'This is not acceptable': Churchill in crisis as Ottawa mulls financial lifeline
Churchill, Manitoba – home of the only deepwater link to the central Canadian Arctic – is facing a crisis capable of putting an end to the century-old community.
The Hudson Bay Railway provides the only land-based link to the town situated on the northern tip of Manitoba. Last month, Churchill lost access to the railway after massive flooding caused what the line’s American owner described as “unprecedented and catastrophic” damage.
Last week, Denver-based OmniTrax announced the indefinite closure of the Hudson Bay Railway, ominously warning the “future of the track is in jeopardy.”
Churchill Mayor Michael Spence told reporters this week the company lacks the “wherewithal” to address the issue, but in exclusive comments provided to BNN by a senior OmniTrax executive, the challenges go far deeper and – at the core – the line’s current and aspiring future owners say Canada’s federal government is to blame.
“It is very difficult for us to justify putting the kind of money that we anticipate will be necessary to repair this into a line that is already losing money,” the executive said by telephone from Denver. “We are talking about an operation that has lost money essentially every year for the past 20 years.”
Since taking control of the port and railway from Ottawa in the late 1990s, OmniTrax has occasionally been able to make some profit, but the executive said they would always end up losing more money the following year than they earned the previous year, leaving the company too strapped for cash to address this challenge alone.
“We were probably naïve in our belief that our business model would work with this particular railroad,” the senior executive said.
The financial challenges are easily overshadowed by the sheer scale of the damage. And the unique nature of the railway being nowhere near any roadways immensely complicates the logistics of repairs. Over an 84-kilometre stretch of track, the rail bed has been completely washed away in 19 locations, five bridges have been damaged beyond repair and will need to be rebuilt, and an additional 28 bridges have lost at least some structural integrity.
OmniTrax has already conducted four helicopter-based inspections of the line, the company executive said, but added the lack of accessibility means it will be at least a month before the full extent of damage can be assessed. Then there is the actual repair work, which will happen extraordinarily slowly since the only way to get materials to the region is, ironically, the severely damaged railway. That means the possibility of returning the line to service before the winter freeze-up forces all work to stop is virtually impossible.
Mayor Spence refuses to believe the work cannot be expedited and confirmed to BNN the town has not considered any contingency plans.
“That is not in the cards, we cannot wait that long,” he told reporters with frustration clearly rising in his voice. “That is not acceptable.”
The clock is ticking before the crisis Churchill is facing becomes one that could threaten its very survival. There is just enough fuel storage in the town to keep homes heated and vehicles moving for six weeks before resupply is necessary. Fuel can still be delivered via marine access at the Port of Churchill, the OmniTrax executive said, but only so long as the summer thaw persists.
“Once we get to freeze up, we are not exactly sure how [fuel delivery to Churchill] can be done, so that is an urgent situation that community members and ourselves need to come to grips with,” the executive said.
“This is a railroad that is really a public utility, except it is funded by a private company, and so we feel it is critically important to involve the government in the ongoing operation because it serves the community as a utility as opposed to having a strong commercial link,” the senior OmniTrax official added.
The commercial link used to be there when the Canadian Wheat Board ensured substantial grain exports went through Churchill, which was why OmniTrax agreed to pay $11 million to buy the port and the Hudson Bay Railway in 1997 after the federal government put them up for sale.
Both Spence and the OmniTrax executive used the word “devastated” to describe the economic impact of the 2012 shutdown of the Wheat Board’s marketing monopoly, which eventually forced OmniTrax to shut down grain export operations from the Port of Churchill during the peak of last year’s summer shipping season.
The need for reinvestment in the line was brought up multiple times during the roughly 30-minute conference call Spence held with reporters earlier this week. According to Western Economic Development Canada, the federal government has invested more than $100 million in the Port of Churchill and the Hudson Bay Railway to support its continued operations, but the mayor argues more is needed.
“It is all about investing and continuing to invest in your infrastructure,” Spence said. “That is what needs to happen, even though that has never happened.”
Spence added he spoke with federal Natural Resources Minister Jim Carr about the issue recently, but that Carr indicated to him a full assessment of the damage would be needed before Ottawa would agree to transfer any funds. Minister Carr’s office referred questions to Transport Minister Marc Garneau, who said through a spokesperson the government is monitoring the situation closely and is continuing to operate the Churchill Airport as a source of supply, but did not comment on the possibility of any federal funding for the railway.
For the past two years, OmniTrax has been in talks with the Missinippi Rail consortium – a group of local First Nations communities led by Mathias Colomb Cree Nation Chief Arlen Dumas – to sell the port and railway. Dumas was not available for an interview, but the OmniTrax executive said the delay in completing the transaction is almost entirely due to a lack of interest from the federal government.
“What [Dumas] is concerned about is the ability to finance this operation going forward, recognizing that it is a utility and it needs government funding, probably from all levels of government but certainly from the federal level of government,” the executive said. “That is what he has been seeking, and I don’t want to speak for him but I think he has been frustrated in getting the federal government’s attention to support him in this endeavor.”
More than 1,000 people have signed a petition calling on Parliament to renationalize the port and railway; and a four-year-old federal-provincial task force report described the need to find solutions “with a greater sense of urgency.”
When OmniTrax first shut down its grain business in August 2016, Navdeep Bains, the federal economic development minister responsible for the file, released a statement expressing disappointment with the decision, adding he would “continue to monitor the situation closely.”
BNN sent multiple requests for an update to the minister’s office. None were returned.
“Canada really needs to go back to the vision that we had… going back to the early days of the port [of Churchill] in the early 1930s, the vision we had, we still share that vision,” said Mayor Spence. “Because this has to be a long-term solution, we cannot have another Band Aid short-term fix. We have gone through that for far too long.”
OmniTrax says it is happy to support the recovery process in whatever way the company can. “We want to work with people to come up with a solution,” the company executive told BNN, “but we just need people to listen to us first.”