SMART-TD chairmen call move a ‘giant step backwards’
OMAHA, Neb. — Incoming Union Pacific CEO Jim Vena will not get a honeymoon with rail labor when he begins leading the railroad on Aug. 14.
Local SMART-TD leaders and the Transportation Trades Department of the AFL-CIO were critical of the company’s selection of Vena, who served as UP’s chief operating officer in 2019 and 2020.
Vena accelerated UP’s shift to a low-cost Precision Scheduled Railroading operating model. During Vena’s tenure, overall employment at UP fell 21%, according to Surface Transportation Board data, including a 43% reduction in the number of shop workers, a 19% drop in maintenance of way employment, and a 14% decline in train and engine crews.
Five SMART-TD general chairmen, in a July 26 letter to UP’s vice president of labor relations, said Vena’s return was a “giant step backwards.”
“As COO, Vena enacted policies, practices, and procedures that deliberately destroyed our members’ quality of life for the sake of profit and make him personally responsible for the hardships our membership and other employees have endured in the last few years,” General Chairmen Roy Davis, Luke Edington, Gary Crest, Scott Chelette, and Joe Cornelius Jr. wrote. “He orchestrated huge furloughs and cuts to every department in transportation, which resulted in the crew shortages we have yet to recover from. Vena put this railroad on a long-term path of destruction for a short-term return on investment for Wall Street tycoons. Watching Union Pacific place this albatross as CEO for the foreseeable future is heartbreaking for those of us who have worked hard to bring Union Pacific back from the brink.”
Union Pacific, like BNSF Railway, CSX Transportation, and Norfolk Southern, experienced widespread crew shortages in 2022 that led to service problems that prompted complaints from shippers and scrutiny from regulators.
UP credits Vena with leading an operations team that reaped more than $1 billion in efficiency savings and delivered the best service in the railroad’s history.
But the Transportation Trades Department of the AFL-CIO echoed the concerns that the SMART-TD general chairmen raised.
“We are deeply disappointed in Union Pacific’s decision to appoint former Chief Operating Officer Jim Vena as CEO given his history with Precision Scheduled Railroading and the pain he inflicted on the rail workforce,” TTD President Greg Regan said in a statement. “Buckling to Wall Street pressure, Union Pacific’s decision to hire Mr. Vena demonstrates that it is doubling down on a failed business model and gambling with the company’s future. The freight rail industry’s success depends on fresh leadership that can guide carriers away from the PSR past and towards a future that prioritizes safety, service, and staffing.”
Union Pacific defended its transition to a PSR operating model and said it wants to reach additional labor agreements that would improve quality of life for its workers.
“Class I railroads are in a different era with new stakeholder expectations. Transportation and markets demand new approaches and strategies to meet customer requirements. Union Pacific is proud of the sick leave agreements that we reached with 12 of 13 unions and remains committed to continuing work to address quality-of-life issues,” spokeswoman Robynn Tysver says.
“Incoming Union Pacific Chief Executive Officer Jim Vena, who started his railroading career as a brakeman, understands firsthand the challenges of our craft professionals and will be meeting with Union Pacific employees and other key stakeholders soon after assuming his new position Aug. 14,” she adds.
Vena, in a statement issued last week as part of UP’s announcement, said his focus will be “to ensure the company delivers industry-leading customer and operating excellence, cultivates and empowers our employees, and cares for the communities in which we operate.”
The SMART-TD general chairmen who wrote to UP said they would not participate in meetings with management next month and is taking a wait and see attitude on meetings scheduled for September and November.
The general chairmen also said they were skeptical about ongoing negotiations, including talks on Auxiliary Work and Training Status crew boards, which are an alternative to furloughs. Under AWTS, employees who would otherwise be furloughed go onto a separate auxiliary board where they’re guaranteed full benefits plus a minimum of eight days pay per month.
When traffic picks back up, employees are called back to full-time status. The program, negotiated on a territory-by-territory basis, once covered nearly 80% of UP’s train crews and improved retention during downturns. But UP cut the auxiliary boards as a cost-saving move during its shift to PSR.
“Union Pacific currently has AWTS boards in place for approximately 50% of our workforce,” Tysver says. “We are in discussions with labor and evaluating where it makes sense to deploy this or other mechanisms to help maintain our workforce.”
The Brotherhood of Locomotive Engineers and Trainmen took a more diplomatic stance than TTD and the SMART-TD general chairmen.
“I worked as a locomotive engineer at Union Pacific in the years when Jim Vena was serving as chief operating officer. Today, as the president of the Brotherhood of Locomotive Engineers and Trainmen, I look forward to working with him in his new role as CEO,” BLET President Edward Hall said in a statement.
“In 2023, UP reached agreements with BLET to improve both scheduling and sick leave. We would like to see continued progress, including necessary changes to the Precision Scheduled Railroading operating model. Few people alive know more about PSR than Vena. He should be fully aware of its failings. If not, rest assured, we will make him aware.”
UP announced Vena’s selection on July 26, five months after one of UP’s largest investors publicly demanded that the board oust CEO Lance Fritz and hire Vena as his replacement. Soroban Capital Partners was critical of UP’s performance under Fritz and noted that the railroad’s operations and service quickly improved during Vena’s two-year tenure as chief operating officer, only to falter after his departure.
Vena spent four decades at Canadian National, rising from a brakeman to chief operating officer. CN posted a record low operating ratio and its best safety performance while Vena was chief operating officer from 2013-2016.