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Hunter Harrison, former president and CEO of CN , poses in his Montreal offices on October 20, 2009 (Christinne Muschi/Christinne Muschi for The Globe and Mail)
Hunter Harrison, former president and CEO of CN , poses in his Montreal offices on October 20, 2009 (Christinne Muschi/Christinne Muschi for The Globe and Mail)

Transportation

CN's Hunter Harrison nears final station Add to ...

In his 16th floor office in Montreal, Hunter Harrison is reminiscing about his birthplace of Memphis, where he grew up a kilometre down the road from Elvis Presley's Graceland mansion.

The king of rock 'n roll would often rent the Memphis fairgrounds, using it as a private amusement park for his family and friends after closing time, and one night, a teenage Mr. Harrison managed to score an invitation through a buddy who knew one of the singer's confidants.

"Elvis leaned on a wall with his motorcycle hat on," recalls the chief executive officer of Canadian National Railway Co. "There was a lady then that Elvis was going with named Anita Wood. She was a local TV star on a dance show like American Bandstand .

"She knew me a little bit. Here I am at the fairgrounds with pimples, 16 years old. She comes over to me and my neighbour - another little acne kid. We talked to her for about 10 minutes. She approached us, we didn't go to her. But the man Elvis is over there. One of the bodyguards comes over and tells us, 'The man doesn't like that.' I'm thinking, 'Could Elvis be jealous of us?'"

His face beams as he finishes the story in his Tennessee drawl. On that night nearly 50 years ago, it was clear that the teenager didn't stand a chance in the competition of romance against the rock legend. What wasn't at all obvious was that Mr. Harrison the hotheaded son of a travelling preacher, would, in a very different line of work and a very different place, eventually become a minor legend in his own right.

Thanks in part to his reforms, CN is the envy of the railway industry - a formerly bloated Crown corporation that has transformed itself into an efficient operator.

It is now worth $25-billion in stock market capitalization, or more than 10 times its value when Ottawa spun it off in 1995. And as he prepares to retire from CN with a reputation as one of the most successful railroaders on the continent, his career has taken him back to where he began.

Memphis has emerged as CN's main southern U.S. hub, a strategic yard that handles freight that arrives after long journeys, including Asian imports sent along CN lines from the Port of Prince Rupert in British Columbia. Memphis, where CN interchanges traffic with all four major U.S. carriers, is also the company's gateway to its Gulf of Mexico region operations.

In a fitting tribute, CN has named the Memphis distribution hub after its CEO, unveiling the Harrison Yard last month after spending $100-million to nearly double its capacity. What was once an aging flat yard has been converted into an industry model of efficiency after CN added a hill, or "mini-hump," to better shuffle trains into proper position. "Memphis is particularly a very important spot for CN going forward," Mr. Harrison says.

The improvements in Tennessee will help CN maintain its industry-leading operating ratio - a key indicator of productivity that measures operating costs as a percentage of revenue.

The next major de-bottlenecking project will be a major challenge in the Chicago region. CN made a deal to acquire Elgin Joliet & Eastern Railway Co. in 2007, hoping to avoid train gridlock in Chicago's core by rerouting traffic through EJ&E's suburban tracks.

CN now has agreements on when and how it can run its trains through 19 of 33 cities in Illinois and Indiana, and another three or four may be signed to minimize the impact of increased freight traffic in the suburbs. Chicago-area communities such as Barrington remain opposed.

"It's this not-in-my-backyard type of mentality that I very frankly misread. I thought that they were going to have a band there and instead they had bayonets.

" I'm convinced that it's extremely important to CN and the communities of Greater Chicago. It's the right thing for everyone, but there are a few people who are being a little selfish."

CN will still gain efficiencies over the next four years in the Chicago region, but Mr. Harrison says the suburban skirmish underscores the industry's battles across North America.

"None of us want to be stopped by a train. I don't like to be stopped by a train, but how are we going to move goods? Where would you like us to go? The towns followed the railroads to the West. Now, people say, 'Get them out of here.'"

Mr. Harrison isn't one to back away from a fight, enduring a 15-day strike by conductors and yard workers in 2007. But while he defends CN's safety record, he acknowledges that the company should have communicated better with residents upset about a 2006 CN derailment that spilled bunker oil into Lake Wabamun, 65 kilometres west of Edmonton. "God forbid we should have anything like that again. We have learned from that experience," he says.

Mr. Harrison, who turns 65 next month, plans to split his retirement time between his family's 100-acre Connecticut horse farm and 22-acre Florida site. Double H Farm, owned and operated by the Harrison family, produces equestrian jumpers in both states.

Former CN director Jim Gray, who retired from CN's board in April after 13 years, said Mr. Harrison's seven-year tenure as CEO will be remembered for his innovations in turning the company into a "precision" railway that no longer waits for enough cargo to show up before the trains roll out. CN has become a trend setter by setting detailed schedules, leaving at specified times.

Although hurt by the recession, CN has been a popular stock for investors since the initial public offering came out at $27 a share in 1995, or a split-adjusted price of $4.50. Taking into account stock splits, but not dividends, an investor holding 100 CN shares worth $2,700 back in 1995 would currently have 600 shares worth $32,040.

"This will go into the history books. No other railroad has come close in the last 14 or 15 years," says Mr. Harrison, who will leave at the end of this year, to be replaced by Claude Mongeau, CN's Quebec-born executive vice-president.

Mr. Harrison admits that he has been sensitive to being an American in Montreal, serving as Paul Tellier's right-hand man for five years, after CN acquired Illinois Central Railroad Co. in 1998 before taking over as CEO in 2003.

"Paul Tellier and I used to joke about this. We would cross the border for visits. He went south and I went north. He got to Jackson, Mississippi, and they'd have the red carpet out, catfish and fried chicken. They didn't have any red carpet out for me here, and I don't know if it was me, or if Paul was just so charming," Mr. Harrison says with a laugh.

He pokes fun at his own attempts at speaking French, even trying, "Bonjour, y'all," as a greeting in New York.

As the time draws closer to pack up the trusty golf putter he keeps in his office, he says he will be only a phone call away should Mr. Mongeau feel the need to ring. Gone, however, will be the Hunter camps - retreats where Mr. Harrison could easily speak for two hours without any text about the importance of railroading.

"If there are going to be camps, there will be Claude camps. There will be things that he will want to put his touch on. If you want to be a good leader, you got to make tracks of your own," Mr. Harrison says.

"I'm going to take a breather. I'm not going to do anything on a rebound. I'm going to take some time off and reflect. I'm trying to do some charitable work in Ridgefield in Connecticut. I might sit on a board, but I'm not going to be a professional board member. People have approached me about doing a couple of books on leadership. So, it's time for me to move on."

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