In March, Canadian Pacific (CP) and Kansas City Southern (KCS) railroads announced a merger, which CP said would bring about an “industrial renaissance” and “growth across the industrial heartland.”
Those are some pretty big promises. But after digging into the details of the deal, CP’s assessment is more than hyperbole. This merger does hold some intriguing promise for Wisconsin and rest of the country and deserves support. (Editor’s note: Canadian National Railway Company recently announced a competitive bid to acquire Kansas City Southern).
Everyone knows our state’s economic fastball is manufacturing. We make things here in Wisconsin – machinery, computers and electronics, transportation equipment, and lots of food and agricultural products. What you may not realize is that our largest export markets are Canada and Mexico.
In fact, Wisconsin exported a whopping $7 billion in goods to Canada in 2018, which is about a third of the state’s overall exports. The CP-KCS merger could increase that number. By creating the first United States-Mexico-Canada rail network, a merged CP-KCS will drive single-lined efficiencies North and South, fostering economic growth across North America, which is a win for Wisconsin workers.
In 2016, over 8,000 companies exported goods from Wisconsin with nearly 90% of those companies being small- and medium-sized businesses that employ fewer than 500 people. These are good paying jobs that fuel the economic engine of Main Streets across the state. Wisconsin’s economy is reliant on a robust export system and the CP-KCS merger will offer additional options and services for shippers, as greater efficiency and access to rail make it easier to move materials across North America.
As the economy begins recovering from the COVID-19 pandemic, it’s more important than ever that Wisconsin participates in the economic growth and that our neighbors in Canada and Mexico can rely on Wisconsin exports.
It is unfortunate that in the year 2021 there is still not a seamless transcontinental rail system between the three countries. The merger between CP and KCS would create a rail network that does just that. CP and KCS have done their due diligence to ensure the combination of the two companies will benefit all parties involved: businesses, shippers, and hardworking Americans.
As the Surface Transportation Board reviews this proposed transaction, I urge them to recognize the benefits of this merger for Wisconsin’s and the nation’s economy. Regulatory approval of this transaction, will help spur the “industrial renaissance” and “growth across the industrial heartland” that CP has projected.
Steve Baas is the senior vice president of government affairs and public policy for the Metropolitan Milwaukee Association of Commerce (MMAC).
