I have always been curious as to if Canada’s providing health care to all its citizens gives its railroads a cost advantage over their U.S. competitors.
I don’t mean to start a thread on the pros and cons of universal health care, but just simply to inquire about what is in place.
Examples: CP handles shipments from the to the American Midwest. CP handles grain from the Upper Midwest to the American Pacific Northwest via , and interchanges it with UP.
In both cases, the CP route is longer, often steeper, has more crew changes, and likely has longer car cycle time than a comparable route on BNSF due to the fact that much more of the CP route lacks CTC and has less siding capacity. An example could be a unit grain train from Central North Dakota destined to
This is a political hornets nest! Providing health care is both an economic and political issue. BUT IT CAN BE DISMISSED DUIRNG THIS ARGUEMENT.
The political arguement can be dismissed that is. This is because there are so many other cost factors which may or may not mean anything. Union rules and wages, for one. Route milages, fuel usages and costs, sales and property taxes, track conditions and maintenance costs, supervisory costs, federal and state tax structures, equipment costs and maintenance. And probably dozens more factors. Unless you know the actual per mile per ton per route cost for anything, there is no way of honestly answerig your question of comparitiveness.
The key is are the crews working in the U.S. Canadians or Americans, If Canadians, do they have green cards ? Would you expect American crews to be covered by the Canada Health Plan because it’s a Canadian company, , Just ship crews north to take the trains south. Don’t worry about Canucks taking away American jobs, it is so difficult to get permission to work or emigrate to the U.S. unless you are a singer or a hockey goon.
As is so often the case…having money helps alot. If you own a business and have some money to invest then moving to from the US or Canada is not a problem.
I think Henry nails this one. On any particular shipment, there are so many potential cost centers, from car hire to locomotive costs, crew agreements, etc., that one benefit to employees is a drop in the bucket, almost unnoticeable.
CP and CP-aligned short lines in North Dakota (NPR/DMVW) must compete for grain shipments against BNSF and BNSF-aligned short lines (DN/RRVW). Consequently, neither can afford to raise rates dramatically out of proportion with the other. It’s true that elevators will compensate farmers based on their rail rates: a lower rail rate means an elevator can offer more to farmers for grain. Assuming BNSF’s West Coast rates are fairly comparable to CP’s West Coast rates, farmers are mostly going to head for the nearest elevator to keep trucking rates down. So if your farm is located 3 miles from Rogers, N.D., where CP operates an elevator that loads efficiency trains, you’ll probably ship your crop there. On the other hand, if you’re located near Alton, N.D., where BNSF operates a shuttle-train-loading elevator, you’ll probably go there. That holds true so long as the two railroad’s rates are at least in the same ballpark.
Thus two railroads divide up the shipment of a state’s crop. It doesn’t seem at all odd that both enjoy some market share.
Mark asked a very simple question "Does Canadian Taxpayer funded health care give CP and CN a substantial cost advantage compared to American carriers who provide their employees with health care insurance that the railroad pays for?’
It is a simple and reasonable question. It would probably take someone very familiar with both systems to provide an accurate answer. I have no idea what the answer is.
Andy said it: NO SIMPLE ANSWSER. Real answer is based on politics, history, economics, law, railroading, philosophy, and how do you spell and define “is”. It is so rhetorical and politically explosive, that there is no real answer. Once you get beyond what I said above and what Andy said later, it is all politics and emotions.
And also overlooked in the “simple” question is who the taxpayers are. Among the taxpayers are the railways themselves. And I have no idea how the corporate income taxes and all the other miscellaneous government taxes and charges compare between the two countries. I believe our personal tax rates are higher up here.
Canadian taxes and social policy apply to Canadian operations. American taxes and social policy apply to American operations. In the concept of the total operations, cross border operations are a very, very small part of the total operations on either side of the border.
When I worked in management for Santa Fe I was told the full cost of an average employee, including all bonuses and benefits, was roughly 1.5 times that of the base salary. When I moved to Canada to work for CN, I asked about it and was told that they figured the cost at 1.25 times the base salary. This was back in the mid-90’s; the numbers may have changed since then. Health benefits provided by CN were a “top-up” plan that covered some extras not covered by the national plan. Otherwise, it was all pretty much the same stuff as in the U.S. - dental, disability, life, etc. Federal corporate income tax rates in Canada have been gradually reduced from 21% in 2007 to 15% starting this year. The provincial rates range between 12% and 16%. I don’t have information on property or other taxes paid by the Canadian railways.
I disagree that there isn’t answer. How are Canadian railroaders provided their health care? Through their employer or the national health care system, or a combination of both? Has to be one of these. That is all I’m asking. The employees do have health care. That, we know for sure.
I will agree that if there is a difference, it would probably not approach the threshold of “substantial”, and it would be one of myriad things to consider with regard to the cost of operating a train. To suggest that “there is no answer” means that there are certain costs (especially benefits, like health care) that railroads don’t consider, and that is not true.
I thought I answered the question in my earlier post. Canadian railway employees are covered under the national plan. The railways provide some “top-up” coverage as part of the benefits package, but the vast bulk of the cost is borne by the public system.
Actually, yes there is an answer. In fact there are hundreds of answers. Unless done by a CPA, and even then it probably is the same as the rest, the answers will be jaded by politics, philosophies, and opinions, parochialism, provincialism, education, white coller, blue coller, railroader, railfan, and patriotism and favoritism. No definitive answers, just rehtoric, not even rehtorical answers!
The answer to the question “how is health care coverage provided to Canadian railway employees?” is simple and straightforward. It’s the other question, “Does this translate into a cost advantage for the Canadian railways?” that has hundreds of ‘answers’. I worked in intermodal marketing and sales, which means that I was very much absorbed in pricing, margins, and cost factors, at a time when CN was competing with US railways for Pacific Rim imports moving to Chicago. I can say with all honesty that I never heard anyone at CN express the idea that we had a cost advantage over BNSF or UP due to lower employee cost. I would agree with the posters here who say there are far too many other variables involved to single out this one item. I would also point out that at the same time CN was handling US imports bound for Chicago through B.C. ports and Halifax, the US rails were handling Canadian imports bound for Toronto and Montreal through California and the Port of New Jersey. When dealing with traffic containing an overseas component, things such as the overseas origin/destination or vessel rotations, utilization, and traffic mix can sometimes be a bigger factor in routing decisions than mere railway cost/service. Finally, I will add this to the pot: at the management level at least, CN did not seem averse to having more sales reps per $ amount of revenue than Santa Fe did, and it prefers to provide and sell its domestic intermodal service on a direct, door-to-door, ‘retail’ basis to major domestic shippers, rather than through truck lines or intermodal marketing companies as all the US railroads do. In this I believe the cost of an employee WAS a significant a factor, but the difference as I understood it was not that CN’s employees cost less than BNSF’s, but rather that CN doesn’t pay a premium for its employees relative to other Canadian companies. My understanding is that in the US, due to Railroad Retirement and the Railway Labor Act, it costs more for a railroad to hire a truck driver, sal