One executive's scandal is another's opportunity.

Just ask Paul Côté.

Some people might shudder at the thought of taking over a large Crown corporation such as VIA Rail after it was rocked by the $1-billion federal sponsorship scandal. But not Côté, who as a kid used to commute regularly by train to Montreal from his home in Sherbrooke, Que.

"I always aspired to, one day, have the opportunity to be president," he says. "I was an executive since 1989, so I've seen many presidents and many boards that lived through difficult times in the company - restructurings, downsizings and things like that. When I arrived on the job, I saw that as an opportunity for me to take the company one step further."

Peter McCabe, Business Edge
VIA Rail Canada president and CEO Paul Côté has worked in the passenger rail industry for 35 years and understands its many challenges.

He took over VIA's day-to-day helm after chairman Jean Pelletier and president Marc LeFrançois were ousted following accusations related to the federal sponsorship scandal made by former Olympic biathlon gold medallist and VIA employee Myriam Bédard.

Côté is only the second CEO who has risen through the VIA ranks. Most of the others were parachuted in from outside by the federal government of the day.

"For me, (the sponsorship scandal) was like a motivation to get the company through the difficult times we were going through in 2004," he says.

Has he succeeded? Passenger rail service is a perpetual money-loser in Canada. But if Côté has his way, people will definitely enjoy the ride.

1. What was it like growing up in Sherbrooke and Montreal?

"My first 14 years were in Sherbrooke. It was a small town, very closely knit and it had the character of being - particularly in the area I lived in - very bilingual. Growing up in smalltown Sherbrooke with the countryside, the quality of life was quite exceptional. My father was a lawyer and was also a very family-oriented man. I picked that up from him, I'm quite sure. So we had a very good youth, up until the time I left to go to boarding school in Montreal. That changed (life) quite significantly for me, because my friends were left in Sherbrooke. I discovered the big city and a living environment outside the family. It was a major shift for a teenager at that age ... a double-whammy in terms of cultural shock. First, the big city and second, what we were going through at the time as teenagers. But (Collège Jean de Brébeuf) was a great school, well recognized, and I am very thankful for the support and the education that I received from them."

2. Why did you decide to go there?

"Quite honestly, it was not my decision. It was the decision of my parents. The academic performance in Sherbrooke was not exactly what they were expecting, and they didn't appreciate the environment and the friends I was hanging out with. They thought it would be a good thing for me to be removed from that environment. The influences were not the best. I thought that was a tough thing for them to do. But in retrospect, after all these years, I must say I thought they did the right thing. I'm very grateful for what they did for me. They sent me to this school, which was a high-quality school, and the environment was much better for me."

3. Why didn't they like the friends you were hanging around with?

"Let's say academia was not their prime concern. It was more sports and other things. So (my parents) just exercised their parental duties, as I do with my kids sometimes. Not that significant, because I haven't sent any one of my kids to boarding school."

Paul Côté

4. You were going to be a lawyer. How did that plan change?

"Actually, with my father being a lawyer, I did spend some time with him as a teenager in his office during summer months. His desire - his big dream - was to have me (become) a lawyer. I learned law from the technical side, going to court with him, doing things for him at the court and so forth. I must say that the environment and law faculty, which I tried for one year, didn't actually turn out to be what I was expecting. I wasn't too enthusiastic about the prospect of studying fiscal law, constitutional law and all these things. I knew that I would basically have the same type of practice that my father had, which was civil law and different aspects of law than what they were teaching. I just stopped - and that's it. He was quite disturbed by that. But I must say that in 2004, when I got the appointment as (CN) president, even by interim, I think he appreciated that the decision I took to go a different route turned out to be a good one."

5. Did you like trains when you were a kid?

"For the first two years when I was at boarding school, I used the rail line that CN was operating between Sherbrooke and Montreal. Later in 1993, when I became a vice-president responsible for operations, I heard that the conductor who was responsible back then for our train and picking up my ticket was going to take his retirement. I had the opportunity to say goodbye to him. Of course, he didn't recognize me, but I knew who he was. I had the privilege of saying goodbye to this man who was my conductor back then."

6. Aside from the year at law school, you didn't take any post-graduate studies?

"No. That's it. I went to law school and I stopped and I was offered the job at CN for summer employment and I went in as a student. So I (worked at) CN from May 15, 1972 to January of 1978, when I transferred over to VIA Rail. VIA was created, as you probably know, at the end of '77. Staffing started at that time and I was recruited to start working in January of 1978. So my career really started by accident. I was a student and I was supposed to be laid off in August, but they needed somebody because of sickness or whatever, and I offered to stay. My father was quite distraught by that, but I stayed and it just carried on like that from job to job, from a unionized position to a management position. My last job at CN, before I left for VIA, was branch manager of Central Station (in Montreal.) I was running Central Station for CN passenger services and for the tenants of the station. Then I went to VIA where, over the years, I had multiple positions. My first executive position was in 1989, when I was appointed general manager of marketing. I stayed on that job for about a year, and then I went to a customer-service organization, where I stayed from that moment up until 2001. In 2001, I was appointed chief operating officer and then, in '04, interim president and, in '05, president. And, I did quite a number of other executive assignments. I think the only job I didn't (do) was finance. But finance and (information technology) were not exactly my cup of tea and are not still, so I didn't spend any time in those departments. The rest of (my assignments) pretty much touched on everything - equipment maintenance, marketing, public affairs, corporate affairs, labour relations, human resources. I had this great boss who gave me these opportunities to develop myself. It turned out to be quite helpful."

7. What did your first job with CN involve?

"My first job was as a telephone sales agent. As a student, I was answering phones to get fares, make reservations and so forth. I did that until 1974. Then I took a management position. We called it 'special traffic.' These were special trains, big groups, tourism operators liaisons and so forth. I did that for two years and in '76 took over Central Station until '78, and then I was off to VIA where, of course, the functions were numerous."

8. Once you had stayed beyond that summer position and you were employed full-time, did you then expect to stay on?

"Yes. This was when I started to formulate a career path for myself, because I was making a little bit of money. I moved out of my parents' house. I had my own apartment downtown. I was doing things in a different league than before. At the time I joined the railway, there was this generation gap. There were opportunities where people were retiring. CN was very effective in developing its resources. They developed a pattern of successors and succession plans, and I made myself available for these programs and went back to school at night. I was thinking that, perhaps, there was an opportunity for me for a career. Early, at that stage, did I think of being president? Probably not. But four or five years into the company afterwards, I thought it was a possibility."

9. How would you describe your management style?

"One thing I say to people is that we have two ears and one mouth. I'd like to think that people think of me as somebody who can listen well to people. I value people and relationships, very much.

I've always tried to stay in touch with the people in the organization and to listen to what they say. I try to provide them with feedback when they ask questions and to explain why we're doing what we do and to ask them if they think it's the right thing. So it's very much driven around the people who, of course, drive the success of the company, and to stay in touch with them and to be respectful, whoever they are - a cleaner or a VP or a middle-management person."

10. What are some of the challenges you've faced over the years?

"Because we're a Crown corporation, we are, of course, following (federal) government policy. In 1990, when the company was cut in half because the government cut the (annual) subsidy (to CN) in half in line with its fiscal-restraint policy, it was a very problematic time because half of the company disappeared - and the people. We were then about 7,000 (employees.) We ended up being about 3,000-3,200. So, many people who we had developed friendships with were laid off. That was difficult. The second wave came in 1995, when we completely reorganized the company and went from 1,000 people in management to about 350. So, 60 per cent of management were laid off for us to be able to meet the targets of government without cutting services. For me, these are difficult times. You must do them. You have to make those decisions and take those actions, but they touch on the people side of me. There were people who had dreams of building careers in the railway and, suddenly, because of decision time, you step in and you have to call them in and lay them off. It had a major impact on their lives and their family and their psychological stability, so it's very difficult. In 1986, we had a very serious train accident in Hinton, Alta. (where 23 people died). I ended up meeting the parents of one passenger in the office who came to ask where she was. We looked for two days in hospitals everywhere, finally to conclude that, with the reservation she was given, she must have been at the head end of that train and these (cars) were the ones that were destroyed completely. I had to tell them that their daughter was (gone). That's tough. You don't get too much training to do something like that."

11. You've maintained some high positions in a Crown corporation despite several changes in government. How have you managed to survive?

"I guess it's because I'm a railroader more than a guy connected to individuals. This has been my life. This is all I've done for 35 years. I learned the trade from the base and experienced all sorts of different activities and situations in the company.

I think I developed a very good understanding of how passenger rail is to be managed, and what are its strengths and weaknesses and opportunities. Without being pretentious, I think people were happy to see that somebody from inside was being appointed to the position (of CEO). As you know, previous presidents except for the first one - Mr. (Frank) Roberts (a former machinist) was a railroader - were not really people with railway experience. I would say simply that I am railroader - not a politician or a man with political connections."

12. How would you assess the levels of passenger travel in both Eastern Canada and Western Canada?

"In the East, we've had some significant challenges in recent years because of the fare wars that the airlines have engaged in. That affected our long-haul inter-city markets, like Halifax to Toronto. But this problem, in fact, created an opportunity for us. Our staff and our teams of employees sat down and analysed the situation, and we created a new product based on learning. Rather than simply being train travel where you sit on the seat or sit in the bedroom and go from A to B, we've transformed this experience into a learning experience, where you get to learn about the region, you get to learn about the wine you drink, about the food, about the characteristics of the area. We are in our third year with this product and we are happy with the customer ratings. It's still in its early stages. With a product like this, three years is not much time. So we need a little bit more time to assess. In the West, we are really dealing with a mature product, particularly in terms of high-end tourism for the peak season.

"But, as you know, we have our mandate, and this must be understood. We are a year-round transportation service from Toronto to Vancouver and up to Prince Rupert (in northern B.C.) and to Hudson Bay. We run year-round and we do this very effectively. In Alberta and B.C., there is tremendous opportunity for tourism, which we have developed into product that we call the Silver and Blue. It was launched in 1992. It is one of our most successful product launches ever, and it is a high-end tourism product. It has a tremendous reputation in the travel industry - worldwide, in Asia, Europe, the States - so that's very encouraging. I'm very happy about that."

13. In Europe, there's the Eurail Pass. What are you doing to try to cater to budget travellers?

"We have the Canrailpass. It goes back more than 30 years and it is precisely the same concept - it has a certain number of days for travel. You can also use our pass in the States. There's an inter-line agreement where you can buy a North American railpass that allows you economy travel in Canada and the States. It's available to all, not only (international) tourists.

Of course, Canadians can buy that. People have lots of time to go from A to B and take their time in between."

14. What opportunities do you have to grow your market in the future?

"We need to continue on our long-haul (service) to keep in touch with customer needs that are changing all the time and to develop the products that I just mentioned, particularly for the high-end tourism market. But we also need to continue to focus on day-to-day quality and service - and consistent service - to maintain and increase our market base and to increase our share of market. We are very much focused on cross-functionality, where we put together ... people from different areas of the company to identify opportunities to develop products. We have one for the East, we have one for the West and we have one for the corridor between Quebec (City) and Windsor (in southern Ontario). In that particular corridor, of course, business travel is a tremendous opportunity for us. Given the situation with airlines and in airports with security checks and baggage and so on, it's a real opportunity to position train travel. We call it the human way to travel. Less hassle and more comfortable. You have time to work. You have more legroom. You can use your phone. You can use your laptop as you travel. You can eat well on trains. I think we fit very well in the 'slow' movement. The train travel fits very well with this philosophy of life. Stop rushing all over the place and take advantage of life a little bit more."

15. What is your company doing regarding possible purchases of high-speed trains for that Quebec City-Windsor corridor?

"We are consulting with the (transportation) minister's office and the department. Minister (Lawrence) Cannon was in the press saying exactly that, that discussions are ongoing. This decision and how it'll evolve is one that the minister and the government will have to take."

16. What's the company's position on high-speed trains?

"I think our role, at this particular point in time, is to provide the minister with some information relative to the options that are available, and I think it's up to them to decide how they want to go for the future. We'll wait for (the government) to decide what they want to do."

17. You alluded to border security. What effect have the new passport rules had on VIA?

"To date, we haven't seen a major impact. We are working very closely with the (Canadian Tourism Commission) and with the other organizations in tourism to monitor the impact. I think it's a little bit too early to call right now, but I can't say that we've seen changes in traffic patterns or bookings because of that particular situation."

18. What's your view on the introduction of identity cards rather than the passport requirement?

"I don't have a specific view on that, personally. The overall objective between the two countries is to keep the flow of goods and people as smooth as possible. Anything that can be done to maintain that - a steady flow and a seamless flow - probably is the ultimate objective, because tourism is one aspect of the exchange between the countries and it has a major impact on communities."

19. What are you seeking from government in terms of helping your company operate better?

"There are two objectives that we pursue for the shareholder (i.e. the federal government) ... One is, first of all, financial stability. We have many discussions with the shareholder on the financial situation of the company in terms of what is required to invest in the operation to keep it financially viable. As well, we address reliability (of service.) In our business, you need to invest in equipment - to restore equipment that's been in use for some years or to acquire new equipment, or whatever."

20. Given how long you've been with the company now, if you couldn't be president and CEO anymore, what would you do?

"If I left the company today, I would definitely go and work in an organization that is people-oriented and serves people. I'm on two boards. One is Portage and that one's helping teenagers who are having difficulties with substance abuse. The other one is the (Rehabilitation Centre of Montreal), where people who have accidents and amputations and different problems are being brought back to life. You can see all the good that you can do when you meet those people."

Paul Côté

* Title: President/CEO.

* Born/raised/age: Sherbrooke, Que./Sherbrooke and Montreal/56.

* Education: Attended Collège Jean de Brébeuf and Université de Montréal. Obtained a bachelor of arts in social sciences. Dropped out of law school after one year.

* Family: Married to Pascale Villeneuve. Father of Olivier, 18, Julien, 16, and Félixe, 11.

* Career: After dropping out of law school, Côté joined CN Rail for what he thought would only be a summer position. But he wound up making a career on the railroad, first with CN and then with VIA. After holding several executive positions, he was appointed interim president and CEO of VIA on March 1, 2004, after the company's chairman and former president were forced out as a result of the federal sponsorship scandal. A year later, he was officially promoted.

* Moonlighting: Governor of Portage, an organization that helps teens with substance abuse problems. Board member of the Rehabilitation Institute of Montreal.

* Passions: Family, golf, long walks.

VIA Rail Canada

* Brass: Paul Côté, president and CEO; Donald Wright, chairman; Christena Keon Sirsly, chief strategy officer; Steve Del Bosco, chief customer officer; John Marginson, chief operating officer.

* Profile: Late prime minister Pierre Trudeau's Liberal government created VIA in 1977 after the country's two railway firms had spent a decade trying to drop passenger service - even though it was heavily subsidized by Ottawa. Inspired by the U.S. government's creation of Amtrak in 1971, the aim was to provide affordable passenger service for the entire country. Its main route runs from Vancouver to Toronto via Jasper, Edmonton and the B.C. Interior.

* Stats: VIA has approximately 3,000 employees and transports about 4.1 million passengers per year. It posts about $300 million worth of revenues in comparison to $500 million in expenses. The federal government provides a subsidy of about $200 million to make up for the shortfall between revenues and expenses. The company operates approximately 480 trains per week along 14,000 km of track and serves 450 cities and towns across Canada.

* Corporate structure: VIA is a Crown corporation. Its lone shareholder is the federal government.

* Website: www.viarail.ca

* HQ: 3 Place Ville-Marie, Montreal, H3B 2C9

* Phone/Fax: (514) 871-6000/(514) 871-6658.

(Monte Stewart can be reached at monte@businessedge.ca)