Hunter Harrison's surprise departure from Canadian Pacific Railway Ltd. in January bumped Keith Creel into the top job ahead of schedule. But for Mr. Creel, his own promotion to chief executive officer could not come soon enough.
"I would say I got thrust into it about six months late," Mr. Creel says. "The last couple of years, [Mr. Harrison] has given me the autonomy and space to run the railway, to pick the players. So really when he left, in all honesty, as much as I loved working with him, the timing was, although late, probably appropriate because this leadership team will be judged on 2017's performance."
"Without having two leaders … I can make my own decisions," Mr. Creel says. "Most will be similar; the style will be different."
Mr. Harrison, a long-time mentor of Mr. Creel, took his proven book of turnaround methods to Florida-based railway CSX Corp., and left Mr. Creel to run Calgary-based CP.
Since taking over, Mr. Creel has been busy putting his own mark on the company, travelling across Canada and the United States to meet with investors, customers and employees. He introduced a new corporate logo, and the company will send a vintage passenger train to celebrations across the country in the summer to mark Canada's 150th birthday.
Mr. Creel says he wants to establish better relations with the train operator's union, and smooth the "feathers that have been ruffled" under Mr. Harrison's reign.
In a wide-ranging interview at The Globe's offices last week, the Alabama-born Mr. Creel outlined his vision for the 136-year-old company, and explained how he differs from Mr. Harrison, under whom he has worked at three railways.
The two railroaders have very different styles, he says, even if they'd make the same business decision nine of 10 times. "Hunter is, I wouldn't say old school, Hunter is very rigid," says Mr. Creel, who turns 49 this month and describes himself as "a bit more progressive" with the advantage of having worked more closely in operations than his predecessor.
"I've run both Canadian railroads. I understand the competitive dynamics. I understand the territories. I understand the cultures. I understand the cities. I've lived in Winnipeg, Toronto, Calgary and Edmonton. I've got pretty good experience across the Canadian properties as well as the U.S. properties," he says.
Under Mr. Harrison, the company boosted profit by slashing costs and implementing a freight-train schedule that improved service and made more efficient use of rolling stock. The challenge for Mr. Creel is to boost revenue, while adhering to the operating model set by Mr. Harrison.
"We've shrunk to the point of strength," Mr. Creel says. "We've got the company on solid footing and it's time to grow the company. That's what my mandate is."
He says the growth will come from bulk shipments – grain, coal and other commodities that rise and fall with harvests and economic growth – and container shipments among Canada's major cities, where the company's route has an advantage over its rivals.
Fadi Chamoun, a transportation stock analyst at Bank of Montreal, said CP faces a "tough task" competing with industry leader Canadian National Railway Co., but said CP is working more closely with customers to boost revenue and sales, and has made gains against the trucking business. CP has also retooled its management compensation scheme to reward growth while placing less emphasis on costs versus expenses and cash flow, measures favoured by Mr. Harrison, Mr. Chamoun said.
"Canadian Pacific's transformation in the past five years has been nothing short of extraordinary, moving from worst to near first in terms of industry profitability. However, strong competition from Canadian National along with recent commodity challenges limited CP's revenue performance," said Brandon Oglenski, a Barclays Capital Inc. analyst. "But with an improved service offering, more focused management attention and a stronger fundamental backdrop, we think the prospects are bright for CP."
Much of Mr. Creel's time has been spent trying to improve relationships with the company's largely unionized work force and its representatives. He rolled out a new disciplinary policy for unionized employees intended to offer more predictable consequences for safety infractions with fewer suspensions and terminations.
CP this month reached a tentative contract agreement with the Teamsters union that represents 2,000 track maintenance employees, and 600 clerical staff represented by the United Steelworkers ratified a new contract in April. The contract with the locomotive engineers and conductors, also Teamsters members, expires at the end of the 2017.
However, Mr. Creel's push for in-cab camera legislation, introduced last week in Parliament, and the company's efforts to certify office workers as train operators face opposition from the union and may do little to improve relationships with a labour force that, under Mr. Harrison, faced firings for minor transgressions.
"That's not ruffled feathers," said Doug Finnson, president of the Teamsters Canada Rail Conference. Using that term is "minimizing the tragedy at CP that happened to all those good people."
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