COVID-19 Impacts Prompt “RULA-making” at Union Pacific

Written by William C. Vantuono, Editor-in-Chief of
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Stored UP locomotives at Klamath Falls, Ore. Herald & News/Gerry O’Brien

Every Union Pacific non-agreement employee has been hit with a RULA—“Required Unpaid Leave of Absence”—consisting of one week of unpaid leave during May, June, July and August; executives and board members will take a 25% pay reduction over that same time period, UP Chairman, President and CEO Lance Fritz said on April 21.

“With the unprecedented drop in volume due to COVID-19, Union Pacific has taken several actions to protect the company from the economic impacts of the virus,” Fritz said in a statement. “UP has enacted several cost-saving measures, but they are not sufficient to offset the significant decline in volume. Accordingly, the railroad also is implementing changes that will impact our workforce. I recognize this is a significant adjustment. I considered many possible scenarios, including furloughs or permanent workforce reductions, but ultimately decided that RULA would address our short-term needs.”

Lance Fritz at UP’s fourth-quarter 2019 earnings call. Adam Jeffery/CNBC

“Many of our customers have reduced or halted production, and overall freight transportation has declined dramatically,” wrote Fritz in an email to UP employees obtained by KETV-7, the local ABC affiliate in Omaha, Neb., where the railroad’s corporate headquarters is located. He noted UP has canceled its 2020 summer internship program, reduced or eliminated non-agreement hiring, and eliminated nonessential spending through the end of 2020.

The Association of American Railroads (AAR) reported U.S. rail traffic for the week ended April 11, 2020, and it’s clear that the coronavirus continues to wreak havoc: Total carloads for this week were 198,726 carloads, down 23.8% compared with the same week in 2019; U.S. weekly intermodal volume was 213,777 containers and trailers, down 20% compared to 2019; total U.S. weekly rail traffic was 412,503 carloads and intermodal units, down 21.9% compared with the same week last year.

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