COMPETITION WATCH: CN to increase 2007 capital spending to C$1.6 billion

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MONTREAL, Que. — CN plans to spend C$1.6 billion on capital programs in 2007, an increase of four per cent over the level of 2006.

E. Hunter Harrison, president and chief executive officer of CN, said: “In 2007 we will invest more than C$1 billion in track infrastructure to maintain a safe railway and to improve the productivity and fluidity of our network across Canada and mid-America. This reflects our key priorities – plant quality and safety, building capacity and speed, accelerating growth potential, and improving productivity across the board.”

CN will spend more than C$800 million in 2007 on basic capital, replacing rail, ties and other track materials and improving bridges. CN will also invest close to C$200 million in network and growth-related projects, including:- Extended sidings and double-stack clearances on the railway’s B.C. North Line to accommodate container traffic from the Prince Rupert Intermodal Terminal, which is scheduled to open in the second half of 2007;- New siding capacity between Winnipeg and Chicago, and- Continued upgrading of its freight car classification yard in Memphis, Tenn.

In Western Canada alone, CN plans to invest nearly C$350 million in track infrastructure to enhance the plant and to take advantage of growth prospects in North American trade with Asia and the boom in the West.

CN’s equipment spending is targeted to reach approximately C$350 million in 2007 to tap growth opportunities and to improve the quality of the fleet. This will include about C$200 million for locomotives, covering the acquisition of 65 new units and continued spending on other improvements to the core fleet. Almost C$150 million will be spent on freight cars and intermodal equipment to meet customer requirements in the marketplace.

CN expects to spend more than C$200 million on facilities to grow the business, including transloads and distribution centres, on information technology to improve service and operating efficiency, as well as on other projects that will allow the railroad to increase productivity.

Harrison said: “CN’s 2007 capex program – equal to almost 20 per cent of our revenues – represents a major commitment to running a safe, efficient and productive railway for our customers and the communities in which we operate.”

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