphasizes the need for teamwork.
“There’s been a lot of apprehension and anxiety about who was going to be the leader and what changes were going to be made. We’re trying to go through kind of a calming period. There’s some very talented people at CP,” Mr. Harrison said.
He will be guiding efforts to reduce CP’s operating ratio, a gauge of efficiency that measures costs as a percentage of revenue. A lower number is better, and CP’s operating ratio averaged 81.3 per cent in 2011, compared with CN’s industry-leading ratio of 63.5 per cent.
“It was the CP shareholders’ wishes for change. They were frustrated with the performance and they wanted change, and now we have the opportunity. It’s time for us to perform,” Mr. Harrison said.
Although they compete for customers, CP and CN co-operate by sharing tracks in certain regions to speed up rail shipments. Between Vancouver to Kamloops, B.C., freight destined for the Port of Vancouver moves along CN tracks while goods headed toward Alberta are transported on CP lines.
“I think over time, there will be potentially more opportunities that crop back up so that we can work together, but it’s hard to speculate,” Mr. Harrison said.
In an internal memo to employees, he acknowledged that “change is never easy,” and there is no magic formula for staging CP’s recovery.
“It will come down to a mix of the strengths of the railway and CP people working hard to execute the plan for service excellence,” Mr. Harrison wrote. “My immediate focus in the coming weeks will be to get out on the property to meet you and learn as much as I can about the operation and the workings of the company.”
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