Brandon Oglenski: As you talked about new progressive hourly agreements with the SMARTs and the BRAC unions, how important is that towards working €“ towards a quick integration and what advantages do these hourly contracts have versus maybe some of your competitors?
Keith Creel: Well, it’s critically important. It’s a success enabler. I can tell you that €“ I don’t know if we have a lot enough time to go through this on this call. But I think of one collective agreement, think of a conductor, think of an engineer, think of no complexities from yard rules and road rules, where we have two classes of employees. So, you have one class of conductors and engineers, they make more money, they have scheduled time off. And as a result of that, we have more predictability. And when you offer a better quality of life, especially in today’s world, you pay more money and you let people know when they have to come to work. In the rail industry, that’s a very unique and compelling value proposition.
So, to be able to expand that, we benefited from that on the new properties at CP, we have had a unique outcome even through last year and the year before. So, that’s been part of our recipe for success and to be able to leverage that and give something to our employees will be proud of, their families will be proud of. And I think it’s part of the being not only to succeed in realizing revenue synergies and the growth that we committed to as well as operational synergies. Most importantly I think it’s necessary to be the employer of choice. Employees in the rail industry had to work it’s not an easy job. They have a choice of where to work, all the railroads are hiring, CPKC, pending, of course, the STB’s approval of our transaction. I believe has the potential, again, for the employee to create a unique experience in this industry, and that’s what I am most excited about.
Brandon Oglenski: Thanks Keith.
Operator: Your next question comes from Konark Gupta from Scotiabank.
Konark Gupta: Good evening everyone. Welcome back Nadeem. Just wanted to ask on one of the comments you made on the largest hiring and CapEx programs you undertook in preparation of the opportunities ahead. How much harder in CapEx are we expecting to unleash months of transaction STB approved?
Nadeem Velani: Well. From a €“ I will tell you from a CP standalone, our CapEx is $1.6 billion. So, let me comment on Kansas City Southern’s CapEx, but they have had a number of initiatives, call it, whether it’s from a bridge point of view or from other land acquisition and so forth, they are hitting record CapEx levels as well. From a hiring point of view, we hired starting in the spring of 2022. We have had a strong pipeline in anticipation of the grain crop coming back. So, we saw our employee counts, I think get up to almost 13,000 people at the end of the year. And so we hired, I think close to 2,500 new people were hired and trained. So, that was certainly a significant expense in 2022 and it will be a significant expense this year as we prepare for growth.
So, those RTMs that we expect to come along the GTMs, assuming a positive response from the STB, the synergies that one day will realize, will take some people. So, we are hiring a few thousand at a time, and we are spending CapEx at record levels on our property and KCS on their properties. So, just a bit of color, hopefully, that helps Konark.
Konark Gupta: That helps. Appreciate it. Thank you.
Operator: Your next question comes from Steve Hansen from Raymond James.
Steve Hansen: Good afternoon. I appreciate the time. You noted that KCS estimates on or headwinds in the past couple of quarters here, units differ then. At the CP core just you can comment at this juncture, just curious how addressable you think those headwinds are and how quickly they can be range in upon a successful STB decision?
Keith Creel: Yes. It’s hard to put a number that, Steve. The thing I think about, obviously, I can’t stick my hands of their business. John and Pat and the team are very competent and capable and talented railroaders, and they are managing those situations now. Pending STB approval and we have an ability to get our hands into it. Then obviously, when you put the combined network together as we tend to go as a team, we create and you take out handling, you do a lot of those things that whatever challenges they are dealing with is going to get better from a fluid an operational standpoint. And the other thing is as we win this business that we are talking about and we create these new markets, you take out some of the complexity of cars being handled back and forth with a single-line move versus an interchange move.
That’s true for CP-KCS, that’s true for a move perhaps giving ECB, NCN all of the above. Single line is part of the value of this for the customer. It’s part of the efficiency. As far as the asset turn, you control the move cradle to value there, you charge a fair price for it, you create capacity. And as a result, you have a more efficient railway, which produces a lower operating ratio. It’s just the way you effectively run the business. So, I can’t put a number on it. I can tell you that you should expect improvement naturally because of all those reasons. And I can tell you this is going to be a team committed to driving that improvement.
Steve Hansen: Appreciate the color.
Keith Creel: Thanks Steve.
Operator: Your next call comes from Brian Ossenbeck from JPMorgan.
