Railway wants to cut ties with Cape Breton

Chris Shannon cshannon@cbpost.com
Published on June 12, 2014

A view toward the Cape Breton and Central Nova Scotia rail yard in Sydney’s north end on Wednesday evening. The railway’s parent company, Genesee & Wyoming Canada Inc., intends to file an application with the Utility and Review Board on Oct. 1 — a day after its provincial subsidy expires — to abandon a section of the line, which runs from St. Peter’s Junction to Sydney. It cites the lack of traffic on the rail line has made it too unviable to keep operating beyond this year. 

©Cape Breton - TC MEDIA


Too often the railway tracks running through Cape Breton have been eerily silent.

The familiar train horn sounded by passing locomotives has become less common as each year passes, and it now looks likely to disappear altogether later this year as the railway’s owner seeks permission to abandon Cape Breton’s only freight rail service.

Genesee & Wyoming Canada Inc. will apply to the Nova Scotia Utility and Review Board on Oct. 1 to shut down its operation of the Cape Breton and Central Nova Scotia rail line between St. Peter’s Junction and Sydney.

The decision doesn’t affect the section of the rail line that runs from Truro to the Strait area.

Company president Mario Brault said the process would begin a day after the $2-million-a-year provincial subsidy expires on Sept. 30.

Brault said his company has only owned the line for 18 months, but traffic on the line has continued a downward trend that’s been happening for more than a decade.

“This rail line is not profitable,” Brault said from his Montreal office Wednesday.

“We can only observe that the business has been depleting over the years and now the level of traffic is one-third of what it was 11 years ago when abandonment was (first) granted.”

Back then, in 2005, the provincial Tory government came through with an annual $2-million subsidy to support railway owner RailAmerica as long as it provided proof of operating losses.

Over the last nine years, the province has provided the money-losing rail line with $20.6 million in funding.

That subsidy was renewed in 2011 by the NDP government.

Brault’s company, which bought the line from RailAmerica in 2012, doesn’t want another “handout” from government, he said.

“The current infrastructure on this portion of the line is getting older and older like everyone of us, and it will require more and more maintenance in the future.

“All that being said, we see only the need for subsidy increasing significantly and substantially over the next few years. We don’t feel that would be fair to ask for more money from the government for a line that does not stand on its own feet from a commercial standpoint.”

Local businessman Sean Burke will be directly impacted by the railroad company’s decision.

Burke, vice-president and general manager of Polysteel Atlantic Ltd., expressed surprise when told Genesee & Wyoming wasn’t interested in continuing the subsidy or having the amount increased.

He said he’ll meet with company officials on Friday to look at alternative ways to have the raw materials he needs shipped to his manufacturing plant in Sydport in order to make synthetic ropes.

“It’s certainly not a cost-neutral option for us,” Burke said.

Suggestions by Brault that it could look at somehow shipping its customers’ goods by truck to the closest rail spur, likely near Point Tupper where industrial customers there such as the paper mill won’t be affected by this decision, didn’t make much sense to Burke.

The plastic resin pellets needed in the manufacturing of synthetic rope is shipped from a plant outside Houston, Texas, he said.

“In the immediate short-term, our alternative is to truck directly from our suppliers to our plants. (It) means trucks on the roads from Texas to Sydney, or at some point in between wherever it makes sense to offload a railcar into a trailer for road transit.”

As Burke prepares to look at alternative shipping methods, he said he’s interested to see how the province reacts to this decision.

Transportation Minister Geoff MacLellan said the provincial government isn’t in the position to offer a “large-scale subsidy” to Genesee & Wyoming.

He said the current subsidy of $2 million a year, as well as capital upgrades remain on the table for discussion.

The province has no intention of taking over ownership of the rail line, he added.

To illustrate the bleak picture, MacLellan, the MLA for Glace Bay, said the rail line currently sees 500 freight cars a year but needs about 10,000 cars just so the company can break even.

At this point, he said it’s time to reach out to the municipalities affected and those private-sector customers who will be affected if the UARB approves abandonment of the line.

The Cape Breton Regional Municipality has promoted itself as a player in the world of international shipping. In a statement released by the mayor’s office Monday, it said port development is “very connected to rail service” and upgrades to rail infrastructure would be necessary.

But there is no clear answer as to how that economic development strategy can move forward without rail service.

Mayor Cecil Clarke refused the Post’s request for an interview Wednesday because it’s an issue currently being handled by Economic and Rural Development Minister Michel Samson’s department, the mayor’s spokeswoman Christina Lamey said.

MacLellan said the next few months will give the province an opportunity to determine what capital infrastructure upgrades are required on the railway and the costs associated with that work if a new operator were to take over the line.

“Again, that’s all tied into what economic development opportunities are going to materialize,” the minister said.

“We’re at the state with the Cape Breton economy where we can’t speak in hypothetical companies coming to Cape Breton. We can’t talk about hopeful business entities arriving and setting up in Sydney.

“We’ve got to look at the present and what’s on the docket in the short term because we need, ultimately, to save this railway. We need an increase in railcar usage and that’s only going to happen through increased economic development.”