Two of North Americas largest railways have called off their proposed $28-billion merger after U.S. regulators imposed a 15-month moratorium on such alliances. In a joint statement, Canadian National Railway Co. CEO Paul Tellier and Burlington Northern Santa Fe Corp. head Robert Krebs said it would not be in the interests of their shareholders to wait for more than two years while regulators dealt with their proposal, first announced last December. By merging their operations—a total of about 80,000 km of track that crosses the continent—the companies had hoped to save about $1.2 billion.
Regulators at the U.S. Surface Transportation Board said they wanted time to review the rules regulating railways.
Both CN and Burlington said that they will continue to work together to “strengthen the ties that have been established between the two companies,” igniting speculation that neither has given up on the possibility of merging at a future date.
Meanwhile, CN and Canadian Pacific Railway, traditional rivals, reached an agreement to share one another’s tracks on heavily travelled routes between Montreal and Chicago, and to the U.S. northeast. No jobs will be lost as a result of the deal.
The high cost of depression at work
A study backed by some of the biggest names in Canadian business found that stress and depression in the workplace is costing the Canadian economy billions in lost productivity. Former finance minister Michael Wilson chaired the volunteer committee of the Business and Economic Roundtable on Mental Health partly, he said, because he lost his own son, a successful professional, to suicide. Some of the leading factors causing employee depression: lack of control and appreciation, poor communication and unclear policies.
Canadian industry is expected to push investment in equipment and plants to a record high this year, driven by soaring demand from the high-tech
THE SURGING NEW ECONOMY
Annual percentage change in investment
-51994 1995 1996 1997 1998 1999 2000
sector. Investment in the telecommunications, broadcasting, computer and scientific sectors will likely jump by an astonishing 25 per cent to $13.3 billion, according to Statistics Canada. While the old economy still dominates the investment picture with total expenditures of $126.9 billion, that number is up only 3.3 per cent from 1999. The booming oil and gas industries lead the traditional sectors with a jump of 25.9 per cent this year to $19.1 billion. Total business and government capital expenditures are expected to hit $140.2 billion, up 5.1 I per cent from last year.
The prospect of an Air Canada strike in peak flying season lessened when both the airline and its pilots’ union agreed to resume contract talks with a federal mediator. Both sides are seeking quick progress, and if there is none the pilots say they could still walk off the job on Aug. 1. But federal Labour Minister Claudette Bradshaw has suggested the government is prepared to impose a legislative settlement if necessary. The armed forces will jet MPs back to Ottawa in the event of an airline strike.
Cash woes at Corel
Ottawa’s Silicon Valley is rife with rumours that cash-starved software maker Corel Corp. may be a takeover target. But Corel chief and founder Michael Cowpland is adamant he won’t give up control or sell Corel’s popular WordPerfect or CorelDraw product lines. To keep his detractors at bay, Cowpland is spinning off other Corel technology, swapping it for stock in high-tech startups—he acquired a ninth last week—in the hope of making windfall profits once these affiliates go public.
Ottawa-based JDS Uniphase Corp. saw its market value increase by $27.5billion—an 18-per-cent boost—after Standard and Poor’s chose the growing fibre-optics maker to be included in its prestigious 500 equity index. But earlier in the week, giants Microsoft Corp. and Intel Corp. reported increased quarterly earnings, only to see their stocks savaged the next day as longrange profit warnings stirred up the technology sector.
A gentle slowdown
The U.S. economy is continuing its gradual slowdown, Federal Reserve Board chairman Alan Greenspan told the Senate Banking Committee, in what Wall Street took as a hint he may not raise interest rates again this year. Softer consumer spending could ease inflation, Greenspan said. New figures show U.S. inflation climbed slightly to 3.7 per cent in June. Inflation in Canada is running at 2.9 per cent.
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