Under the leadership of Hunter Harrison, CN expanded their network by acquiring connecting regionals. This included DM&IR, EJ&E, BC Rail, and several lines in Canada that had been spun off earlier. CN is now managed by Claude Mongeau, Luc Jobin, Sean Finn and Jean-Jacques Ruest, who all went to university in Montreal, so perhaps expansion in the USA may be put on hold. On the other hand, CN still has a strong cash flow, and has fewer bottlenecks to open when compared to the other class 1s.
Lately I have been wondering if CN has been considering the Wisconsin & Southern for their next target. I believe W&S operates several lines which are owned by the State of Wisconsin, and WS DOT provides funding for the upkeep of other lines. Is it likely that this relationship with the state will keep W&S independent?
The two big questions that Canadian National might ask are these: what would acquiring Wisconsin & Southern “bring to the table” and “at what cost?”
If the W&S outbound traffic base is largely short haul to markets in southeastern Minnesota, Wisconsin, and northern Illinois, that’s one factor to consider. Secondarily if CN ownership would have little affect on expanding those markets, all CN would be doing is essentially buying a terminal operation. That same short-haul/high-cost “terminal railroad” argument would apply as well if the W&S operation is largely a terminating carrier.
The “at what cost?” question poses another issue. If CN really did want to acquire this shortline carrier, what would happen to State of Wisconsin support of its right-of-way? Wisconsin would look at Montreal’s financials and probably drop state support in a heartbeat - and doing that would change the value of the W&S franchise measurably.
Unless the W&S has a few high-volume customers whose business lines are pretty recession proof and those customers could provide significant long haul traffic opportunities to CN, I don’t see an acquisition in the future.
I don’t see the CN buying the WSOR either, for many of the same reasons Bob-Fryml mentioned.The CN bought the EJE, WC, the DMIR primarily for some sort of through route that would let them connect Canada with Chicago (or go around it) - the WC’s Wisconsin main line, the DMIR Interstate Branch, etc. In this part of Wisconsin the CN has never been known for customer service and on many of the branch lines that WC worked to cultivate local industries. They’ve been known to abandon tracks and not worry to much about what kind of service they’re giving the “small” customers, which is entirely what the WSOR consists of. The WC was much better at finding a balance between overhead traffic and the little customer. (In fact, Burkhardt and the WC were once very, very close to buying the WSOR, but the deal fell through at the last minute.)
The WSOR has no through route to offer that would give the CN any sort of advantage without re-laying a heck of a lot of track that has been turned into bike trail. And even then, that wouldn’t seem to make any sense when the CN could sink that money into upgrading or double tracking their own main line. I don’t see the WSOR as having any big customers that would attract a buyer either. The WSOR would probably fit well into something like the G&W or Rail America, but I don’t see a class one as wanting it. Then again, perhaps someone will come around and prove me completely wrong.