Despite lack of dividends, Cypress County opts to keep shares of SW Sask. shortline rail
The shortline rail business has had its share of struggles the past few years, acknowledges Great Sandhills Rail CEO Perry Pellerin, but it has proved its worth to the customers and local communities it serves.
“We have our challenges like any industry, but generally we are doing pretty good. At Great Sandhills Railway we are up to 29 full-time employees now, and we carry an annual budget of just over $7 million. I think as time has gone on, we’ve become part of our community here in southwest Saskatchewan ... Long term, I think we are in great shape.”
Based in Leader, Sask., GSR runs between Burstall and Swift Current. When it got started in 2009, it was the efforts of local farm groups and municipalities which funded the purchase of the track, its first terminal and first engine. Cypress County was one of those early investors, buying shares worth $100,000.
Coun. LeRay Pahl recently initiated an effort to see if those shares could be sold, an effort which fizzled out with an 8-1 vote against at the June 20 council meeting.
“We originally went into it to help them get this thing off the ground at that time. I just think it is $100,000 sitting there and doing nothing ... Even if they paid a reasonable dividend, at least then you could see we are getting something out of it,” says Pahl.
Pellerin says GSR has been hit with some significant trials since starting up. The biggest being the Lac Megantic disaster in Quebec in 2013, which took a lot of wind out the sails of the shortline industry.
“We have had a pretty hefty increase in insurance requirements,” confirms Pellerin. “For a shortline, we’re required to carry $100 million in insurance, and that comes at a pretty significant cost.”
Pellerin also cites the Saskatchewan government’s 2016 decision to end its matching grants program for track maintenance as another hit GSR has had to absorb.
“As these things come up, just like with any other business, you have to get around it or move on. I think we have done a good job on that,” he says.
Pellerin feels the company is now turning a corner. New businesses have sprung up as a direct result of having the shortline in the southwest region, and the line is shipping nearly 50/50 in fertilizer petroleum products and agricultural commodities. GSR is making money on track storage of unused cars from the oil downturn, and is beginning to look into offering new tourist opportunities on the line.
And not all councillors at Cypress County agree with Pahl’s skepticism. Coun. Earnest Mudie says while the dividends might not be there at the moment, there are huge indirect financial benefits to Cypress County.
“I view this as an infrastructure investment,” says Mudie. “The petro-chemical plants by Burstall are in Cypress County, and that gives them a rail link to bring products in and out. And they are not beating our local roads to pieces. It’s benefiting a lot of communities. Sure Saskatchewan gets more benefit than we do, but, come on, it’s only $100,000. That for us is the cost of fixing one kilometre of road.”