Huron Central Railway faces uncertain future—again

HCRY 911, the near-daily westbound train from Sudbury to Sault Ste. Marie, passes Vale’s Totten Mine in Worthington in April 2019. Its parent company, Genesee and Wyoming, plans to end rail service unless the it receives more government funding. photos by Warren Schlote

SUDBURY – The fate of the Huron Central Railway (HCRY), a 179-mile (288-kilometre) shortline railway between Sault Ste. Marie and Sudbury, remains in doubt once more as its operator, Genesee and Wyoming, has threatened to shut down operations at the end of this year unless the government injects funds to upgrade the line.

It’s a recurring pattern for the railway line that opened as a key link to the United States in 1888. Since 2009, HCRY’s parent company Genesee and Wyoming (which operates more than 100 shortline and regional railways worldwide) has announced the line’s imminent closure three times because it feels it can no longer afford to operate the route.

After the 2009 announcement, the City of Sault Ste. Marie, Essar Steel and Domtar in Espanola negotiated with the railway to keep the line open. The following year, it received an additional $30 million from the provincial and federal governments to upgrade the line.

In 2018, HCRY’s parent company again announced it would shut down operations because it was not receiving any more funding. The province later provided interim cash but the following year, HCRY announced it would shut down yet again, this time scheduled for early 2020.

Earlier this year, Brookfield Infrastructure Partners and GIC Private Limited of Singapore bought Genesee and Wyoming. They paused the closure of HCRY to see if governments would offer more operational funding but as of September, the line is once again slated to close at the end of 2020.

The railway itself employs more than 40 people in Northeastern Ontario but it supports thousands of jobs through the customers it services, mainly Essar Steel in Sault Ste. Marie, Domtar in Espanola and Eacom in Nairn Centre.

“That rail service is critical to the pulp and paper operation in Espanola. We depend on it for inbound manufacturing chemicals and outbound finished product. We’re hopeful that a solution can be found to keep that line viable and available for our operations there,” said Domtar spokesperson Bonny Skene.

If the mill should lose rail service, it would struggle to compete with other pulp and paper operations across North America. The Espanola operation employs about 500 people, including roughly 20 from Manitoulin Island. Its estimated regional economic impact is $694 million USD, according to the company.

“I can’t point to a single pulp and paper operation anywhere in North America that doesn’t have rail service,” said Ms. Skene. “We remain hopeful that a solution can be found. It’s an important aspect of our businesses and is important to the region, especially because of the jobs that go along with that.”

Eacom also employs several Islanders at its Nairn Centre sawmill operation. Regional manager Bob Banchero did not respond to The Expositor’s multiple requests for comment and the company has previously declined to comment on stories in other publications.

In addition to job losses, the rail line transports 12,000 carloads a year—the equivalent of roughly 40,000 trucks, whose presence on Highway 17 would increase traffic and deteriorate the road surface.

A significant part of the issues that HCRY has faced under Genesee and Wyoming ownership is the fact that Canadian Pacific (CP) still owns the physical trackage of the Webbwood Subdivision from end to end. CP owned and operated the line until it leased the track to HCRY in 1997.

CP benefits from this arrangement in part because it receives carloads at its Sudbury interchange, which it then ships across the continent.

However, CP does not contribute any funds for the upkeep and maintenance of the line. The tracks used to carry trains at speeds rivaling Highway 17 but by 2009, track speed had dropped to 10 miles per hour (all railways in North America use miles as their unit of measurement).

The 2009 funding brought a significant portion up to 25 miles per hour but many 10 mph stretches remain. Such older sections often use lighter rails and are not as robust, presenting potential safety risks.

Reports have emerged over the past month indicating that the province no longer wished to bankroll the shortline, potentially spelling an end to service. However, a Sault Star report this past week indicated that the federal government was continuing to work with the province and other stakeholders to keep the line in operation.

Alternative providers

Many proposals have emerged over the past decade, including inviting Ontario Northland Railway to take over both the HCRY and the Ottawa Valley Railway, a shortline between Sudbury and North Bay. Genesee and Wyoming also operates the latter line, which is a part of Canada’s original transcontinental railway.

In late 2019, a new option emerged. Diesel Electric Services (reporting mark DESX), a division of Milman Industries Inc. in Sudbury, publicly announced its interest in being part of a regional solution to the railway woes.

“If the government is going to invest, we’d like them to invest in something that makes sense,” said Jason Carriere, vice president of DESX.

The company has several operational locations in the city, including a small shop at the HCRY-CP interchange in downtown Sudbury. It presently services the Via Rail BUDD cars that operate between Sudbury and White River.

DESX is no stranger to the HCRY. When it received its rehabilitation funding in 2009, DESX was a key part of the work. It built a spur line to a quarry in Serpent River and processed all of the rock ballast that lines the tracks. Its crews ran ballast trains on the line to transport and dump the new rock on the roadbed.

“We’re completely accustomed to the line, the condition of the line, the process and so on,” he said. “As Northern Ontario business owners, we’re tired of our government forking out all this money over and over every couple of years when Genesee and Wyoming is lined up at the trough, threatening to shut down and end all of these jobs.”

However, any hopes DESX may have of taking over the shortline are on hold until Genesee and Wyoming either pulls out or secures more government funding. The current operators have a lease agreement with CP and the latter will not discuss possible lease terms, according to Mr. Carriere.

“We have a lot of good ideas to build the service but somebody needs to make the call first and then we’ll hone in on a more detailed business case,” he said.

DESX continues to meet with regional economic development groups and government leaders to plead its case ahead of Genesee and Wyoming’s proposed end-of-service date on December 31, 2020.