Union Pacific Railroad has shed jobs in recent months, including a few dozen in Arkansas, because while it still hauls roughly the same amount of freight, it is using 25 percent fewer locomotives and several thousand fewer freight cars to accomplish it, the company's top executive said Monday.
The increased efficiency is part of the railroad's Unified Plan 2020 in which it uses technology to adopt precision scheduled railroad principles used by other major railroads. The principles include focusing on moving freight cars rather than trains, minimizing down time, using more general-purpose trains carrying a mix of products and balancing train movements to improve crew and asset use.
The Unified Plan 2020 was announced on Sept. 17, 2018. More than a month later Union Pacific announced 60 job cuts in its locomotive and car-repair facilities in the Little Rock area.
Lance M. Fritz, president and chief executive officer for the Omaha, Neb.-based railroad, said he is pleased with the plan's implementation. The company's next earnings report is scheduled for release on July 18.
"It looks like it's going to generate the outcomes we thought, which is a better service product, more efficient and more consistent and reliable service for our customers," he said. "So I'm a huge fan. It's working."
Fritz made the comments after participating in a roundtable discussion with Gov. Asa Hutchinson at a luncheon to mark the 60th anniversary of the establishment of the Port of Little Rock. The discussion, which focused on trade, was moderated by Thomas F. "Mack" McLarty, former chief of staff under President Bill Clinton, chairman of McLarty Associates and a member of the Union Pacific Board.
About 300 people attended the event in the Robinson Center ballroom overlooking the Arkansas River.
Union Pacific is a key partner with the port. While the port handles several hundred barges annually, the majority of its revenue is generated by the 20,000 rail cars that enter and exit port property every year. The port also is served by BNSF Railroad.
The port projects revenue from handling rail cars will account for $2.4 million of the $3.5 million in revenue it projects for 2019.
Fritz called the port, with its 42 companies employing 4,000 people in its 2,600-acre industrial park, an "economic engine that we see because of the business we do -- anything from steel tubes and pipes, to gas and oil coming out of shale energy plays to Skippy Peanut Butter. We see it all. It covers the gamut."
Fritz said he was unable to give an exact number of job cuts, but said they have been "across the board."
"There's been some modest consolidation," McLarty added. "Most of its been by attrition, not all, but most of it."
The railroad employs about 42,000 people, including about 2,600 in Arkansas as of 2018. Union Pacific has 32,000 miles of track in 23 states, including about 1,300 miles in Arkansas. Its Downing B. Jenks locomotive heavy maintenance repair shop in North Little Rock is the largest in the Union Pacific system.
With the focus on efficiency, fewer workers are needed, Fritz said.
"We've got 2,000 fewer locomotives on our railroad right now," he said. "That's about -- call it 25 percent of the fleet. That's definitely impacted people that maintain the locomotives.
"We've dropped our inventory of freight cars ... because we're using them more efficiently so that requires fewer people to maintain freight cars. We're also running fewer trains on a more scheduled basis so that's now impacting our transportation employees."
The impact has been felt in management as well, Fritz said. "We've also done some work to take out some of the bureaucracy and kind of right size for how we're trying to run the railroad now."
Fritz met with President Donald Trump two weeks ago to discuss trade issues, including ratification of the United States-Mexico-Canada Agreement, which the president wants to replace the North American Free Trade Agreement.
"I got a sense the president is very firm on getting USMCA ratified," Fritz said. "He thinks its achievable. He has his team working hard on it. We'll just see if that can happen."
He said he hopes Congress ratifies the agreement by late summer or early fall.
"I'm an optimist," Fritz said. "We will get USMCA ratified. It is going to take a heavy lift. I know Trade Representative [Robert] Lighthizer is doing a great job in Congress, meeting with representatives, meeting with senators, understanding what their issues are and addressing them by amending the agreement."
Business on 07/09/2019