When Kelowna Pacific Railway stopped running trains

When Kelowna Pacific Railway stopped running trains

Derailed: Kelowna’s fight to save the railway and 500 jobs

Okanagan politicians and businesses are weighing the economic reality and opportunities the loss of rail service presents

  • Nov. 1, 2013 10:00 a.m.

It’s been four months since Kelowna Pacific Railway went into receivership and the Central Okanagan lost all rail service. For a good sector of the business community it means profit margins will slip right off the tracks. This week the Central Okanagan evaluates the line, efforts to save it and the opportunity it presents for tourism.

There is one month and three days remaining to save the Canadian National Railway line from being sold in the wake of the Kelowna Pacific Railway collapse.

An interim injunction to force CN to open the line from Kelowna to Vernon has failed.

“Last week, we learned that the Canadian Transportation Agency turned down our request…seeking to restore service immediately,” said Barry Penner, a former provincial Liberal cabinet minister.

Based out of Vancouver, Penner filed the injunction with the CTA as part of an appeal to try and block CN, which owns the tracks, from selling the line. CN has already started the discontinuance process that could see first right of purchase as early as Dec. 3.

Working on behalf of Ashland Chemicals, a small division of the Fortune 500 company with just 35 employees, Penner says his client could be forced to leave the Okanagan without the trains.

“If you lose this line, you will not get rail transport back in the Central Okanagan,” he said.

Barry PennerBringing in the chemicals and products needed to make things like fibreglass and plastic polymers, Ashland supplies the products for Campion Boats, here in Kelowna, to build its luxury yachts. Kohler Canada, in Armstrong, needs its materials to produce its bathtubs, showers and bathroom fixtures. And FormaShape: 3D Architectural Design in Winfield works with Ashland in its waterslide component and gas station canopy outfit.

Ashland is also the reason there is now a node of the Composites Research Network at UBC Okanagan.

Unbeknownst to many people living in the region, this area has become a key manufacturing niche for composites with at least a dozen manufacturing businesses working in the sector. Bottom line, the loss of rail transportation could mean 500 to 600 job losses, according to the Canadian Manufacturers and Exporters.

“If one key business fails, so (could) many others as their supply chain is further disrupted,” said Marcus Ewert-Johns, CME vice-president, in a letter to Mayor Walter Gray and Kelowna city council.

Manufacturing in B.C. is on dicey ground as it is, Ewert-Johns explains, pointing to the re-introduction of the Provincial Sales Tax, loss of tax credits geared at light industry, increasing property taxes and B.C.’s carbon tax as stressors.

At UBCO, the news has yet to trickle down.

Abbas Milani, UBCO engineering professor working with the composites network, has not heard of fallout from their industry partners.

It stands to reason that if Ashland disappears and some of the technical companies pull out of the area, the research node and all of its potential for developing new, innovative products—like aerospace parts—could be in danger as well, according to Penner.

But there is a difficult flip-side to Penner’s pitch.

The rail line is in enough disrepair that it’s curbed the line’s customer base.

While Penner says he’s heard quotes from independent rail providers interested in contracting on the line that peg the repairs as low as $3 million, CN’s figures don’t align.

CN says the short corridor needs $10 million in upgrades. It’s hard to verify the sum. Transport Canada can only confirm annual inspections on the line met the Railway Safety Act right up until KPR shut down in July.

No matter what the price tag, the state of the tracks is a key issue in current discussions, according to Kelowna-Lake Country MP Ron Cannan.  He has been in on several industry and inter-governmental meetings on the railway and says he understands customers were pulling out because the trains had to run so slowly Kelowna Pacific wasn’t able to keep pace with industry needs.

“It got so decrepit the train could only go 10-kilometres an hour,” said Cannan.

grassA quick run through the railway’s customer list seems to confirm what he says.

From Superior Propane to Knox Mountain Metals to Tolko, many businesses said they no longer used the railway or were well prepared to move to truck transport when the collapse finally came.

One of the main customers, Tolko, adjusted to truck transportation immediately, sending lumber over the Coquihalla Highway route.

The company was a key component to getting the line reinstated north of Vernon. The former KPR stretch from Campbell Creek, east of Kamloops, through Lumby will re-open. CN has agreed to take over, provided Tolko stays on as a customer.

It has not agreed to do so for the line from Kelowna to Vernon, Cannan said.

And there is one more economic factor to consider.

On the other side of the fence are those who want to see the line purchased to be used as a recreational corridor with vast tourism potential.

The City of Kelowna has spent the last half dozen years working toward a Rails-with-Trails project, which stalled after the first phase of development because CN became nervous of having pedestrians and cyclists so close to the rail line.

Were the tracks to disappear, it would obviously open the door for the city to purchase the land and complete the critical recreational artery.

However, the municipality is very concerned about the business impact as well, said Paul Macklem, general manager of corporate sustainability with the City of Kelowna.

Describing the case to find another rail operator to take over the rail road as “a tough nut to crack,” Macklem noted the city is looking at possible partnerships that might be available with the provincial or federal government if the rail line goes up for sale.

Just what that might look like remains behind closed doors, though light rail, the cycling corridor and possible connections to other wider, possibly even national, trail networks have all hit the news.

An Okanagan College economics professor has even set up a website advocating for the trail option, okanaganrailtrail.ca, and is using Facebook ‘like’s to gather support.

He’s been quoted in media as saying he believes a collective effort to secure the 50-kilometre section could help push CN’s price point down.

Macklem is not so sure, but says the opportunity for cycling tourism has the city’s interest.

Twitter: @jaswrites

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