At Bailey Yard, about 80 foremen jobs are going to be eliminated, replaced by half as many managers, part of the 3,000 job cuts that Union Pacific plans to make this year across its system.
Company officials announced their plan to cut jobs and increase the length of trains on Jan. 23 during a conference call to discuss the quarterly earnings.
Bailey Yard foremen are union jobs but managers are not, so 80 union jobs will be lost when the changeover in North Platte is complete. Interviews are underway now for the new manager jobs. Foremen are forced to apply if they want to keep working at the yard, according to employees who asked to remain anonymous for fear of job reprisals.
The company is pushing ahead with its operating plan for fewer, longer trains, with corresponding job cuts and fewer switch yards.
Union Pacific said it plans to reduce its average number of workers by around 8% in 2020. That comes on the heels of an 11% reduction in 2019, the Wall Street Journal reported.
The company currently employs 34,500 workers, down sharply from nearly 42,000 employees before the cuts began in 2018, the Journal reported.
The number of workers that have been cut is equivalent to 7,100 full-time jobs.
The train and engine workforce was cut 20%. Management, engineering and mechanical workers decreased 16%, UP officials said.
At the same time, UP’s earnings are down, with less net income in the fourth quarter compared to the same time a year earlier — $1.4 billion compared to $1.6 billion.
Also, operating revenue was down 9% in the fourth quarter. Business volumes decreased 11% compared to 2018.
Industrial volumes were flat compared to 2018, while agricultural products, premium and energy shipments declined, according to the fourth quarter financial report.
As the length of trains increases, the number of trains decreases.
The average UP train was around 8,200 feet long in the fourth quarter, or just over 1.5 miles. That is a 16% increase from the year before, according to the report.
As of Dec. 31, UP had around 3,100 locomotives in storage. Another 300 units were either sold or retired. Just over 3,000 locomotives are in operation, the report said.
Chief Operating Officer Jim Vena said the company still has reductions to make in the number of locomotives.
Across the UP system, car loadings hit a low point during the holidays of 120,000 cars per week, but have rebounded to 160,000 cars a week, the company reported Feb. 7.
UP recently stopped humping cars at Davidson Yard in Fort Worth, Texas. The company has also reduced switching at the Settegast Yard in the Houston area, shifting the work to nearby Englewood Yard.
Earlier in the year, the company stopped humping cars at the Neff Yard in Kansas City and curtailed operations at Armourdale Yard, moving the work to a single yard at 18th St. for the entire Kansas City complex, company officials said.
“We think that we can make the terminals even more efficient, so we turn the cars quicker (yet),” Vena said.
Vena, who was brought on to oversee the operational changes, said the company was on the 25 yard line when he arrived, and hasn’t quite reached mid-field yet.
He said the company is building longer siding tracks in strategic places to accommodate longer trains in each direction, reducing demand for crew starts.
“Train length is one that we have to deliver on,” he said.
Vena said there are plans to put the Chicago intermodal terminals together, reducing the number of those yards from six to three.
“There’s (also) gains on how we repair cars,” he said. “There’s money on gains on how we move our people around the network.”
“There’s a long list,” he said. “I could go through and spend an hour taking you through it, but I’m very excited with what we have on the table for this year.”
International trade on the rise
In the fourth quarter of 2019, fertilizer and sulfur carloads were down 13% from the year before, primarily due to weakness in export potash, the company reported.
But company officials are excited that trade agreements are being renewed with China.
Phase 1 of the new trade agreement “essentially takes China as a headwind and sets it up to be a potential tailwind, very high level,” CEO Lance Fritz said during the call. “They’re committing to over doubling their purchases of U.S. goods with a concentration in agriculture and some other areas that, if it comes true, or if even a large portion, or even half of it comes true, it’s a really nice tailwind for us going into the next 2-3 years.”
On a positive note in the last quarter of 2019, favorable crude oil price spreads drove an increase in crude oil shipments, which was the primary driver for the 19% increase in petroleum shipments for UP.
Officials said improvement in asset utilization and fewer car classification yards led to a 5% improvement in freight car velocity and a 13% improvement in freight car terminal dwell time, compared to the fourth quarter of 2018.
Train speed for the fourth quarter also increased slightly, up 1% to 26.2 miles per hour compared to 2018, the quarterly report said.