� The St� Lawrence SeawaySystem

� President's Message�� Report on Operations�� Governance�" Financial Summary

Photos:Thies BognerSLSMC employees

Design:Walters and Greene Associates

Printing:Beauregard Printers

June ���-

TABLEOFCONTENTS

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TheSt�LawrenceSeawaySystem♠ A vital traffic artery • from Thunder Bay to the Atlantic Ocean • 3,700kilometres • 8.5 sailing days, start-to-finish • 245,750 square kilometresof navigable waters ♠ Serving the North American heartland • 15large international ports, 50 regional ports • a third of North America’s

population • 8 states and 2 provinces border the Seaway • convenientroad, rail and air connections • 60 % of Canada’s gross domestic product• 26 % of U.S. manufacturing is based here ♠ An engineering marvel • 15 locks (13 Canadian, 2 American) • world’s most spectacular liftsystem • between Montreal and Lake Erie, ships are raised 180 metresabove sea level – the height of a 60-storey building • each lock fills withabout 90 million litres of water in about 10 minutes • the 8 locks of theWelland Canal pass ships up and over the massive Niagara Escarpment• it takes about 45 minutes to get through a lock • channels and locksaccommodate vessels twice as long and half as wide as a football field• that’s 225.5 metres long, 23.8 metres in beam, and 8 metres in draft

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• the Seaway was named one ofthe 10 most important publicworks projects of the 20th

century ♠ Makes a hugeeconomic contribution • theSeaway supports 75,000 directand indirect jobs in Canada and150,000 in the U.S. • marine commerce on the Great Lakes/Seawaysystem each year generates more than $4.3 billion in personalincome, $3.4 billion in transportation-related business revenue and$1.3 billion in federal, state and local taxes • 10,000 tonnes ofgeneral cargo handled by a Great Lakes port contributes more thanhalf a million dollars in local economic benefits ♠ Tonnes oftraffic, with room to spare • since it opened in 1959, the Seawayhas moved more than 260,000 vessels and more than 2.2 billiontonnes of cargo, valued at $265 billion Canadian to and fromCanada, the U.S. and more than 50 other nations • about 12 vesselsa day pass through the Seaway in an average navigation season ♠ Safe, efficient and environmentally friendly • AutomaticIdentification System (AIS) and centralized traffic managementreduce delays and increase safety margins • a consistent record ofover 99% reliability and system uptime • a Seaway-max shipcarries a cargo equivalent to 870 trucks or 225 rail cars • marinesafety and spill records are far superior to rail and trucktransportation: one marine accident for every 13.7 rail and 74.7truck accidents and one marine spill for every 10 rail and 37.5 truckspills • Seaway ships move a tonne of freight up to 800 km on 4

litres of fuel • ships emit onetenth the environmental pollu-tion of trucks and half that oftrains • marine transport producesless noise, less waste, less trafficcongestion.

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THE ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION (SLSMC)

• All business, but not-for-profit • established 1998 to bring commercial management concepts to Seaway operations • non-profit corporation run bySeaway users and other stake-holders • operates Seaway’sCanadian assets under contractto Canadian government,which retains owner sh ip• responsible also for manag-ing Saint-Louis de GonzagueBridge, Valleyfield Bridge,Townline Tunnel and all Sea-way-related leases and licences ♠ A CLEAR DIRECTION • OUR MISSION:We pass ships through a safe and reliable waterway system in a cost-effec-tive, efficient and environmentally friendly manner to meet ourcustomers’ transportation needs • OUR VISION: The SLSMC and its part-ners... the transportation system of choice • Guided by 5-year businessplans • the Corporation completed its first five-year business plan in2002–2003, meeting or exceeding all targets • 5-year revenues within

0.5% of the original forecast at $366 million• manageable costs 4.5% below plan at $277 million• asset renewal costs 2.5% below plan at $123million. • revenues fluctuate with economic trends,but SLSMC stays on target through proactive controlof manageable expenses • 2002–2003 financialhighlights • total revenue for the year was $65.6million, about 0.4% above budget • manageablecosts: 96.3% of business plan target • asset renewalexpenditures: $700,000 below plan, at $24.2 million• $3 million added to Corporation’s reserve, whichstands at $8.4 million, after awarding 1% toll rebateat start of 2003–2004 season • 606 full-time equiv-alent employees, compared to budget of 619 • 2002season highlights • navigation season opened on

88

86

84

82

80

78

76

74

72

70

Five-Year Review Overall Total Costs (millions of dollars)

Actual Business Plan

1999/00 2002/032001/021998/99* 2000/01

* Includes 6 months of SLSA activity, and 6 months of SLSMC activity.

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March 26, closed onDecember 26 • lasted276 days, the third longestseason on record • Traffichighlights • continuingdrought in wheatlandsand economic downturnin U.S. forced traffic levelsdown • reduced demandfrom mid-west steel indus-try and new U.S. steel tariff

caused slow traffic in related com-modities (iron ore, coal and steelimports) • grain traffic figures wellbelow 5-year average • total 2002traffic: 41.4 million tonnes, downfrom 41.7 million tonnes in 2001• grain down 1.3 million tonnes• coal down 0.66 million tonnes

• other bulk cargodown 0.5 mil-

lion tonnes • iron ore up 1 million tonnes• general cargo (steel) up 1.1 million tonnes

• cargo movements on Montreal-LakeOntario section amounted to 30 milliontonnes, a 0.9% decrease from 2001• traffic on Welland Canal totalled 32.11million tonnes, a decrease of 1.2%• overall vessel transits down by 194

from 2001 • slight increase in Montreal-Lake Ontario section • reduction of some

10% in Welland Canal

50

300

250

200

150

100

0

Performance vs. Business Plan (5 year review - millions of dollars)

Actual Business Plan

277290

Manageable Costs

Asset Renewal Revenues

123 126

366 368350

0

100

80

60

40

20

-20

Comparison of Actuals to Business Plan (millions of dollars)

Actual Business Plan (5 year)

65.57973.864

Revenue Manageable Costs(Operating Expenses)

Asset Renewal including Capital Expenditures

Excess Total Costs over Revenue

59.458 61.797

24.235 24.971

(18.114)

th

(12.904)

15

10

5

01998 1999 2000 2001 2002

Five Year Review of Combined Traffic by Commodity (millions of tonnes)

Grain Iron Ore Coal Other Bulk General

Looking Back

A s we begina new five-year cycle,

it seems appropri-ate to look back atwhat we haveachieved since

1998. During the period covered by our initialbusiness plan, April 1, 1998, to March 31,2003, the Seaway consistently succeeded in notonly meeting, but also exceeding its targets.Revenue was within 0.5% of the original planat $366 million, manageable costs were 4.5%below target at $277 million, and asset renewalcosts were 2.5% below plan at $123 million.

Strong cost control enabled us to provide tollrebates to our customers during the last twoyears of the cycle. Although weak economicactivity and aggressive competition in recentyears cut into cargo traffic, a final 1% reduc-tion was integrated into the tariff structure for2003. This is certainly the primary measure ofour success, but there are others.

In five years, excellent progress has been madewith the marine industry and other stakehold-ers in the Great Lakes/Seaway system to forgestrong partnerships that enhance our appealand promote joint planning. This ongoing ini-tiative began with the work of the WaterwayStrategic Issues Forum led by my predecessor,Guy Véronneau, and involved industry leaderson both sides of the border. Many of the ideasfrom this strategic exercise were amalgamatedwith the marine industry’s Vision 2020 think-ing, and their implementation, which goes

beyond the mandate of the SLSMC, is beingspearheaded by the Chamber of MaritimeCommerce, with our co-operation.

SLSMC, under Guy Véronneau’s leadership,also brought to fruition a number of signifi-cant long-term projects to improve service. AISis now a reality, with full-scale implementa-tion starting in 2003. We have thoroughlyupgraded our information technology systems,which contribute greatly to efficiency. Trafficcontrol has been integrated throughout thesystem, and our Web site serves thousandsevery day with comprehensive, easy-to-useinformation and e-business applications. Wehave upgraded operational procedures andstructures to improve safety and efficiency forvessels and employees. Other projects areongoing. We continue to work on optimizingdraft throughout the system and on optimiz-ing the length of the navigation season. Thepreliminary work for hydraulic conversion oflock equipment has started, installation ofremote operation for bridges is underway, andwe are tackling a number of important plan-ning and management issues through large-scale research.

The Year’s Financial ResultsThe financial results for the past year confirmthat we again bettered the business plan.Actual expenditures at the end of the year wereslightly higher than forecast, due mainly todifficult weather conditions that increased thecosts of preparing the system for the 2003opening. In light of the flat revenues of thepast two years, we took aggressive action onmanageable costs. At the end of the year, man-

6

PRESIDENT’SMESSAGE

ageable costs remained at 96.2% of plan,despite steep increases in insurance premiums.This, together with asset renewal expenditures$700,000 below plan, added another $3 mil-lion to the Corporation’s reserve. Continuedstrong management to control absenteeism,replacement and overtime have kept the full-time equivalent number for the year at 606,well below the budget figure of 619. TheCorporation’s reserve, after awarding the 1%toll rebate at the start of the 2003 season,stands at $8.4 million.

New Business PlanSince I assumed the position of ExecutiveVice-President last fall, and then thePresidency this spring, it has been a busytime, with a number of important mattersdemanding simultaneous attention. Perhapsthe most urgent was negotiating theCorporation’s new business plan withTransport Canada over the fall and wintermonths. The new plan, which takes effectApril 1, 2003, and covers the period2003–2007, provides a stable platform for usto optimize our operations in the short term,while planning for the longer-term needs ofthe system. It incorporates some changes thatreflect current operational challenges.

After the 1% reduction in the mandatory tollincrease for 2003, annual toll increases will becapped at 2% for the remaining 4 years of theplan, and there will be no rebates. This actionshould provide users with a toll level lowerthan what could have been achieved byrebates in years 7 through 10.

Total revenue is targeted to increase by 14% or$50 million over the 5-year period. Thisincrease will come mainly from the mandatorytoll increases, although some growth in traffic isforecast – about two million tonnes annually.

Close attention paid to maintenance andasset renewal has ensured us an extremelyreliable system, with the Seaway’s uptimeincreasing from 99.75% in 2001/02 to99.79% in 2002–03. However, in view of ouraging infrastructure, the new plan providesfor increased asset renewal costs, though lessthan we proposed. We will increase ourmaintenance expenditures by some 36% overthe next five years, to $170 million. Thisamount will be reviewed by 2005, when theinitial baseline information from the GreatLakes-St. Lawrence Seaway System Reviewwill be available.

The gap between what SLSMC proposedand what the new plan provides will chal-lenge us to ensure that our preventivemaintenance programs are in top shape, todevelop an aptitude for “just in time”major repairs and to ensure cost estimationand inspection processes are well-based.The impact on reliability will be closelymonitored. Key projects in the next fiveyears include the conversion of mechanicallock drives across the system to hydraulicequipment, in place of continued repairs,and the engineering study for the majorrehabilitation of the Montreal andBeauharnois locks.

Our target for manageable costs is $318 mil-lion, also a 14 % increase. Personnel costs areexpected to remain at 84% of manageablecosts; employee future benefits, pension andinsurance costs will continue to place a heavyburden on the Corporation, and taken togeth-er are projected to increase by 100%. The planprotects SLSMC against any further increase inthose costs due to market fluctuations. Thefull-time equivalent staff target in the businessplan is 599 by the end of year 6, decreasing to574 in year 10.

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Corporate Focus

The need to control costs, coupledwith the retirement of my predeces-sor, brought about some changes tothe organization in 2002–03, chiefamong which was the elimination ofthree vice-presidential positions, anda variety of promotions and reassign-ments. We benefited from previoussuccession planning work, which hadidentified candidates ready to take ongreater responsibility and others who neededa different challenge to move their careersahead. At the same time, a split was madebetween corporate process responsibility andregional management responsibility, allowingthe line Vice-Presidents time to concentrateon people management issues. We believe wehave measurably strengthened the organisa-tion by these moves. In addition, the collec-tive agreement with Seaway workers has beenextended to March 31, 2005. My thanks toour labour partners for agreeing to help usensure that the Seaway retains its reputationas a reliable transportation system, with acompetitive productivity and cost base.

Vision 2012As we prepared for the renewal of our businessplan, it became clear that the Seaway is at acrossroads. Given increasing maintenancecosts, declining traffic, shifting markets,increased competition, the increasing size ofocean vessels, many of which cannot beaccommodated by our locks and channels,and the emergence of new technology every-where, the challenges confronting theCorporation are significant enough to warranta collective effort towards a new definition offuture goals and strategies.

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A visioning initiative was launched inDecember 2002 through a series of discus-sions between myself and employees. We gath-ered the views of over 85% of employeesabout what the Corporation should look likein ten years. Work teams then consolidated theinput into a coherent and realistic picture of2012 for discussion at the Corporation’sannual President’s meeting in June 2003. Theemerging 10-year Vision will be translated intoaction plans and integrated into the corporatestrategic planning cycle.

Looking Outward, and Forward

Planning to ensure the continued viability ofour waterway requires collaboration amongmany stakeholders on both sides of the border.This collaborative approach remains an inte-gral component of our strategy. A great stepforward was taken with the recently announcedagreement between Canada and the U.S. tocomplete the Great Lakes/St. Lawrence SeawaySystem Study. SLSMC has been promotingparticipation in this study, because it has thepotential to provide the best informationpossible for decisions about the long-termfuture of marine transportation in the system.

The review will encompass a thorough engi-neering study of the waterway’s infrastructure,with other critical analyses, including a cost-benefit analysis and an environmental review.While Transport Canada (TC) and the U.S.Army Corps of Engineers (USACE) will be co-managing the study, I will represent SLSMC onthe Steering Committee, along with seniormanagement representatives from TC, the U.S.Department of Transportation, USACE and theSaint Lawrence Seaway DevelopmentCorporation (SLSDC). An SLSMC co-leader ofthe Engineering Team will contribute signifi-cantly to the assessment of our infrastructure.

This is a long-term study, and I believe it is anecessary first step towards deciding if andhow to modernize the Seaway infrastructure.

We are also encouraging a second significantbinational study, now being considered by TC,to modernize and streamline navigation serv-ices on the waterway. Ships transiting theSeaway must cross the U.S.-Canadian bordersome 16 times, and deal with more than 20different agencies in doing so. What we hopewill emerge from the study is a co-ordinatedapproach that cuts out duplication and unnec-essary costs, and provides efficient joint servic-es on both sides of the border.

Strategic External Communications PlanIn January 2003, following direction from theBoard, consultation with the ShippingFederation of Canada, the CanadianShipowners Association, the Chamber ofMaritime Commerce, and the St. LawrenceEconomic Development Council (SODES), ledto a proposed communications plan for the

Great Lakes / St. Lawrence Seaway System. Theinitial focus of raising the profile of the water-way and generating support for the GreatLakes / St. Lawrence Seaway System Reviewwas broadened to incorporate two additionalobjectives: to increase the credibility and influ-ence of the maritime industry with decision-makers and opinion leaders; and to empowerbusiness leaders, workers and communities tobuild acceptance for investing in new infra-structure for the system. The SLSDC hasexpressed an interest in participating in thisendeavour, and sharing the ensuing costs.

I believe it is essential for the marine industryto make widely known the environmentalbenefits of marine transportation. A Seawayused to full capacity can reduce greenhousegas emissions and congestion on our high-ways, conserve energy and reduce both acci-dents and spills related to cargo transport, thecosts of which are borne by society at largeacross North America. Marine transportationis the way to a greener future, and the Seawayis key to that future.

Finally, a word of thanks to our Board, man-agement and employees, whose support andco-operation have eased my new duties con-siderably. And thank you to Guy Véronneau,whose legacy is a strong, flexible and effectiveorganization, well fitted for the challenges ofthe future.

Richard Corfe

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5-year Project MilestonesSLSMC completed its first five-year businessplan in 2002–2003, and with it, a number ofkey projects. The milestones reached onprojects related to the Corporation’s strategicobjectives, stemming from its long-term(2001–2004) strategic plan, are summarizedbelow.

Corporate Projects• Completion of special examination

(required by law)• Negotiate new 5-year business plan with

Transport Canada• Participate in U.S. Army Corps of Engineers

study (reconnaissance phase)• Commence study on modernization /

future governance of marine navigationservices

• Work with Great Lakes Management Forum / Waterway Strategic Issues Forum /other marine stakeholders to forge a morecohesive approach to promoting and man-aging the System

• Transition to a corporate process-centredorganization

• Complete corporate threat and risk assess-ment study

• Complete marine security plan for theSeaway System with joint stakeholders(Canadian and U.S. Coast Guards /Transport Canada / Transport Quebec /SLSDC / pilotage / police agencies / others)

• Implement new Seaway Practices andProcedures and Seaway PropertyRegulations

• Review of SLSMC policies

Report ON OPERATIONS

11

Human Resources Projects• Develop and implement succession plan• Provide orientation for change manage-

ment / leadership development• Implement management performance

plan• Implement SMART performance program• Develop and implement joint job evalua-

tion plan for pay equity• Design / implement related compensation

program• Negotiate new collective agreement (3

years + 1 year extension)• Manage / reduce absenteeism

Operations Projects• Operations centre functional study• Research and develop new tools for vessel

tie-up at locks• Develop strategy for ice management• Complete ship “squat” study and revise

vessel speed guidelines• Carry out study to optimize ship draft • Implement vessel self-inspection program• Revise ballast water management proce-

dures to mitigate the impact of aquaticnuisance species

• Develop transit time standards with tradepartners

• ISO certification of Marines Services andTraffic Control Services groups

• Build worker safety and reduce lost-timeincidents

Finance Projects• Complete initial 5-year business plan,

meeting or exceeding performance targetsfor manageable costs and asset renewalcosts

• Streamline operations / meet or exceed allcorporate targets for staffing levels

• Develop new model for tariff structure

Technology Projects• AIS implementation and integration with

Traffic Management System (TMS)• Implementation of a new geographic infor-

mation system within TMS• Implement Seaway Web site as the premier

mode of disseminating information to themarine industry

• Transition to electronic delivery of Seawayinformation

• Web delivery of Seaway promotional video(A Vital Waterway)

• Implementation of ATM (AsynchronousTransfer Mode) communication backboneto link offices more efficiently

• Leverage SAP across the corporation andimplement HR / payroll functions

• Put in place integrated Help Desk system toimprove service levels and minimize sup-port costs

• Link offices through video conferencing• Ensure all systems met Y2K compliance

objectives

The 2002–2003 Navigation SeasonOpening • Seaway opened to navigation March 26,

2002• In the Montreal / Lake Ontario section,

draft limited to 7.9 m (26’0”) until SouthShore Canal became ice-free April 15, andthen increased to 8.0 m (26’3”)

• Draft of 8.0 m (26’3”) in Welland Canal forfull season

Closing • Navigation ended December 26, with

passage of CSL Laurentian through St.Lambert Lock

• Season lasted 276 days, third longest onrecord

• Some ice formation during early December,but mild temperatures left Seaway ice-free atclosing

• Surcharges waived for December 21–22, butretained for December 23–24

• Two vessels paid surcharges totalling$140,000

Traffic to/from Canada 2002/2003

From Foreign 11%

Within Canada 53%

To Foreign 10%

To U.S.A. 26%

From Foreign 22%

To Canada 61%

To Foreign 17%

Traffic to/from U.S.A. 2002/2003

Combined Traffic by Commodity 2002/2003

Other Bulk 32%

Grain 25%

General 10%

Coal 10%

Iron Ore 23%

Combined Vessel Transits 2002/2003

Inland vessels 52%

Other vessels 19%

Ocean-going vessels 29%

• Special agreements required for one vesselin Montreal-Lake Ontario section and twoin Welland Canal resulted in additionalcharges of $180,000

Cargo Traffic HighlightsMild economic recessions continued in bothCanada and the United States, leading to fur-ther reductions in Seaway traffic.

Cargo movements on the Montreal-LakeOntario (MLO) section in 2002 amounted to30 million tonnes, a 0.9% or 276,000 tonnesdecrease from 2001 cargo movements. Trafficon the Welland Canal totalled 32.11 milliontonnes, a decrease of 1.2% or 377,000 tonnes.

Combined Seaway traffic reached 41.39 mil-lion tonnes, a decrease of 0.8% from the 2001result of 41.7 million tonnes.

GrainAgain in 2002, poor harvests and strong com-petition among exporting countries combinedto push Canadian grain traffic well below the

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13

15

10

5

0

15

10

5

0

Grain

CoalIron OreOther Bulk

General

Montreal/Lake Ontario Section (millions of tonnes)

2001/2002 2002/2003

.41

.34

3

4.16

9.8611.2 8.4 8.17

7.37.44 15

10

5

0

15

10

5

0

Welland Canal (millions of tonnes)

2001/2002 2002/2003

Grain

Iron Ore

CoalOther Bulk

General

2.69

10.3

9.9111.6 10.32

5.04

3.5

4.8 4.11

2.2

5-year average. Traffic decreased by 9% or 0.55million tonnes in the MLO section, for a totalof 5.56 million tonnes. On the WellandCanal, traffic decreased by 8.8% or 0.55 mil-lion tonnes, for a total of 5.67 million tonnes.

American grain traffic also suffered from badweather conditions and strong competition.Movements decreased by 15.8% or 0.79 mil-lion tonnes in the MLO Section and by 15.4%or 0.84 million tonnes on the Welland Canal.American grain traffic totalled 4.23 milliontonnes in the MLO Section and 4.58 milliontonnes on the Welland Canal.

As a result, total grain traffic decreased by11.6% to 9.86 million tonnes in the MLO sec-tion and by 11.4% to 10.32 million tonnes onthe Welland Canal.

Iron OreMovements from Labrador mines to Americanfacilities in the upper Great Lakes were againaffected by reduced activity in the Americansteel industry, causing another decrease in traf-fic. Movements to Canadian Mills fromLabrador mines also decreased. However,downbound movements through the WellandCanal from the Mesabi Range increased by413.7% or 1.12 million tonnes. Total ship-ments increased by 10.6% or 571,500 tonnesin 2002. Imports through Quebec Cityincreased by 64.1% or 204,300 tonnes.

Total iron ore traffic amounted to 8.17 mil-lion tonnes in the MLO section (a decreaseof 2.6% or 219,000 tonnes from 2001). Onthe Welland Canal, traffic amounted to 5.04million tonnes, an increase of 44.6% or 1.56million tonnes.

CoalCoal movements in both sections decreasedin 2002, mainly because of lower demandfor coke production. Traffic decreased by17.3% or 71,000 tonnes to 0.34 milliontonnes in the MLO section and by 14.4% or690,000 tonnes to 4.11 million tonnes onthe Welland Canal.

Other Bulk CargoEconomic conditions unfavourable to move-ments of bulk materials prevailed in the USAin 2002. While traffic in the Welland Canalslightly decreased, there was a small increasethrough the MLO Section, where other bulkmovements increased by 1.8% or 135,000tonnes to 7.44 million tonnes. Trafficincreases were registered in coke, chemicals,gypsum and stone, with all other bulk com-modities decreasing. On the Welland

Canal,other bulk

movements reg-istered a decrease of 426,000 tonnes or 4.1%to 9.91 million tonnes. All commoditiesdecreased, with the exception of coke, whichexperienced a 32.5% increase, mainly becauseof Chinese coke imports.

General cargoThe introduction in March 2002 of a tariff onsteel imports by the United States reducedgeneral cargo movements at the beginning ofthe navigation season. However, strongerimports during the rest of the season broughtan overall traffic increase of 38.3% or 1.15million tonnes in the MLO section and 21.8%or 0.48 million tonnes on the Welland Canal,for a total of 4.16 and 2.69 million tonnesrespectively.

OutlookFuture movements in the Seaway will remainclosely linked to both Canadian and Americaneconomic performances. For the next fewyears, the potential effects on Seaway traffic ofworld events and increasing globalization willbe difficult to forecast. Nevertheless, given amore vigorous Canadian economy and some-what better economic conditions on the hori-zon for the United States, total Seaway trafficis expected to improve.

Ocean-going vessels Inland vessels Other vessels

Five Year Review of Combined Vessel Transits

3,000

2,500

2,000

3,000

2,500

2,0001,500

1,000

500

0

1,500

1,000

500

01999-2000

1998-1999

2000-2001

2001-2002

2002-2003

Asset Renewal

Winter Works ProgramEach winter, major components of the Seawayinfrastructure are overhauled during theeleven-week shutdown period. In Niagara, 96projects were completed by contract over thecourse of the winter, at an under-budget costof $9.5 million. Projects carried out in theMaisonneuve Region cost $3.5 million.Seaway employees carried out a number ofwinter works projects (amounting to some$4.9 million) as well, in addition to regularpreventive maintenance and inspections.

Major Winter ProjectsMaisonneuve Region• gate rehabilitation and re-tensioning at

St. Lambert lock• Bridge 10 cleaning & painting, phase I• crack injection at lower Beauharnois lock• concrete repairs at upper Beauharnois and

St. Lambert locks• channel dredging between locks

Niagara Region• remote control of Bridge 11• concrete repairs at lock 6 • lock 7 intake restoration

• gate rehabilitation at locks 2 and 6• Long Reach bank stabilization• McGee’s wall, wharf 18 and wharf 12

repairs• mechanical repairs and rehabilitation of

lock valves• wall paving at lock 6 • timber pile repairs at locks 2 and 3• various electrical and electronic upgrades• painting and building renovations

Asset Renewal PlanIn 2002–03, the last year of the first five-yearplan, $24.2 million was spent on asset renewal,bringing the total expenditure for the five yearsto $122.6 million or 2.8% below the maximumauthorized amount of $126.2 million.

The next five-yearplan allows a totalexpenditure of $170million to safeguardday-to-day operationsand the long-termintegrity of theSeaway’s infrastruc-ture and equipment.

Essential WorksProjectsIn negotiating thenew business planwith TransportCanada, SLSMCemphasized the needto make adequate provision for the Seaway’saging infrastructure. Maintenance costsincrease yearly, and decisions about a majorinvestment in infrastructure renewal willbecome necessary before the end of thisdecade. The new business plan does respondto these concerns, though to a lesser extentthan SLSMC had hoped. Financial coverage fortwo essential projects, however, has beenacquired. The detailed plan for next year (year6 of the Agreement) totals $30 million and

includes funds to carry on with the alkali-aggregate reaction (AAR) rehabilitation studyfor the Maisonneuve locks and start ahydraulics conversion project in Niagara.

Alkali-aggregate Reaction (AAR)AAR is an irreversible chemical reaction thattakes place within concrete structures. Whenalkali in cement reacts with certain types ofsilica in aggregates, a silica gel is produced thatswells when exposed to humidity. As a result,the concrete in some Seaway locks is increas-ing in volume.

AAR affects four locks in the MaisonneuveRegion: St-Lambert (lock 1), Côte Ste-Catherine (lock 2) and both Beauharnoislocks (locks 3 and 4).

The swelling of concrete creates serious opera-tional problems. Valves no longer shut tightly,gates stick, various lock components lose align-ment, expansion joints on bridges close up,and cracks develop in the structure. In addi-tion, the locks shrink by 4mm annually inwidth. Annual overhauls are required to pre-vent damage to mechanical components of thelocks caused by the swelling concrete, and tomove back bridge abutments. Hydro-Québec,the modelling consultant for this project, has

15

5-YEAR ASSET RENEWAL PLAN (Excluding St. Catharines Hydro Electric Commission)

‘98-’99 ‘99-’00 ‘00-’01 ‘01-’02 ‘02-’03

RegularMaintenance 2,792 2,740 3,331 3,251 3,464

MajorMaintenance 16,807 18,318 20,068 19,500 19,433

Capital 6,007 2,479 1,525 1,764 1,339

5-yearTotal

Total 25,606 23,357 24,924 24,515 24,236 122,638

Auth. Plan 26,814 23,567 24,926 25,457 24,971 125,735

Original Plan 27,518 25,054 23,184 25,744 24,703 126,203

(in millions of dollars)

dations to proceed with converting themechanical drives of specific components ofthe Welland Canal, at a cost of approximately$32 million. Converting the mechanical drivesof other components will be reviewed at alater date.

Three projects (valves, gates, and shiparrestors) were identified and approved forthe next fiscal year. The majority of the fund-ing has been secured for subsequent years andis included in the new five-year business plan.The conversion project is a 6-year program,which will begin with selected equipment atLock 6 in the first year, followed by the con-version of all equipment and the control sys-tem in Lock 7 in the second year, setting thestage for conversion across the system in thefollowing four years.

Remote Operation To improve operational efficiency, the Seawaylaunched a program to bring free-standingbridges under remote control from a centralcontrol station.

Bridges 5 on the Welland Canal is now fullyoperational; control was moved to the TrafficControl Centre, and the bridge is operated byTraffic Control personnel. Work on Bridge 11is progressing and should reach completion bythe winter of 2004. Bridges 4 and 21 will befully automated and operated from a centralcontrol station by 2006. This will bring theoperation of all isolated bridges to one centre.

16

developed a finite element analysis model toassess damage and predict future deterioration.Results to date show that cracks in the struc-tures will reach unacceptable levels within10 years.

In response, SLSMC has developed a long-term strategy to guarantee structural integrity,and to restore the locks’ original width. Weare monitoring AAR through inspection andtesting, instrumentation and modelling pro-grams. All affected locks are now equippedwith crack measurement apparatus and invert-ed plumb-lines on the lock walls. Preliminaryfeasibility and cost analyses for various over-haul alternatives are underway. Ultimately, therehabilitation work will increase the usefullife span of the Maisonneuve Region locks upto 100 years.

Hydraulic Conversion ProjectHydraulic applications are becoming moreand more current in modern canal and damsystems around the world, including thePanama Canal locks. Growing maintenanceand repair costs for the Seaway’s originalmechanical drive systems, and the potentialfinancial savings, safety improvements andtechnological control advantages of modernhydraulic equipment prompted theCorporation to investigate the possibility ofconversion.

A successful business case was prepared andAcres International was awarded a contract fora feasibility study, which included recommen-

Crack Injection in the cable galleries5St6Lambert Lock

The second reliability indicator, ContinuedAvailability, measures the overall systemavailability during the navigation season. Itfactors in all delays that are under our con-trol, with the exception of traffic-relateddelays. The continued availability indicatorincreased from 97.55% in 2001/02 to99.79% in 2002/03. The SLSMC also trackstwo indicators to assess its performance interms of efficiency.

Over the past 3 years, there has been a reduc-tion of approximately 45 % in the number ofhours ships are delayed in transit by causeswithin SLSMC control. Controllable delaysinclude those caused by the operation, main-tenance or breakdowns of equipment; waterlevels; traffic management; and installation ofnavigation aids at the opening and closing ofthe navigation season.

Transit time measures theCorporation’s commitment toefficiency. During the 2002 navi-gation season, 91% of vesselstransited the Seaway system with-in the agreed-to norm. This indi-cates that our customers can relyon a high level of dependabilityin regard to transit time.

The safety index tracks incidentssuch as vessel collisions andgroundings, and vessel contactswith Seaway structures, no matterhow minor. In 2002–03, therewere 4 commercial vessel inci-dents where some damageoccurred per 1000 transits; in theprevious season, there were 5 per1000 transits.

Navigation and Customer Service

Reliability and System UptimeAs an indicator of its commitment to providea highly reliable system, SLSMC has estab-lished five different measures to monitor thewaterway's reliability, efficiency and safety.

Two measures of system reliability track theoverall structure availability . The structureavailability indicator, or system uptime meas-urement, considers all maintenance relateddelays including delays due to Seaway equip-ment malfunctions or breakdowns at locksand bridges. Over the nine months of naviga-tion in 2002, structures were not available0.2% of the time for maintenance-relatedreasons, a 0.2% improvement over the lasttwo years.

better predict vessel movements and trends,and improve scheduling accuracy.

The responses from vessels equipped with AIShave been very positive:

Vessels will also benefit from the shore-basednetwork; TMS broadcasts back critical naviga-tion information, such as wind conditions,water levels, weir and dam outflows, as well assafety-related messages.

Between August and December 2002, theSeaway leased 11 transponders from variousmanufacturers to test the network, giving ves-sel pilots and masters a preview of the benefitsof the new system. Nine inland vessels werefitted with these units. Two portable unitswere used by the Pilotage Associations to teston various ocean vessels.

Traffic control centres, vessel pilots and mas-ters filled out a survey for each transit, provid-ing information on the functionality and relia-bility of the new system. Tests continued untilthe end of the navigation season and modifi-cations were made to the system based on theexperiences recorded, to ensure optimum con-ditions for official start-up in April 2003.

With the opening of 2003 navigation season,all commercial vessels transiting the Seawaywith a gross registered tonnage of 300 tons or

18

Automatic Identification System (AIS)Both Seaway organizations, with the assistanceof the Volpe Center (U.S. Department ofTransportation) have worked for a decade todevelop and implement AIS, and as a result,the St. Lawrence Seaway is the first inlandwaterway in the world to take advantage of thisnew standard in navigation technology.

The AIS system uses both shipboard and on-shore equipment. Aboard ship, a transponderbroadcasts and receives information about ves-sel position (acquired by GPS satellite), vesselspeed, course, heading, dimensions and (atthe user’s discretion) destination and ETA.Information from all surrounding ships is dis-played on each vessel’s electronic charts ornavigation system. Shipmasters and pilots canuse this precise information to improve vesselsafety dramatically, especially during adverseweather conditions.

Nine VHF antennas located along the Seaway– the shore-side portion of the AIS network –were activated in August 2002. They capturethe AIS signals broadcast by transiting vesselsand return the vessels’ coordinates, headingand speed back to our Traffic ManagementSystem (TMS), helping traffic controllers to

“We were caught in heavy squalls5 duringwhich time we pretty well lost our

targets on radar due to the rain clutter�Fortunately5 we had the M/V Peter R�Cresswell visible all the time on our ECDISscreen thanks to its AIS transponder� We neverlost its icon even in the worst of the rain� Asmore ships are fitted with AIS5 I believe every6one will quickly realize that it is going to bevery useful in all aspects of our job�We are just beginning to explore the potentialof this tool…it sure looks promising�”—Captain Georges Coté of the

Canadian Prospector (August ����)

more, and all passenger vessels carrying morethan 50 people, require an IMO (Interna-tional Marine Organization) certified AIStransponder.

Draft OptimizationThe Corporation is continuing to pursue thegoal of increasing Seaway draft to accommo-date heavier vessels; however, implementationof deeper draft continues to be delayed by lowwater levels in parts of the Great Lakes.

During the last year, much of the preparatorywork was completed:

• high spots in South Shore Canal levelled• high spots at Hamilton Island and

International tangent removed• high spots removed above lock 7 and below

lock 1 in Welland Canal• vessel squat curves developed for five main

types of vessels transiting the Seaway andincorporated into Seaway water level spread-sheets to determine optimal speeds for dif-ferent loading conditions

With AIS now in place to provide preciseinformation for monitoring vessel speed andlocation, it should be possible to increasedraft by up to 3” when water levels return tonormal throughout the system.

Season ExtensionA binational committee made up of the twoSeaway Corporations and trade representativescontinues to assess the feasibility of extendingSeaway navigation to 10 months, consistentwith the opening and closing dates of the SooLocks.

A market survey of the main shippers has beencarried out to evaluate benefits, and the incre-mental revenues / costs for an extended seasonhave been assessed. The necessary capitalexpenditure is estimated at over $50 million.A preliminary cost-benefit analysis has beenprepared, and the committee members willfinalize their report during 2003.

ISO Certification Extended to Traffic Control CentresIn July 1998, the Corporation obtained ISO9002 certification from Lloyd’s Register forMarine and Ship Inspection Services, reinforc-ing the Seaway’s commitment to provide a safeand reliable system with a high standard ofservice. SLSMC plans to extend ISO certifica-tion to all services linked to the operationalneeds of our customers.

In 2002, Traffic Control Services in bothNiagara and Maisonneuve Regions obtainedISO 9002 (1994) certification. The processrequired the documentation of existing prac-tices and, in some cases, the implementationof new quality procedures to ensure consistentand timely service. Periodic audits and theimplementation of corrective and preventivemeasures now provide a mechanism for con-tinuous improvement, which benefits both theCorporation and our customers.

Work continues on the quality certificationfront, as ISO has now published new stan-dards to which the Corporation will need toconform. In addition, the ManagementCommittee has identified Lock Operations asthe next area to be certified.

Inland Vessel Self-inspection ProjectIn 2000, SLSMC offered ISO/ISM-certifiedcompanies the option of carrying out theirown inland vessel inspections for Seawayrequirements. SLSMC ship inspectors carry outrandom spot-checks of self-inspected vesselsthroughout the season.

19

In 2001, Upper Lakes, Algoma and CSL indicat-ed that, despite the convenience, the costsinvolved in self-inspection place them at aneconomic disadvantage in comparison withnon-participating companies. SLSMC reviewedthe program in 2002 and introduced the use ofa short form for the biannual inspections, thelong form being completed only for the initialinspection. Participating companies agree thatthis modification provides a level playing field.Rigel Shipping Canada Inc. became a CSAmember in 2002 and has included their threeCanadian-registered ISO-certified tankers inthe self-inspection program.

Web Site and E-Business ApplicationsThe binational www.greatlakes-seaway.comWeb site has become the leading source ofinformation on the Seaway for stakeholders.The latest Web traffic figures point to 107,000page requests in the month of March, 2003,continuing a >60% annual growth trend.

In addition to providing useful services to cus-tomers, the Web site has a favourable impacton the Corporation’s efficiency. Many Webusers are obtaining information that once hadto be issued by phone, fax, or Canada Post.We have noted a marked decline in thedemand for printed copies of our publica-tions, including our annual report, thanks toefficient dissemination via our Web site. In2002, SLSMC implemented a comprehensivee-mail broadcasting system. Seaway Notices,Seaway Handbook updates, and a variety ofother correspondence are now available by e-mail, with more than 850 stakeholders regis-tered by the end of the fiscal year.

Our e-business services have steadily advancedover the last 18 months. The Web site facili-

tates many aspects of shipping goods and com-modities through the Seaway. Users may nowsurvey the Seaway’s competitive advantages,calculate their shipping costs, review the capac-ity of every major port along the waterway,contact agents and other service providers list-ed in our “yellow pages” links section, obtaininformation on transit requirements and regu-lations, file pre-clearance requests and transitdeclarations forms (which are automaticallyrouted to Seaway personnel), track the progressof their vessels on our real-time map display,submit pre-arrival forms, and receive electroniccopies of toll invoices for payment.

The Web site also increases our marketingreach. In the span of a single month (April2003) 2,189 showings of our new video, TheGreat Lakes St. Lawrence Seaway System – A VitalWaterway, were recorded, incorporating viewersfrom virtually every continent. Available inboth standard and high-speed (broadband)versions, our bilingual Web video accommo-

20

March

April Ma

yJune Ju

ly

August

Septem

ber

October

November

December

Monthly Web Traffic Page Requests for March– December 2001 2002 2003

140,000

0

20,000

40,000

80,000

100,000

120,000

60,000

“The DigitalWave” symbolizesthe Seaway’s newsuite of e6businessapplications5available for useon the web site�

dates a variety of users, effectively bringing ourmessage to the desktops of businesses, govern-ments, and schools across the globe.

Seaway Security and Safety

System Security and Risk AssessmentSome years ago, SLSMC began to examine itssecurity position by undertaking a comprehen-sive threat and risk analysis (TRA). In the inter-vening time, the September 11th attacks, thecontinuing risk of terrorism and sharply risinginsurance costs have combined to make securi-ty one of the Corporation’s top priorities.

Internally, a corporate Security Committee wasestablished to action the many recommenda-tions of the TRA and provide the assurancessought by our insurance underwriters. TheCorporation amended its emergency prepared-ness policies, and incorporated external agen-cies and consolidated responses where appro-priate. Our new Risk Management andSecurity Program establishes common stan-dards for all regions and ensures ongoing, dili-gent risk management.

In the past year, almost all the TRA recommen-dations have been implemented, including:

• tightened control of access to all Seawaystructures

• more comprehensive security checks• improved fencing and signage against tres-

passing on Seaway property• a site mapping project that identified critical

areas where video surveillance camerasshould be installed to protect assets andcontrol unauthorized access to high-riskareas

With the goal of creating a consistentapproach to reducing its business risks, theCorporation recently conducted an enterpriserisk management assessment. In this exercise,employees in all three regions identified the

risks they saw for each functional area, andthe gravity and the likelihood of each risk. Theresults were then benchmarked to industrystandards, showing how SLSMC compares tosimilar businesses. In a second exercise, thecritical risks were ranked, along with existingmitigating strategies.

Based on this information, the Corporationestablished tolerance levels and developed aplan to minimize the risks in areas where theywere deemed above the acceptable tolerancelevel. SLSMC has compared its preventivemeasures to those of other marine operationsand is confident the measures are effective;however, security will be examined further inthe next fiscal year by a consultant hired byTransport Canada.

Binational Security MeetingsEvery ship that transits the Seaway passes criti-cal infrastructure and large populated areas.Since the security of our binational waterwayis an important joint concern, Canada and theUnited States have initiated a cross-borderprogram to share intelligence and increasesecurity boardings on foreign commercialships entering the St. Lawrence Seaway and theGreat Lakes. All the key system stakeholders –both Seaway corporations, Transport Canadaand Transport Quebec, both Coast Guards, thepilotage agencies, the police organizations,and many others – have met a number oftimes in the past year to develop a concertedsecurity plan.

Both nations are working closely together toprovide maximum security, while minimizingdisruption to commercial shipping. Riskassessment inspections of vessels transiting theSeaway have increased, and SLSMC, with theU.S. Coast Guard, Transport Canada andSLSDC have conducted exercises to test andimprove the boarding regime.

All ships entering the St. Lawrence Seawaymust provide 96-hour advance notification.

21

Ships failing to give notice, or those whosenotice is incomplete, are prohibited fromentering the Seaway. The U.S. Coast Guard andthe Canada Customs and Revenue Agency spe-cial analysis units screen the ship’s informa-tion and submit the crew and passenger list toa centralized information centre. If a potentialthreat is identified, the ship undergoes a secu-rity boarding by a team from Canadian agen-cies before it enters the Seaway and the GreatLakes. These boardings are in addition to ran-dom boardings and other security measuresalready in place.

Vessel SafetyIn the past two years, SLSMC has implement-ed a number of changes in operating andsupervisory practices to improve vessel safety.The changes complied with, and in some casesanticipated, directives issued by the Trans-portation Safety Board (TSB) following theWindoc incident in 2001, in which a vesselcame into contact with a lift bridge on theWelland Canal. Action was taken in areasrelated to the medical fitness and supervisionof employees, emergency preparedness anddefences against inadvertent lowering of

bridges. Additional technical safeguards forthe operation of bridges and other SLSMCstructures are currently under study or in theprocess of being implemented. These technicalmeasures include the use of cameras and sen-sors, and remote operations from a centralcontrol station.

An emergency planning review, which wasalready underway, is now completed. Anannual multi-agency planning exercise willensure enhanced coordination of personneland resources within the affected area in theevent of an incident.

To further enhance the safety of both vesselsand employees, SLSMC has put in place analcohol and drug abuse policy. Monitoring themedical fitness of employees, as well as drugand alcohol testing, are complex and sensitiveissues that affect human rights and continueto be debated in the courts. However, SLSMCwas able to establish procedures, in agreementwith the Canadian Auto Workers (CAW), thattake into account both human rights and theguidelines set by the courts, and meet with theapproval of union, management and the TSB.

With these additional measures in place, theSt. Lawrence Seaway continues to build uponits 43-year record of safe and reliable customerservice through a progressive managementapproach.

Workplace Health and Safety The lost time injury statistics to the end ofMarch 2003 continue to show a downwardtrend. The frequency and severity rates for thepast year are at the lowest levels ever recordedat the Seaway.

The Corporate Health and Safety Programrequires the Regional Vice-Presidents to com-plete annual safety audits of each other’sregions. These audits indicate that the level ofproactive involvement with safety in the work-place is high and the programs in place are,for the most part, working. Safety inspections,

22

toolbox meetings and safety committeesappear to be showing positive results, withsafety procedures being applied in both themaintenance areas and the locks. Minor find-ings were submitted to the regional Healthand Safety Advisors for necessary action.

Environmental Management The environmental impacts of Seaway opera-tions are highly regulated by the provinces ofQuebec and Ontario and by the federal gov-ernment. When it took over responsibility forSeaway operations, SLSMC also acquiredresponsibility for lands, structures and storagefacilities and has been working to identify andclean up environmentally threatened areas ofits holdings, and to ensure that current facili-ties conform to all regulations.

An Environmental Management System hasbeen developed, and preliminary performanceindicators have been defined and quantified,with reference to new legislation.Environmental impact matrices for majormaintenance projects are completed each year.An updated database of potentially contami-nated sites is being prepared for auditing andfield inspection purposes. Confirmed contami-nated sites are reported to Transport Canada’sEnvironmental Affairs Division, which over-sees remedial measures. The first target formanagement next year has already been iden-tified: the Melocheville Maintenance area,including a recently fenced waste disposalarea.

Underground storage tanks for petroleumproducts have been removed throughout thesystem, and any contamination has beencleaned up. The only remaining SLSMC-oper-ated underground heating oil tank in Quebecis located at the St-Lambert office. It complies

with CCME and provincial guidelines, and itsleak detection system is verified every otheryear under the provincial regulations. InOntario, the last two unused tanks have beenremoved in the Port Colborne-Niagara Region,and soil clean-up has been completed. Onesand-filled tank remains under the headquar-ters building in Cornwall.

Obsolete above-ground petroleum storagetanks used to fuel generators, lock equipmentand the SLSMC fleet of vessels are also beingreplaced or upgraded according to plan.

The Corporation still operates PCB storage sitesat Melocheville and St. Catharines; these siteswill be decommissioned as soon as we can ver-ify that no further PCBs remain on Seawayproperty. Decommissioned ballasts containingPCBs were found last year in Melocheville andwere disposed of during the spring cleanuporganized in March each year by Public Worksand Government Services Canada for federalinstallations.

SLSMC is also responsible for ensuringpotable water at its facilities, and for septicsystems. Water is tested and analyzed periodi-cally to ensure quality. The Niagara Region’sGlendale Maintenance Centre was connectedto the municipal sewer system last year, elimi-nating the sewage lagoon management andassociated monitoring and reporting require-ments in that location.

In 2002, channel maintenance projects werecompleted at the International Tangent and atHamilton Island. Disposal of dredged materi-als in open water was allowed and the Depart-ment of Fisheries and Oceans required nocompensation measures.

Preparatory work was carried out for channelmaintenance in the South Shore Canal nextyear. The environmental section of Public

23

Works and Government Services Canada iden-tified potential disposal sites, prepared a sedi-ment sampling and testing program, and esti-mated project costs. Preliminary results of testscarried out by another consultant indicatewidespread contamination by PCBs and heavymetals above the lowest effect level, but belowthe severe effect level. Eco-toxicity tests havebeen required by Environment Canada todetermine whether disposal of the dredgedmaterials in open water is acceptable. Thepotential impact on project costs is significant.

Market DevelopmentPanama CanalOfficials from the Canadian and AmericanSeaway visited the Panama Canal for threedays in April to learn about its technologicalimprovements, modernization programs andongoing expansion studies. The team alsoreviewed the Canal’s enhanced traffic manage-ment system, the communication, trackingand navigation-based control system, and theautomated identification system. These sys-tems are uniquely customized for the PanamaCanal and reflect the waterway’s trend-settingadoption of the most appropriate technologiesto increase efficiency and safety, a strategy theSeaway is emulating.

Market Research Studies and Strategic Business Development PlanThe Research and Traffic Group has complet-ed two market research studies for the twoCorporations. The competitiveness studycompared the Great Lakes/Seaway route toother routes and modes for the shipment ofvarious commodities. The market growthpotential study analyzed opportunities forthe Corporation to develop niche markets,attract new commodities and otherwiseincrease traffic. The results have been incor-porated in the Seaway’s business/trade devel-opment plan for the next three years, a plan

developed and carried out jointly by the twoSeaway Corporations.

Trade Mission to France and SpainA joint Canadian and U.S. trade delegationtravelled to France and Spain in September2002. Our senior marine industry and govern-ment representatives attended meetings withEuropean port and marine industry officials inParis, Le Havre, Rouen, and Barcelona.

The group met industry representatives from avariety of organizations, some of whom usethe Great Lakes/Seaway system, or have doneso in the past. One infrequent Seaway userindicated that a 27-foot draft could make theSeaway competitive with the Mississippi River.The trade mission confirmed that year-roundservice is also a key factor in competitiveness.

24

Human Resources Extension of Labour Agreement SLSMC successfully negotiated a 15-monthextension of the collective agreement with itsunionized workforce. The agreement, whichwas to expire December 31, 2003, retains allcurrent terms and conditions, provides for awage increase of 3% over the course of theextension, and will expire on March 31, 2005.The SLSMC’s employees are the operationaland maintenance workers who operate thelocks between Montreal and Port Colbourne,together with members of the supervisorygroup. All are members of the NationalAutomobile Aerospace Transportation andGeneral Workers Union of Canada (CAW).

Employment Systems ReviewSLSMC surveyed its workforce to determinehow many employees are members of thefour designated groups under the EmploymentEquity Act. Management, union and employeerepresentatives were consulted on the surveydesign and implementation, and the partici-pation rate was an exceptional 93%. A con-sultant reviewed the Corporation’s employ-ment policies and practices for any systemicor attitudinal barriers to employees and appli-cants, with special emphasis on members ofthe target groups. The Joint EmploymentEquity Committee has prepared an actionplan based on the consultant’s recommenda-tions, which will be implemented over thenext two years.

SMART Performance Management The tools of SMART performance managementcontinue to improve, and participation in theprocess now extends to the Operations andMaintenance unionized workforce.

The latest of the SMART tools is recognitionand appreciation of positive performance andefforts, based on the principle that “what getsrecognized gets repeated”. A RecognitionToolkit of tips, techniques and strategies

25

assists managers/supervisors in makingrecognition an integral practice at the work-group level, where it can be most relevant andtimely, and have the greatest influence.

Leadership Development Training ProgramIn 2002, we implemented a leadership train-ing program to help middle and upper man-agement motivate and enable employees toachieve organizational objectives. More than30 managers, including vice-presidents, partic-ipated in consultant-led two-day training ses-sions. Each participant also completed anintensive one-day assessment with an industri-al psychologist to diagnose leadershipstrengths and weaknesses. Then individualdevelopment plans, prepared with the help ofadvisors, were integrated with the SMARTobjectives for each person. Progress on achiev-ing development objectives is monitoredthrough SMART reviews and during manage-ment meetings.

A similar leadership training program forfront-line supervisors will begin in May 2003.

Supervisory Skills Training Effective supervisors must balance legislatedrequirements, contractual agreements and

600

850

800

750

700

650

St. Lawrence Seaway Employees(Full Time Equivalents)

Actual Business Plan

Business Plan Target

619 6062002 2003

794

709

727

681671 664

619650

637

1998 1999 2000 2001

corporate policies in managing front-lineworkforce performance to achieve SLSMCgoals. To upgrade those skills, a SupervisorySkills Training Program was implemented inearly 2002. The practical “how to” trainingmodules in areas such as attendance manage-ment, problem-solving techniques, investiga-

tive skills and change management have beenwell received. An ongoing program of addi-tional workshops will complement LeadershipDevelopment training for supervisors in 2003.

Succession PlanningWith over 30% of our workforce eligible toretire over the next 5 years (2003-2007), ongo-ing succession planning is a priority. Our suc-cession plan for all levels of management andkey risk positions is updated annually.Improved tools for the process continue todevelop, and strong links have been estab-lished with leadership training and the SMARTperformance management process. The expect-ed turnover will present opportunities also toachieve some employment equity goals.

26

GOVERNANCE

The St. Lawrence Seaway ManagementCorporation is governed by a nine-mem-ber Board, which meets as frequently as

necessary to set and oversee the direction ofthe Corporation and review financial results.Their ultimate responsibility is to secure thelong-term viability of the SLSMC, and of theSeaway as an integral part of Canada’s trans-portation infrastructure. To this end, the Boardensures that our operations will establish credi-bility with customers and the Saint LawrenceSeaway Development Corporation by provid-ing high quality; efficient service to all userswithout preference, fostering the competitiveadvantages of the Seaway, and ensuring a safeenvironment for our employees and customers.

As part of its stewardship of the Corporation,the Board has responsibility for strategic plan-ning, risk management, succession planning,communications policy, and the integrity ofthe Corporation’s internal control and manage-ment information systems. It also defines thelimits of management’s authority, accountabili-ty, and rules on any activities or expenditures,which vary from or are not foreseen in thebusiness plan or in the Corporation’s formalagreements with Government or other parties.

Through the Governance Committee, whichalso administers the Code of Conduct, theBoard ensures that the Corpora-tion’s annual objectives reflect itscommitments under the businessplan, the Letters Patent, and theCanada Marine Act, and ensures thatno conflict of interest arise. ThisCommittee also oversees andreports to the Board on the systemsthat manage the principal risks ofthe business, including environ-ment, scheduled maintenance andoccupational health and safety.

The Human Resources Committeeensures the development of succes-sion plans for all senior manage-

ment positions, evaluates the performance ofsenior executives, reviews and fixes seniormanagement salary and compensation poli-cies, and oversees the performance of theCorporation’s pension plan.

The Audit Committee, responsible for review-ing financial statements and for audit of theCorporation, also evaluates accounting andfinancial reporting policies, systems and inter-nal controls.

Members of the CorporationBoard of DirectorsRobert J. Swenor 1 2

ChairmanSteel and Iron Ore Representative

Marc Dulude 2

Québec Provincial Government RepresentativeExecutive Vice-President and Chief Operating OfficerIMTT- Québec

W. Nick Fox 2

Grain Representative Vice-President, Terminals & Eastern OperationsJames Richardson International

Alan R. Holt 2* 4*

Other Members Representative

Ian MacGregor 3

Ontario Provincial Government RepresentativeFasken Martineau DuMoulin LLP

SLSMC Board of Directorsfrom April �5 ���� toMarch -�5 ���-

Georges H. Robichon 1*

International CarrierRepresentativeSenior Vice-Presidentand General CounselFednav Limited

Doug Smith 3 4

Domestic CarrierRepresentative

Guy C. VéronneauPresident & ChiefExecutive OfficerThe St. Lawrence SeawayManagementCorporation

Denise Verreault 1 3*

Federal GovernmentRepresentativePresident Groupe MaritimeVerreault Inc.

Members of:1. Governance

Committee2. Human Resources

Committee3. Audit Committee4. Capital Committee* Committee Chairman

OfficersGuy C. Véronneau,President and ChiefExecutive Officer

Richard CorfeVice-President,Maisonneuve Regionuntil August 31, 2002Executive Vice-Presidentuntil March 28, 2003

Joseph V. Contala,Vice-President,Information Technology andTelecommunicationsuntil March 28, 2003

Adina JusterVice-President,Maisonneuve Regionsince September 1, 2002

Michel Drolet,Vice-President, Niagara Region

André Latour,Vice-President, Human Resources until March 28, 2003

Carol Lemelin,Vice-President, Financeand Administration

Camille G. Trépanier,Vice-President, Strategic and BusinessDevelopment

Yvette Hoffman,Counsel and Secretary

Industry Members2002/2003

GrainADM Agri-IndustriesLtd,Windsor, Ontario

Agricore United,Winnipeg, Manitoba

Alfred C. Toepfer(Canada) Ltd,Winnipeg, Manitoba

Bunge Canada Ltd,Québec, Québec

Cargill Limited,Winnipeg, Manitoba

James RichardsonInternational Ltd,Winnipeg, Manitoba

Louis Dreyfus CanadaLtd,Calgary, Alberta

Saskatchewan WheatPool,Regina, Saskatchewan

The Canadian WheatBoard,Winnipeg, Manitoba

Steel and Iron OreDofasco Inc.,Hamilton, Ontario

Iron Ore Company ofCanada,Montréal, Québec

Québec Cartier Mines, Montréal, Québec

Stelco Inc.,Hamilton, Ontario

Other MembersAGP Grain, Ltd,Minneapolis, Minnesota

Essroc Canada Inc.,Mississauga, Ontario

IMC Canada Ltd,Regina, Saskatchewan

Keystone Industry Co., Montréal, Québec

Lafarge Canada Inc.,Concord, Ontario

OmnisourceCorporation,Burlington, Ontario

Ontario PowerGeneration Inc.,Toronto, Ontario

Petro-Canada,Oakville, Ontario

Redpath Sugars,Toronto, Ontario

Sifto Canada Inc.,Goderich, Ontario

The Canadian SaltCompany Ltd,Pointe-Claire, Québec

Domestic CarriersAlgoma CentralCorporation,St. Catharines, Ontario

Canada Steamship LinesInc.,Montréal, Québec

Groupe Desgagnés Inc.,Québec, Québec

Lower Lakes Towing Ltd,Port Dover, Ontario

McKeil Marine Limited,Hamilton, Ontario

N.M. Paterson & Sons Ltd,Thunder Bay, Ontario

St. Mary’s Cement,Toronto, Ontario

Upper Lakes Group Inc.,Toronto, Ontario

InternationalCarriersChristensen ShippingCorporationMontréal, Québec

Cleveland Tankers Inc.,Cleveland, Ohio

Colley MotorshipsLimited,Westmount, Québec

Compass MarineServices,Montréal, Québec

Fednav InternationalLimited,Montréal, Québec

Gibson Canadian &Global Agency Inc.,Montréal, Québec

Gresco Ltée,Montréal, Québec

Inchcape ShippingServices,Montréal, Québec

Laden Maritime Inc.,Montréal, Québec

Montship Inc.,Montréal, Québec

Robert Reford (a division of MRRM (Canada) Inc.),Montréal, Québec

Robin Maritime Inc.,Montréal, Québec

Scandia ShippingAgencies Inc.,Montréal, Québec

28