HERE'S HOW TO PRESENT THE NEW RAIL MERGER

HERE'S HOW TO PRESENT THE NEW RAIL MERGER

Nobody asked, but here's how I would present the proposed Canadian National Railway Inc. combination with Burlington Northern Santa Fe Corp. in Washington so it has the best chance of gaining regulatory approval.

Just tell the Surface Transportation Board, and anyone else who will listen, that this is just like the Illinois Central transaction. Don't even talk about creating the first real North American railroad. That means big, and you want to get the focus off size.Remember, the other big mergers have created the hostile environment toward mergers that you must deal with now.

Another reason for downplaying the North American colossus angle: Canadian nationalism. Some Canadians are terrified that the low exchange rate for the Loonie - the Canadian dollar - makes it easy for U.S. companies to gobble up the Canadian economy.

CN Chairman and CEO Paul Tellier had a blunt reaction to the nationalism issue last week, when he said in answer to a questioner: ''This is not the Americanization of CN - this is transforming CN into a North American company while retaining a very strong Canadian identity.

''I have no time for nationalists who think they can draw a gate around this country,'' Tellier said.

Just as Bill Clinton's staff kept reminding him during the 1992 presidential campaign, ''It's the economy, stupid!,'' keep reminding yourself, the shippers, the regulators and the news media: ''It's about service.'' That would not be stupid.

Freight shippers are particularly suspicious of rail mergers after the STB accepted past representations that mergers would result in customer benefits such as improved service and so on.

The approvals were followed by the 1995 Union Pacific-Chicago and North Western service problems, the complete meltdown of service following the 1996 Union Pacific acquisition of Southern Pacific, and the current service failures of the CSX-Norfolk Southern indigestion over their break-up of Conrail. The Burlington Northern-Santa Fe merger also gave customers a dose of heartburn.

Tell the world that Canadian National and Burlington Northern Santa Fe make the perfect fit at the perfect time. CN did that last year with the Illinois Central acquisition, and it worked.

Point out that there is no overlap, a limited number of connecting points, and that your two companies have a similar culture, or at least the same attitude toward operating efficiency and on-time railroading.

The lack of overlap means no rationalization (line abandonment for those who don't know rail euphemisms), no or little reduction in service options for customers, little impact on jobs. That last one should be whispered in the ears of every international union officer you can find.

A new twist that wasn't pertinent in the IC transaction: Asian economies are recovering. These two railroads will be well-positioned to move goods to Asia from the Atlantic, Gulf and Pacific ports.

It may be unreal, but tell the regulators how the seamless connection from the coast of California to the coast of Nova Scotia will spur the landbridge: containers moving overland between Europe and Asia rather than through the Panama Canal. After all, your crystal ball is as good as anyone else's.

One critic already has asked, ''Are these mergers the only strategic ideas that current rail management can come up with?'' So give them strategic ideas. The prospect of bringing to fruition a new landbridge certainly sounds good.

It's going to be difficult to find customers who will allow CN and BNSF to include a bound letter in their merger applications attesting to the belief that this proposal will be the greatest thing since sliced bread.

Tell the world and the STB up front that it isn't necessary to kill a lot of trees just to demonstrate shipper support. This transaction doesn't have the antitrust issues that other mergers faced, so it isn't necessary to beg customers to support it.

Mount a campaign that allows Canadian National and Burlington Northern Santa Fe to set the agenda of the debate before the STB. The ultimate targets of this effort are the members of the STB and its staff. This campaign should create an environment that makes it easier for the agency to do what it probably is inclined to do: Approve a merger with few if any costly conditions.