Union Pacific Railroad Laying Off Hundreds Of Managers, Workers

OMAHA, NE — Union Pacific is laying off 500 managers and 250 other workers to save about $110 million a year and eliminate about 8 percent of the railroad's managers.

Affected workers were notified Wednesday that their jobs will be eliminated by the middle of next month. Eliminating open positions through attrition and increasing productivity isn't enough to cut costs, Union Pacific CEO Lance Fritz said.

"Union Pacific for some time has leveraged employee attrition and technology to reduce general and administrative costs," Fritz said. "Unfortunately, attrition alone will not keep pace with our need and ability to reduce these costs."

The railroad will record $90 million in pretax severance costs — mostly in the third quarter — because of the layoffs. (For more information on this and other neighborhood stories, subscribe to Patch to receive daily newsletters and breaking news alerts. If you have an iPhone, click here to get the free Patch iPhone app.)

Edward Jones analyst Dan Sherman said the layoffs suggest Union Pacific's cost-cutting efforts weren't keeping up with the railroad's goals.

"They just decided they will push cost-cutting more strongly than they were before," Sherman said.

Modest growth in freight shipments overall along with a sharp decline in coal shipments in recent yearspushed railroads to reduce costs. CSX and Norfolk Southern also announced aggressive cost-cutting efforts over the past year.

CSX announced 2,300 layoffs this year as part of a major restructuring under new CEO Hunter Harrison, who took over in March.

Norfolk Southern is working to reduce its expenses by $650 million and improve efficiency by 2020. The railroad expects to cut more than $100 million in costs this year after trimming $250 million last year.

Most of Union Pacific's layoffs will be at the railroad's headquarters in Omaha, Nebraska, but they will affect Union Pacific's 23-state network. In the second quarter, Union Pacific had about 42,000 employees.

By JOSH FUNK, AP Business Writer

Photo credit:Nati Harnik/Associated Press