Prince Rupert

A Northwest Passage

for Prairie Grains

by Armin Hecht

Summary: Hecht uses a chatty style that emphasizes how individuals from federal Transportation Ministers to Premiers to ordinary businessmen in Prince Rupert have shaped and guided what started off as a raw idea and culminated in a $280 million state of the art grain terminal in PR.

Going beyond Hecht we can now see how these compromises may have been unworkable, but have still determined the subsequent history of the Port of PR.

 

Do individuals really shape our history? I am one who believes that larger historical forces like macro-economics etc are what is really in control; that individuals are more puppets than masters of the times.

 

In Rupert this is not a popular view. Thus the tragic death of Grand Trunk Pacific’s Charles Hays who went down with the Titanic in April 1914 is seen as the real reason Rupert never prospered. The man with the vision was gone and no one could fill his shoes

 

 

With that image of a dream lost Hecht begins his book, which shows several later visionaries from Prince Rupert’s Dr. Bill Hick to “Doc” Horner “fulfilling” the vision that Hays first articulated.

 

The problem was obvious--- while Canada produced some of the best grain in the world it could not deliver it reliably to export ports. Thus 22 grain ships were backed up in Vancouver Harbour awaiting their turn to be loaded. Meanwhile farmers on the prairies were paying needless “demurrage” charges for those waiting ships.

Dr. Bill Hick was a Rupert physician who in his spare time noted the comings and goings of grain ships in PR Harbour. In Hecht’s account Dr. Hick role is critical in convincing first Premier Loughheed, then Transport minister Mazankowski and then the officials in Ottawa that diverting some of that grain to under-utilized PR was the easiest and best solution.

 

.While the oil rich Alberta Government was willing to pay for much of the terminal infrastructure, most of the book deals with attempts to find suitable partners.

It quickly became obvious that a deal between willing privately owned Cargill and the suspicious Alberta Wheat Pool and Alberta would not work.

So given the obvious problem for Prairie farmers the next step was to provide an “industry wide” response to solve the west coast grain transport bottleneck. It was never a “natural” coalition of previously cut-throat competitors, but the cajoling of strong individuals like “Doc” Horner plus the ability of the Alberta Government to up its ante to 80% of the total proved sufficient to make the deal hold together.

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Ridley Waste land---

Hecht sees the undeveloped Ridley Island as virgin waste. One of the sub plots is that the consortium does not want to build here, but at Casey Point. It is only Ports Canada and the Federal government that see the beauty of this location: it has large areas for future development and the grain terminal facilities can help offset the costs for a new coal port that will deliver NE Coal to Asia.

So Federal $ is introduced to offset new Railroad yards etc.

 

 

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And so within 3 years the Prince Rupert Grain terminal is built, within budget.

This is a state of the art facility. For safety to prevent fires and dust explosion none was built better.

But it is in the capability to empty hopper cars, clean and send off into large draft freighters that the terminals distinction comes.

It was envisioned that 20% of the West Coast grain could pass through here and the facility could be doubled as need be in the future.

 

Going Beyond Hecht

In retrospect the “consortium” concept did not work. It made more economic sense for each to go it alone and send there grain to their own expanded terminals in Vancouver.

Plus the politics of grain handling changed with the loss of the ‘Crow Rate” and thus more expense to ship through Prince Rupert than Vancouver,  plus the federal government seemed to loose interest in marketing wheat on the world market. Thus pure market forces came more into play.

The Legacy

Unit Trains--- The coal and grain expansions were based upon an upgraded CN track that allowed 100 car “unit trains” to operate. This commodity emphasis was maximizing the rail lines but may not have been the best alternative in retrospect.

RIDLEY The grain terminal was built and in part the infrastructure allowed a coal port to be built more cheaply along side. Ridley Island became the center of activity for most of CN railroad cars. Ridley not only had room for marshalling “unit trains” but room for more industrial expansion. Thus the CN train Yards in down town Prince Rupert became less useful as the activity moved out to Ridley.

CN slowly withdrew from the city centre yards and with the removal of the VIA train to the BC Ferries site the withdrawal is almost complete.

 

Financial Details of Consortium as found in Hecht

. The Consortium or joint venture was chosen for Income Tax purposes

The make-up of the consortium

The six agreed that Alberta Pool would have a thirty-four per cent share, Sask Pool thirty per cent, United Grain Growers fifteen per cent, Cargill and Pioneer Grain nine per cent each, and Manitoba Pool Elevators three per cent

The Consortium did not want the Alberta Government to have an equity position and insisted the capital investment be treated as debt not equity.

Alberta Investments  at 11%

From the Heritage Savings Trust Fund $106 million would be made available. This is a thirty-year mortgage earning a minimum of eleven per cent. The Heritage Savings Trust Fund mortgage is the most senior debt. From the General Revenue Fund would come an additional $134 million-less if the project came in under budget. This is an eleven per cent participating debenture. It would rank third behind the consortium's investment. Eleven per cent is also a minimum The consortium would invest $60 million-

 

 

Rent

The annual rental rate for the 160-acre site occupied -by the new terminal, or PRG 2, is $100,000 plus an annual increment. In short, Ottawa, through Ports Canada, is sharing some of the risk. When the terminal does well Ottawa will earn more rental revenue and vice versa.

 

TAXES

“Hopefully the  $6 million property tax placed on Prince Rupert Grain's new terminal by the City of Prince Rupert and the provincial government will be reduced as well. If it isn't, this tax assessment may well defeat the best efforts made by many people on behalf of Prince Rupert, on behalf of western Canadian farmers—“

 

Here is the Prince Rupert Ports page on port facilities and specifically Prince Rupert Grain which will supplement what is here.

 

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12/18/00 ---Last Updated