Tag Archive for Cost control

Union Pacific uses old tool of laying off and firing workers as the Renaissance falters

Multiple news sources are citing managements reaction as freight rail traffic and profits slowed in the second quarter.

Union Pacific President and CEO Lance Fritz issued a statement to non-agreement employees on August 12, 2015 announcing a “workforce reduction initiative”… The freight rail company “plans to reduce its management workforce in Omaha and other locations by several hundred people in the coming months through a combination of anticipated attrition and terminations.”

One news source says that “the news of the mass firings follows a flat 2015 second-quarter for UP”… …as the railroad reported net income of $1.2 billion, compared with 2014 net income of $1.3 billion. Also, rail operating revenue decrease of 10%, and operating income was down 11%.

A couple of hundred people could translate in to a range of $20 to $25 million in annual salary and overhead savings. It appears as written that there is also what the railroads call a “furlough” of more than 1,000 craft professionals… CEO Fritz said. …“for our company’s long-term success, we must take these painful actions to balance workforce levels with today’s business demands.”

Layoffs are a traditional way for North American private railways to control costs in the face of falling revenues. They do not receive government subsidies. They report to private investors (shareholders).