Executives
E. Hunter Harrison - Chief Executive Officer, Director and Member of Safety, Operations & Environment Committee
Analysts
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Canadian Pacific Railway Limited (CP) JPMorgan Aviation, Transportation and Defense Conference March 6, 2013 8:45 AM ET
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
All right, great. If I can get everybody to take a seat. We're going to get going with our next presentation here. I recall last year at the conference, we had Hunter with some Q&A at the launch keynote and that was quite interesting, great to get all his insights. We really are excited about welcoming him back to the conference, really anticipate his remarks, and I think we're going to have plenty of time for questions and answers. And so if you're going to prepare your thoughts from the audience. But Hunter Harrison is the CEO of Canadian Pacific. We also have Janet Weiss up here, which -- the Head of Investor Relations. I'm sure you all know Janet. And Hunter, if you want to go ahead and take things away, we look forward to your comments.
E. Hunter Harrison
Sure. Thank you.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
All right. Thank you for joining us.
E. Hunter Harrison
Yes, thanks, Tom, for the introduction, and thanks for having us here this morning, and good morning to all of you. It's been a fast track since I talked to this group the last time, as Tom mentioned earlier. I think the best way for me to try to characterize a little bit about what's going on today at Canadian Pacific is to take you back this -- through maybe the last year of what's been taking place, which would probably give you some, hopefully, some insight into where we're going in the future. We had been through a very spirited, for lack of a better term, proxy contest, which I was really on the sidelines for in an advisory capacity. And finally, that issue was resolved last year with the annual meeting in May. And then I joined the organization in July 1 as CEO. And we have had a -- are in the process of a total turnover change-out, if you will, at the board level. I think when we get through with the annual meeting this year, we'll probably have 3 directors remaining of the original 15 directors. So we've got a new group that's coming together, that's developed a certain chemistry, and we look forward with that guidance and leadership taking the company forward. One thing that's marked this 9 months or year is change. And if you don't like change at Canadian Pacific, it's not the place to be. We've had a lot of change. There's going to be a lot more. We've had a lot of turnover at the top with effectively 7 executive vice presidents and down to regular vice president level that have left us. Probably the most significant issue that's taken place was now about 3 weeks ago, we announced a new President and Chief Operating Officer, Keith Creel, who joined us from his former employer, Canadian National, which really kind of rounds out the management team. I'm excited to have Keith on board. He is, in my view, one of if not the brightest operating mind in North America. I have worked throughout my career with him, going back to '95. And I can tell you that today, he is on the ground in Toronto, making changes to the yard there as we speak.
So effectively, the new game plan is now in place. And it's kind of a unique position for me to be in, that we're in a period, and I hope the period continues, where we've got 3 major constituents that appear to be all pretty happy: employees and customers and shareholders. And to get that -- those 3 groups happy at the same time is sometimes quite a challenge. But we've gone out and we went out the last couple of weeks with what we call town hall meetings that is for all employees, from union, non-union, anyone interested, to give them a story, to tell them what we're doing and why we're doing it, and why change is necessary and the part they will play in there. And we've spoken to over, I think, probably now 2,500 employees face-to-face in not 30 or 40 minute presentations with a few perfunctory questions, but in 5- and 6-hour sessions with people that really talk about what's going to take place with the business. And so there's been extremely positive reaction from the employees. We've had great reactions from customers, which I'll talk a little bit about later. And obviously, the markets are pretty happy. If you look back last year, we were up in 2012, 46%, and as of the end of February, we were up 24% this year on top of that, and we've had a good last couple of days, so we're probably up in the 75% range. So that's nice to be recognized there. So what we're trying to do now is to put this plan in place and execute it. And one of the key drivers that we talked about initially was our service. Within, I think, within a week of me arriving, we took a day out of our Intermodal service between Toronto and Montréal and Vancouver, and between Vancouver and Chicago, which has served us very, very well. We have closed 4 major hump yards. And a lot of people really don't recognize the impact that closing hump yards do to your system. At the same time, we've closed 3 Intermodal facilities. But the hump yards are significant. I mean, I don't know an analogy I could give you except maybe taking them out in this eastern seaboard here, if we closed 4 major airports, what could potentially the impact be, both from a cost and savings standpoint. So we are now -- we had sorted through and have tried to get a handle on what we've argued a great deal about with our headcount. When I first started looking externally at CP's numbers, the first number was 14,500 operators. And then there was 16,500 if you included in capital, and then it was more if you included contractors and consultants. And so finally, I said, how many paychecks do we write? And that number became about 19,000-plus. And in our plan initially, as you know, we had talked about significantly lowering that portion. We're effectively had done away with contractors, had done away with consultants in, certainly, in the traditional sense. Now we talk casually about changing culture. And I can tell you that, that's hard to do. It's very difficult to do. It doesn't happen in one quarter, it doesn't happen in one year, it happens over time. And it happens very slowly, and I mentioned that because of this: there's been a lot accomplished, but there's a lot more to do with this culture change. I mean, somebody asked me about it the other day and how long does it take to change a culture. And I can just tell you what Margaret Mead said, and she said, you do it one funeral at a time, and hopefully, we can beat that pace a little bit. But really, there's a great deal of time being spent internally as to what this organization, what our values are and what we really stand for. And with all that, this plan is to deliver significant financial performance, which is what you're concerned about.
Now overall, let me just make a few observations about the franchise. We've got a group of core talented railroaders there that we're having to kind of pull back, peel back the onion, if you will, to get to those people. But they want to be recognized for their talent and their abilities, and they're tired of being called the worst railroad in North America with the worst operating ratio. And we're spending a lot of -- a great deal of time and attention in focusing on those people that have some raw talent that would like to be recognized. This is a base for your strong franchise, in spite of the fact of all the arguments and debates you heard throughout the proxy contest about structural issues, okay. I think I can safely say, hopefully, you will not hear me talk about that Canadian Pacific has structural issues that we are not going to overcome. We've got a strong franchise. I'm proud of it, and we don't make excuses about the structural issues. Pretty diversified book of business. Obviously, right now, we're heavily weighted towards commodities in Canada. But with all the recent announcements about the fuel and pipelines and energy, that's probably going to be a dominant factor in our growth going forward, insofar as our merchandise numbers picking up because that falls into the merchandise category. But at the same time, I would tell you that, as I talked during the proxy contest, one of the reasons for closing of the hump yards was with the change of mix in our business. If you go back when these hump yards were built, late '50s, early '60s, we were sorting and still carrying grain in 40-foot boxcars, Intermodal had -- virtually hadn't been heard of. There was no such thing as containers. There were no unit grain trains. So everything had to be sorted. Probably 90% of the traffic today, the opposite is true. Right now, our franchise, we have about -- probably about 71% or 72% of our book of business is unit train. And if you add these field trains, they will also be unit trains. And so we don't need these classification yards in large complexes like we have in the past to be able to handle that business. This team, I think, people ask me what's the most -- one of the most positive things you've seen or experienced at Canadian Pacific. And I would say it's this: the people at Calgary and throughout the Canadian Pacific system have been quicker and more open-armed to embrace change than any group of railroaders I've been associated with for my long career, okay. We've got a lot of network opportunities. We've got a lot of rationalization opportunities. We have put out, asked for expressions of interest on the DM&E. We have talked about looking at portions of the D&H. So things are going well. The plan is falling together. We're way ahead of schedule with our workforce reductions, which we've talked about. We -- I think we said initially that we would take 4,500-plus heads out. That -- I feel more comfortable about that number every day. As we speak, the number is 3,000-plus, so obviously, we're ahead of the schedule there. Our service, anecdotally, I can tell you, has improved dramatically. We just went through record movements of grain in January to Vancouver, cycle times were 3 days better, 13% overall in the grain velocity, which includes also, besides Vancouver, Thunder Bay and then U.S. grain. The record number of RTMs, up about 11% to 12%. At the same time, train mile is down about 5%. Record lowering of dwell times at terminals. As I mentioned earlier to you, the one day faster Intermodal cycles. Probably one of the biggest and one of the most missed issues is the train size, train design. Because right now, we've seen our length and weight of our trains respectively improve 10% and 12%. So we've reached a point now where actually, depending on the density and the corridor, having improved by 10% or 12%, you can take train starts out of the network. At the same time, from a NASDAQ utilization standpoint, even from the last time we talked to you, there's 20 more locomotives that have been put up. So we had returned or put up, stored, monetized now 480 locomotives. So there's clearly, obviously, room for growth. So where does that lead us? First of all, as we talk a little bit about next year, if you look at our revenue growth in '12 was -- our revenues were about $5.5 billion. We've said we would be up high single digits. I feel better about that and more comfortable with that all the time. Historically, our hours have been: in '11, it was 81.3; and in '12, it was 77. We've said it's going to be low 70s, and I feel very comfortable about that. And our guidance has been, for earnings standpoint, year-over-year would be up 40%-plus from an earnings perspective. So I feel very good about all that. And there's more to be done. Now if you look at that in the context of the so-called 4-year plan, we're certainly ahead of target, if you look at the operating ratio. When we talked about being in mid-60s, which quickly came into 65, no, we're not that smart to be able to say exactly where the dart is going to land. But I think, comfortably, that I can say now, at this point in time, barring some big change we don't foresee, that the OR will be 65 or below, much more so to the low side than the high side. The cash flow before dividends, I'm extremely proud of, that we see over the 4 years, that's going up to $1.4 billion. Capital will stay in the $1.1 billion or so range. Our revenue from a CAGR standpoint will be up pretty significantly in the 5%, 6% range. So things have come together very well, and I say this with some hesitancy, but in spite of the fact that we've had pretty record performance and recognition in the market and recognition with the customers, the facts remain that there's a whole lot more to do. And we're looking forward to doing it. And so, Tom, with that, we'd be happy to address questions the audience might have.
Question-and-Answer Session
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Great. And I'm going to start you off maybe with 2 questions, and then we'll go quickly to the audience. You had some comments, I think -- I believe this was in a Global Mail article, and you've obviously commented as well, but what -- do you think a 71 operating ratio, is it pretty likely that you could do better than that this year? Or how would you view it? I don't want to make it too specific, but I guess I did, so I don't know. You had commented on it in that article, that's why I bring it up.
E. Hunter Harrison
Oh look, I -- if -- look, we've said low 70s, but if things come together and everything hits, is there a probability that we could be below that? Certainly. So I think it's -- we're going to continue to see the operating ratio go down. And it's kind of the -- it's just how quick are we going to be in some of these areas, how fast is the crude going to come on, and if we get high-single digits revenue growth, it's pretty likely that we could be bouncing against that 70 barrier. Is that specific enough, Tom?
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Bouncing against that 70 on a -- talking about 2013, is that...
E. Hunter Harrison
Yes, yes.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Okay, great. Yes, that's great. And in terms of the 4,500, you've said that, that appears to be more and more conservative every day, the 4,500 headcount reduction. What do you think the upside case is? Can that be 6,000? Is the upside that it would be 5,000? Is there a way of thinking about that or framing that at this point?
E. Hunter Harrison
Yes, it certainly could be 6,000. The question becomes, here, right now, is how effectively and how fast can we get and can we change out the contractors. So to some degree, we're going to be taking contractors out and substituting with employees. And to some degree, it's contractors that have not been in the 19,000 count. So yes, I don't think -- what I'd like to think about is this, is that we're going to see enough success that we can convert this into market, that we'll see some growth beyond what we thought, which we might need some of the people. And so 6,000 might be kind of an upper barrier because of potential growth. But just strictly on today's type business levels, with today's levels of productivity and what we're doing in these yards and some additional changes in the way we maintain the network and so forth, yes, that -- you could -- that number is attainable.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Okay. Why don't we go to the audience and see if we have some questions from the room here. We've got one towards the front here.
Unknown Analyst
Hunter, you talked about increasing train length, I think it was 10%. Your sidings have only been partially changed out. How much room do you have to continue to increase train length?
E. Hunter Harrison
We've got a long way. We've got -- to oversimplify it, we could have, in most segments -- let me qualify this. Let me be sure I'm careful here. In the non-box segments -- for example, we were running potash trains now with 170 cars. We can't increase that. But in our merchandise and our Intermodal and our non-bulk, where we've done -- and the company's done a wonderful job in the past of increasing the size of those trains, we can grow the business 25%, 30%. We're averaging around 6,500 feet, train length and weight. They're very close. We get -- in certain segments, we run trains as big as 15,000 tons plus. So there's a lot of opportunities there. We're putting in, I think it's 9 sidings this year, extensions. Done it a little bit differently than traditional road would do it, is that we're -- we've taken up the obsolete sidings that were 6,000 feet and moving them maybe 15 or 20 miles down and picking them up with another obsolete 6,000 to make one be a 12,000-foot siding. And so I think the program is next year to do a similar number. And we're putting that work in very good shape as far as being able to continue to improve train size, which is direct, quick dollars to the bottom line.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
We have a question in the middle. Go ahead.
Unknown Analyst
On Slide 4, you had points that said network opportunities and real estate. Was that referring to the hump yards? Or was there other -- maybe could you elaborate a little more on the real estate in particular, what you meant?
E. Hunter Harrison
Yes, there's a lot of stuff. We've got the DM&E that we've asked for interest on that, 700-and-some-odd miles on the west end of the DM&E. We've got portions of the D&H that we said we would look at. Now, we have not made any decisions there. And I think any decisions that way would be -- certainly would be south of Albany. We've got 6 partials as a result of the hump yard rationalizations. And these are in nice, nice areas. We've got Schiller Park in Chicago, which is in the proximity of -- not too far from O'Hare. Our yard there is next door to O'Hare. Would we ever think about going out in the country and putting a yard up and selling that space next to O'Hare, putting some money in the pocket, pay it out to the shareholder in the way of dividend or what? Yes. We've got a couple of tracks of downtown properties that we have options on, one big one in Calgary. So there's properties throughout the system. I was looking the other day and going through, and I shouldn't say I found it, but from my standpoint, there was 400 acres up in the northern part of the railroad. People were saying, well, nobody ever goes there. And I said, well, there's 20 cabins there, so what will we develop there? So what we're effectively saying there is real estate is not our expertise, but we recognize the value of it and we're not just going to make a mistake and sell it off and monetize it without looking at the full-blown opportunities with some help, with some people that know more about real estate than we do.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
We have -- other question, yes? Right up here towards the front.
Unknown Analyst
You talked a lot about optimizing the network and service enhancements and so forth. I wonder, could you talk a little bit about from the customer side, in terms of legacy contracts that are either going to be restructured or potentially shed, of how important is that to get to the OR targets? That's your...
E. Hunter Harrison
It's really a nonevent. We've got 2 major contracts that are 10 years in duration. They're there, they're with us, they're in the numbers. Everything can be achieved with those contracts, that's one coal and one potash. There are no other longer-term contracts. In effect, I'm not a big supporter of longer-term contracts. And so that's kind of a nonevent. I think that what we will see and what we're starting to see here is this: with the improvement of service in the markets we serve, you can expect to see quality revenue improve. And so I think part of the story will be improving in revenue. Now, for an example, on the energy side, with the addition of more business, more units, for an example, it looks like our length of haul is going to go up pretty substantially. So I've never been an advocate of that. If you look at units as a proxy of business, I think you're looking in the wrong place. Because if you're looking at one unit that's a 100-mile haul and it's the same as another unit that's a 2,000-mile haul, you're going to miss it there. And that's why I'm more of a proponent of RTMs, or revenue ton-miles, or other measurements. But I think just in that energy move, we'll see length of haul probably go up 25%, which is pretty significant. And that's no interline. That's totally within intra-Canadian Pacific. But there's no downside of any legacy contracts, anything holding us back. It's playing field is level out there for us to perform on.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Hunter, let me jump in with one here on the energy side since you started talking about it. I think -- we've seen great performance from Canadian Pacific in terms of leveraging the origination franchise you have in the Bakken. And I think we've gotten pretty good visibility to where that oil is going. How do you think about the timing for Western Canada crude by rail to begin to effect the franchise? And also, how you think about the positioning? I mean, CN's railroad goes north to Fort McMurray. You go to some of the hubs, Hardisty and so forth. How do you think about the positioning in terms of will the hub strategy you have work well or does CN have an advantage going further north?
E. Hunter Harrison
Well, they probably have an advantage going further north. We've got some advantages in the, obviously, in the Bakken. Our growth is going to be slower in the West. My thoughts and predictions is going to be probably more dramatic to what we've seen in the past to the Northeast. The Northeast has become a bigger player quick, and we're going to see -- obviously, there's been a lot of talk recently about growth over Kansas City into the Gulf markets. So I think there's opportunity for us to participate there. But there's plenty of revenue out there for us. And there's plenty of room out there for the competition. Our job is to control the cost, and I think the rest of it will pretty well take care of itself.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Do you have a sense of when the timing for that crude by rail in Western Canada would start to be material for CP? Is that later this year or is that out a little further than that?
E. Hunter Harrison
Well, it's probably out a little further than that. When it becomes, you have to define material, but I think -- I understand your question. I think it'll be out a little longer. I think we're going to see, obviously, increases in the Northeast as we speak. We could see increases in Kansas City soon. And so the growth for energy for us, for this little franchise, is going to be pretty significant this year. I mean, it's probably going to double. Now that's not a big deal in the scheme of things, with some of the other carrier sizes, but it's something that we're very proud of.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
And the Kansas City increase is not Western Canada, that's Bakken going to Kansas City?
E. Hunter Harrison
Effective, yes. It's Bakken going to the Gulf over Kansas City.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Over Kansas City, right, right. Okay. Great. Do we have some more from the audience?
E. Hunter Harrison
Here's one, Tom.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Okay. Yes, in the front.
Unknown Analyst
There's been a lot of excitement about Keith Creel joining your organization. Where do you see him making his most immediate impacts?
E. Hunter Harrison
In helping me get some rest. I'm serious. Keith has worked for me for -- since '95. And a lot of that was real hands-on. We talk the same language. If we say turn to Page 123 in the hymnal, we both know what the words are. There's no debate about how to run the railroad. And so now, he's kind of on the East, focusing on -- I kind of went through Canada maybe like Sherman went through Atlanta, okay? And he's coming through repairing some of those things and fine tuning, and he's going to do the same thing to some degree that I've been doing. And as soon as we get the momentum where we think, from an operating standpoint, all those things are rolling in place, then I'll turn the operating ball totally over to him and focus my time more on the other areas of the organization which needs some attention. We're going to be doing some significant things with like IT and some other things like that. But he's going to -- as soon as he's ready, which will be soon, he's going to be given the ball. There's not going to be any of this he's got to check with me about everything. All I've got to say to him is, hey, go to Chicago and fix it. And I can rest that it's going to be done.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
A question over on the side.
Unknown Analyst
How many investors think about the cash flow before dividends and the priorities around that over time? And when we may get greater clarity on that as you work through your plans?
E. Hunter Harrison
Well, that's more of a board question right now given the new structure. But I think I can say this, the first call on cash and the first thing we were concerned about is strengthening the balance sheet from a debts perspective, obviously. There were some concerns about, and still are to some degree, but there were great headwinds with the pension funds. Now we made some improvements there pretty significantly with the collective bargaining agreements and with lower numbers of people. So we get the pension fund in hand, we get our balance sheet stronger, which we think will happen pretty soon if we produce these type cash flows. We're going to always first look for the call on capital for the railroad, growing to business in places that there's returns that meet our hurdle rates. But if those aren't there, then we're quickly going to look and have a, I would imagine, a lively debate about dividends, share buybacks and the other options that you have with cash, which is a wonderful question and debate to be able to talk about. So I think that's probably the -- that answered your question.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Hunter, I have an additional wrinkle, I guess, on the prior question about the impact of Keith. When you set out the targets in December at the analyst meeting, I don't know if you had assumed that Keith would be coming on board or not. Obviously, you had a close relationship with him over time. It gives you kind of, I guess, more bandwidth, so to speak. And also maybe there would be things he -- maybe he wants to do smart yard in certain areas or come up with something that you might not have come up with. So do you think we can think about his impact as maybe, on the margin, driving upside versus what you had already seen? Or do you think he is probably going to see the same type of things that you had seen, and that's maybe not the right way to look at it?
E. Hunter Harrison
Well, I think -- let me kind of characterize it this way. I think to start with, it answers some -- maybe some strategic questions. Look, I'm not the youngest guy in the business and people want me to check, get a blood work up every day, but I'm fine, I'm going to be okay, and -- but in case. So clearly, there's a clear succession plan there that, if everything holds together, that's going to be. That's important for organizations. I mean, Keith's a young man, 45 years old. So that -- those questions and issues are answered for some time. Keith gets a chance to put -- get his feet on the ground without a huge amount of pressure on him day 1 to produce something new. I mean, things are going pretty well. He can settle in, take a look at things. And then I think, from my standpoint, from an operating standpoint, initially, you will see a little speed-up of everything. So if we said we were going to get there in '15, maybe it's '14 or vice versa. You'll see that. And I'm sure you'll see, after I leave and they give me my gold watch or whatever, I hope, that you'll see Keith bring on some other things far beyond what I had envisioned. Now I don't know where that's going to be exactly. I do know that he and I have talked a lot. And I do think this company, particularly, and maybe others might follow or lead, I think what's going to be important in this industry going forward is speed and velocity. And I don't think people recognize that. When we talk about we're really searching today about service and what is good service, what should we do. I mean, I'm meeting with steamship lines that are cutting back their speed on the high seas to save fuel. And you say, well, what does that -- does that make a lot of sense? If they're cutting back to save fuel and then they're coming to the coast, and then we're taking it and trying to run like hell to the other end, and then they're not ready at the other end and sitting for 3, 4 days. So we've got to test this whole model. And the issue that we're going to develop that we're developing is this speed and velocity will change dramatically as you see interest rates change. Now, I'm not saying -- I'm not trying to tell you when the interest rates are going to change or when they're going to -- I can tell you this: inventory and carrying costs are awful cheap today. You let us go back to the days of prime, almost at 20% in carrying cost up at 46% and 47%, and look at what speed and velocity, and you're going to hear some new acronym for just in time or whatever, and that's when the carriers that are prepared and have the infrastructure, have the speed, have the velocity, have the ability, will have a real product that will distinguish them from others. And that's the kind of things that he can take us to.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Great. That's very helpful. I think we have time for one more from the audience. Is there another question from the audience? If you come up with one, let me know. And the crude by rail assumptions you set off, the first quarter '13 base, you expect it to grow, to be 2x to 3x that level, I think, by 2016. Within that, are you assuming that the Keystone XL Pipeline gets approved? And if you are, then if it gets rejected, would that -- I assume that would imply some pretty substantial upside to that 2x to 3x increase in the crude business.
E. Hunter Harrison
I think our assumptions basically are that it's going to be approved. It's going to be a timing issue, obviously, it's going to be a time to getting built. And I happen to think that maybe there's a play and a need for both. Rail had bring some distinct issues here that people don't give it credit for. First of all, number one, it's more cost competitive that it's ever been as we've gotten our cost down in the industry over the years. Nobody ever thought about railroads competing with pipelines. Look, with safety, in my view, both of us have the ability to operate, you run a pipeline and run a railroad and move crude safely. That's not a big issue. I think one of the issues that customers recognize in this is you can -- as markets move, if you take off with a crude train and, all of a sudden, the market in the East is better in the Gulf, you turn the corner with that rail train and say, go to the East instead of the South. Hard to do with a pipeline. So I think we're going to have our place, our position. And if the pipeline ought to be built for North America, so be it. I'm not against pipelines. I'm not against productivity. A lot of our competitors are not. But I don't think, whether Keystone comes or it doesn't happen, it's going to effect those numbers.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
But if it gets rejected, it would appear that you'd have some upside then beyond your plan? I mean...
E. Hunter Harrison
Yes, but -- yes. But I think our play is almost there either way.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Sure, sure.
E. Hunter Harrison
Will there be more? Yes, there'll be more. But if there's going to be more, from our standpoint, much more than that pretty aggressive growth, there's got to be some infrastructure changes also, some additional construction and timing issues.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Sure. Okay. All right, last chance for one from the audience. And I guess I don't see any more hands. So I guess a last one I'll give you here, Hunter, before we have to wrap up. What do you think about the capacity position of the railroads? So when you're focused on speed, you speed things up, and then that creates capacity of the infrastructure. Do you think CP had too much capacity? Or do you think -- how you view the capacity, I suppose, in terms of infrastructure and maybe even in terms of people relative to what you would've said at the analyst meeting?
E. Hunter Harrison
Well, we clearly had too much internal infrastructure, as I would suggest most railroads do. I just think that this has kind of slipped by us to some degree. From a rail standpoint, from an overall network standpoint, which is important because we're part of it, I think that there's not going to be any more railroads built. We better learn to take the infrastructure we've got and do more with it. And the same -- the place that concerns me the most that we need, from a rail standpoint, to be concerned and affected about is Chicago. Because as soon as we get back to 2006 levels or whenever the peaks were, those things are going to crop back up, and we've got to address them and we've got to be able to deal with them. Now, from CP's standpoint, I think that we have -- I think we recognize some of our weaknesses, we recognize where we had too much infrastructure and too many people and what, and we're trying to solve that in a very sensitive, humane type of way with attrition and so forth. And it's nice to be able to have that fit. But we've got plenty of franchise that -- and right away, that if we do get more business, we can -- if we need to add some other sidings or, God forbid, if we add double track or whatever, it would be a wonderful thing because if we do, it would be fabulous growth. Because it's hard for me to get somebody to build a double train, to get me to build it.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Great.
E. Hunter Harrison
Thanks, Tom.
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Thanks very much, Hunter. We appreciate it.
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