KC Southern railroad could transfer funds to U.S. from Mexico

The head of U.S. railroad Kansas City Southern said on Thursday the company could transfer money from Mexico to the United States if President-elect Donald Trump lowers taxes for those transactions, even as the company works to convince Trump not to clamp down on trade with Mexico.

“We could invest in other growth opportunities, we could repurchase shares,” said Patrick Ottensmeyer, the president and chief executive officer of Kansas City Southern (KSU.N), speaking on the sidelines of the RailTrends 2016 conference here.

Ottensmeyer declined to say how much money the company could bring back to the United States. He said the tax hit under current U.S. law had so far prevented repatriation.

“It would certainly be a benefit for us to have the flexibility to move money around as we see fit,” Ottensmeyer said.

Simultaneously, the company will press Trump to avoid ripping up the North American Free Trade Agreement, a promise that resonated with the working-class voters in industrial states who helped propel the New York Republican's victory in the Nov. 8 presidential election.

Cutting back on trade with Mexico could concern railroad companies that move goods around the continent. Canada is also a party to NAFTA.

KCS’s multipronged approach underscores the uncertainty before Trump takes office on Jan. 20, as the businessman has never held public office before and, during the election, often made outsized statements on everything from trade to race relations.

The railroad’s stock sank about 11 percent in the two days after the election, but has risen nearly 6 percent since then.

Ottensmeyer said the company will reach out to a Trump administration directly, through trade groups and even through officials of other governments.

“We will use contacts that we have directly, we’ll go through the AAR (Association of American Railroads),” he said, citing also the National Association of Manufacturers and the U.S. Chamber of Commerce.

The chamber helps sponsor the U.S.-Mexico Leadership Initiative CEO Dialogue, and both private and public sector participants there could be helpful, he said.

“We have very strong relationships with a lot of those people, so hopefully the balance will shift a little bit and they will also be engaged in the debate,” he said. “Mexican business leaders, Mexican cabinet members engaged with their counterparts in the new administration, so maybe … we use our connections with those people to engage in a discussion.”