Some railroads and unions appear to be planning now for the day when business returns and skilled workers are called back from layoffs.
Arty Martin, an assistant president at the United Transportation Union, said it makes “good business sense” to reduce the number of trained workers laid off in a downturn, or find ways to keep furloughed workers tied to the carrier with ongoing benefits.
“History shows that laid-off employees frequently do not return to railroad employment, creating a significant cost to the carrier of hiring and training replacements when business levels return to pre-recession levels,” Martin said in a message to members of the UTU, which represents train conductors and other rail workers.
Railroads appear to be heeding the message. Reports to the Surface Transportation Board on the first quarter showed rail employment for all workers down 5.2 percent compared to last year. The biggest share of the decline is among train and engine crews, down 12 percent. But that is short of the fallback in rail profits in the first quarter, and well behind declining carload traffic, which is off nearly 20 percent this year.
It also suggests lessons from the past may figure in this year’s decisions. When business rebounded quickly from a slowdown in the early 2000s, the rapid upsurge caught railroads shorthanded, causing congestion, widespread customer complaints and the shift of some freight to highways.
Although the entire rail industry is cutting back, some executives say it is unwise to cut headcount or capital spending on future capacity as deeply as traffic has fallen.
“As we reduce expenses, we’re also very mindful that we not diminish our service levels or do anything that will hamper our ability to grow and respond appropriately,” Charles W. Moorman, chairman, president and CEO of Norfolk Southern Railway, told the company’s May 14 annual meeting.
And after reporting Kansas City Southern had cut headcount through the first quarter by 8 percent from a year earlier, Chairman and CEO Michael Haverty told analysts, “If you cut too deep, then you begin to run business off.”
Martin said regional UTU officers have worked with NS in the East and Union Pacific Railroad in the West to help workers who are being furloughed.
Changes in an NS contract will allow furloughed employees to keep accruing seniority even after a year, he said, instead of terminating them permanently after 365 days.
At UP, some younger workers who are likely to be laid off are kept on “continuous employment boards” that provide them at least eight days of work a month. That qualifies them for full health and pension benefits, and seniority.
Contact John D. Boyd at email@example.com.