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It took nearly five months to finalize, but Alstom Transport June 27 took over the management and operation of Canadian Pacific Railway's Ogden Shops in Calgary, Alberta.
CPR and Alstom Canada Inc. reached an agreement in principle Jan. 31 to transfer operational duties of the Class I's largest locomotive and rail-car maintenance and repair facility to Alstom.
The 10-year management contract enables CPR to decrease its maintenance expenses and increase use of the railroad's repair facilities.
"[The transfer] removes the problem of capacity under-utilization at our largest maintenance facility," said Rob Ritchie, CPR president and chief executive officer, in a prepared statement.
Under contract terms, Alstom acquires Ogden Shops' inventory and equipment, and obtains a long-term lease on the facility's buildings. The company will perform equipment overhauls and repair services for CPR.
"It amounts to a [$260 million] contract, because CPR spends [$26 million] a year on equipment maintenance," says Hamdi Conger, Alstom Transport senior vice president, service. "We believe, through our worldwide experience, that we can save 10 percent of that cost a year."
Alstom employee Dirk van-der-Weeen was named general manager of Ogden Shops. Under contract terms, 35 CPR shop supervisors became Alstom employees while 540 unionized shop workers remained CPR employees.
In late January, CPR and Alstom officials believed the contract could lead to shop and supervisory workforce reductions once the companies finalized the deal and completed a full staff assessment.
The Class I and Alstom might expand their management agreement to other CPR shops.
"We're in discussions with CPR about that, and other Class Is are showing some interest," says Conger. "We believe Ogden can serve as a blueprint for outsourcing trends to come in North America."
— Jeff Stagl