A group of industry reps and government leaders are under a tight deadline to scrape together enough money to keep the Huron Central Railway running for another year in northeastern Ontario.
After a delegation from Sault Ste. Marie journeyed to Montreal last week to encourage the money-losing railroad to delay termination of operations for at least a year, the short-line carrier has delivered a confidential proposal back to the City of Sault Ste. Marie and CAO Joe Fratesi.
“They were asking us how much money we required to stay in play for one year,” said Huron Central president Mario Brault, who met with Fratesi and senior officials from Essar Steel Algoma and Domtar, July 22.
His railroad plans to terminate service to the Sault on, Aug. 15, and to Espanola by Oct. 31. The absence of a carrier along the 305-kilometre Sault-to-Sudbury line would be devastating to the line's big shippers, Essar and Domtar.
Brault said he was unable to make any commitment to them at the July 22 meeting without first reporting to his board of directors at the railroad's Connecticut corporate partner, Genesee & Wyoming. This week, Brault delivered a dollar figure in a proposal to Fratesi.
A special committee, headed by Fratesi, will spend next week reviewing it.
The railroad claims to have experienced tremendous losses in recent years as freight volumes of steel and paper products have dropped. The 305-kilometre Sault-to-Sudbury track is also in rough shape and requires $33 million in capital upgrades. To wind down operations will cost the Huron Central about $90 million.
”It's a financial question whether this group will be able to raise the money to make it worthwhile for us to stay there,” said Brault. “We're not going to stay there and keep losing money and they understand that.”
Sault Ste. Marie and Essar want to buy a year's time by quickly cobbling together a financial rescue package with federal and provincial money along with investment by industries and communities along the north shore of Lake Huron where the railroad operates.
Despite the looming deadlines Fratesi is still hopeful an arrangement can be worked out.
“It is hoped that the parties will be able to commit and secure all of the necessary support required to avoid the closure deadlines,” stated a July 29 news release from Fratesi's office.
Fratesi was unavailable for comment.
The railroad remains “absolutely” firm on its August and October closure dates and won't wait for a last minute decision.
“We're not going to put this on hold until everything is figured out. We've been very patient and telling the world that this line was in trouble and now the clock is ticking fast and we cannot stick around to see what the answer is going to be.”
The railroad has already started the shut-down process by picking up material and move idled locomotives, and by putting its 45 employees in the Sault and Sudbury on layoff status. Brault said no layoffs have started.
The railroad expects a response from the city within a week. ”I expect some answers...whether it's go or no-go,” said Brault. If the city needs additional time, it will require another “eye-to-eye” conversation “because we can't afford waiting until Aug. 14 to see if it's working.”
Some government relief may be coming.
Ottawa and Queen's Park announced on July 28 a second round of joint infrastructure funding for not-for-profits. It's part of the larger $4 billion Infrastructure Stimulus Fun for construction-ready projects. Surprisingly, short-line rail is included. All applications for this money must be submitted by Aug. 18. There is no indication how soon money could start flowing.
Though it offers some glimmer of hope, Brault said a lot of the funding details are murky.
The condition of the track has deteriorated to the point that hauling steel products from Sault Ste. Marie to link up with the Canadian Pacific Railway's (CP) main line in Sudbury takes between 11 and 12 hours. Only a couple of years ago, the running time was an acceptable eight hours.
The railroad also used to haul between 40 and 60 cars per train. “Now we have a hard time to get 20,” said Brault.
Service to Sault Ste. Marie has been dramatically curtailed from daily operations to twice a week. It's a common sight these days for see Huron Central's burnt orange and black-painted locomotives parked on a siding at McKerrow, near Espanola.
CP, the owners of the track, repeatedly said it has no plans to step in on an interim or long-term basis and would file for abandonment of the line once the Huron Central pulls out.
