The Railroad Workers United union has announced that it is challenging Union Pacific’s decision to streamline operations by laying off workers, including a number who are employed by the company in Pine Bluff.
Precision Scheduled Railroading, as UP's operation to downsize has been dubbed, is driven by hedge fund investors and stockholders in quest of short-term profits, RWU said in a news release.
“PSR has alienated rail workers from all crafts and rail systems, passengers and shippers. When rolled out at CSX in 2017, the railroad came close to total meltdown, while the Surface Transportation Board investigated a plethora of shipper complaints.”
Fritz Elder, a representative from Railroad Workers United, said: “If you step back from the specific railroad application of it, it is just another example of what they call financial strip mining. That has been going on for some period of time in a lot of businesses, where healthy corporations get hedge funds and various kinds of maverick activist investors who strip away the resources of those corporations, and basically leave a shell after they have taken their profits.
“They buy back stocks and do things that allow them to be able to take profit in the short term. They take profitable companies and basically ruin them. That is essentially one of the processes that is going on under the Precision Railroading scheme now.”
Layoffs are affecting numerous Union Pacific workers in Pine Bluff as company officials say they are working to streamline operations through regional consolidations and cost-cutting measures in order to boost revenue.
Layoffs began in early February, according to a statement made by Union Pacific Senior Director for Corporate Communications and Media Relations Kristen South. However, Union Pacific would not give specific numbers for jobs lost in the Pine Bluff shop, which is expected to close.
“Union Pacific notified its mechanical employees that approximately 450 (nationwide) positions are being eliminated in early February,” South said.
“We are not providing location-specific information; however, I can confirm Pine Bluff was impacted and the shop there is closing. The workforce reduction is a result of a reduced locomotive fleet.”
The plan, Unified Plan 2020, was the brainchild of the late Hunter Harrison, who led the third-largest railroad carrier, CSX, until his death last year.
Under Harrison’s efficiency model, the volume of shipments fell slightly, the workforce was cut, and the railroad network was constrained to hubs where cars were reshuffled back into the network of rails.
The ratio of cost to revenue reached unheard of lows. In a profile on Harrison after his death, Fortune Magazine wrote that Harrison had created “a new paradigm for railroading in a new market.”
In an email dated October 16, 2018, UP officials said 475 positions would be eliminated by the end of 2019, as would 200 additional contract positions. The company is also reshuffling the organization nationally, consolidating its three regions into two and closing five service units.
“Workforce reductions are extremely difficult decisions to make because we recognize the impact they have on families, friends and co-workers,” the company wrote in a note to employees. “We are taking steps today to ensure Union Pacific remains a strong, competitive and vibrant company. These steps are part of reducing our general and administrative support structure by roughly 30 percent by 2020. We also will need to drive efficiencies in all other parts of the railroad.”
In addition, serious injuries and a number of fatalities can be traced to practices and procedures of PSR, according to the railroad union. The emphasis of running ever longer and heavier trains with fewer locomotives and fewer employees has resulted in a number of runaway trains, injuries and fatalities in recent months, according to the union's news release.
Elder also noted that it may require government intervention to ensure Union Pacific follows all laws and regulations regarding their layoffs and plans for the railroad.
“The government intervention generally has to do with protecting communities and shippers,” Elder said.
“We are railroad workers, but we also believe in real actual operating railroads. What happened with CSX is it became an extension of the hedge fund. The hedge fund appointed it’s directors and worked very closely with Hunter Harrison to make sure that only those policies and top officials who were in favor of the hedge fund were in positions to do things. They changed it from a railroad with railroad functions into something different. As far as government intervention is concerned, government regulators, it is their job to make sure this type of thing doesn’t happen. So, they should do their jobs.”
According to the United Railroad Worker’s news release, the slogan of PSR is to “do more with less.”
“As a result, rail infrastructure is being ripped out, the physical plant is being downsized, and the very future of the rail industry is being jeopardized at a time when we need more railroad track, not less, more trains, not fewer, and the ability to move more freight and passengers,” the news release noted.
According to RWU General Secretary, Ron Kaminkow, “With the environmental crisis at hand, we should be expanding rail transportation on all fronts, freight and passenger, short and long haul.”
Kaminkow said that rail transport is the safest, most efficient, and environmentally sensitive form of transportation.
Also, according to the news release, Matt Rose, the CEO of the BNSF Railway is critical of PSR. In a recent piece in Railway Age Magazine, Rose asserted that “less is not better.” He believes that “It’s in the public’s interest to move more tons to the railroad network, not off of it.”