“Mass layoffs have been a disturbing and central component of PSR operations… Railroads may want us to believe these workers are extraneous, but it has become clear that reductions are simply about cutting costs, even if those cuts result in the degradation of safety,” said the October 29 policy statement of the Transportation Trades Department (TTD) of the AFL-CIO, which is a coalition of 33 member unions. “Workers who remain have been forced to do more with less, and are faced with discipline or dismissal if they refuse to comply. The consequences of these choices are no longer hypothetical.”
Furloughing employees is a long-standing practice of the freight railroads and serves as a means of adjusting staffing levels to meet demand. Furloughs, which typically involve unionized workers, can occur seasonally, such as maintenance-of-way employees working in larger numbers in the non-winter months. For instance, furloughs typically increase right before Christmas every year because the railroads pare down their operations after the fall peak shipping period. Employees expect to be furloughed at certain points throughout the year and adjust their budgets accordingly.
Furloughs can also occur if a freight railroad experiences lower rail volumes, as the Class I railroads have in 2019.
From a railroad’s perspective, furloughing employees enables the railroad to bring back employees should volume return, instead of having to find employees and having them undergo a training program that can last at least six months if not more. In contrast, layoffs typically occur to non-agreement staff, such as those working at headquarters or in management.
But furloughs and layoffs have increased as almost all of the Class I railroads have adopted PSR. PSR seeks to streamline a railroad’s operations by running longer trains on a fixed schedule. Another goal of PSR is to cut a railroad’s costs.
“The combination of weaker traffic levels and a focus on precision scheduled railroading principles that strive to maximize the efficiency of the operation have each played a role in the aggressiveness of carriers to use furloughs in the present cycle,” said Todd Tranausky, vice president of rail and intermodal services for FTR Transportation Intelligence, a consulting firm.
Tranausky pointed to October data from the U.S. Bureau of Labor Statistics showing that rail transportation jobs have declined nearly 8% compared with October 2018. The transportation sector was also the fastest contracting sector, beating out even motor vehicle parts and manufacturing, which was impacted by a strike during the month, Tranausky said.
FreightWaves has reported previously how headcount levels at the U.S. Class I railroads have fallen to their lowest levels in 2019.
The unions and the railroads acknowledge that recent furloughs are partly the result of operational changes brought about by PSR. Norfolk Southern (NYSE: NSC) last week confirmed it furloughed 95 employees in Altoona, Pennsylvania, and 58 employees in Chattanooga, Tennessee, while Union Pacific (NYSE: UNP) recently closed its Neff Yard in Kansas City, Missouri, and moved the Neff Yard’s operations to other facilities nearby.
Norfolk Southern (NS) said the furloughs are related to the company’s organizational realignment that was announced earlier this year.
“Consistent with our strategic plan and current business levels, our ability to streamline operations and use fewer locomotives has required the difficult but necessary decision to reduce our locomotive mechanical forces due to the decreased demand for locomotive maintenance and repair. Norfolk Southern will continue to evaluate staffing needs as our business evolves,” NS said. The company added that furloughed employees might have the opportunity to apply for other positions.
“In today’s rapidly changing environment, Norfolk Southern continues to focus on ensuring that we have the optimal number of people and assets at every location across our system in order to operate safely and efficiently. As we execute our new strategic plan, we expect that targeted hiring and furloughing will remain components of our operating model,” NS said.
Meanwhile, Union Pacific (UP) said it closed the Neff Yard as a result of its efforts to streamline operations.
“Union Pacific values safety above all else, and our employees understand we will not sacrifice the well-being of our team for productivity. Work conducted at Neff Yard was transferred to nearby facilities that handle rail cars with the same necessary safety protocols and inspections,” UP said.
Unions voice concerns about PSR’s impact on employees
But rail unions are questioning whether the furloughs are justified, especially in light of the higher profits and the lower operating ratios that have occurred as a result of PSR.
These concerns also come as the railroads and the unions are about to undergo negotiations to modify collective bargaining agreements.
“Despite taxpayer dollars and tax cuts helping Union Pacific gain more per share for Wall Street, their way to say ‘thanks’ seems to be, pack up and go,” said Ty Dragoo, legislative director for Kansas for the Sheet Metal, Air, Rail and Transportation union – Transportation Division, also known as SMART-TD. Dragoo was referring to UP’s closure of the Neff Yard and the closure’s ensuing job losses. “This is leaving behind an economic catastrophe for impacted communities to clean up for themselves. To add insult to injury, the company didn’t even have the decency to warn employees until a few days out.”
Dragoo continued, “These job losses will ripple through the heart of the local economy. Without income and security, workers and families won’t be able to spend on clothes, restaurants, recreation and much more. Union Pacific isn’t only undermining workers and families, but entire regional economies.”
Meanwhile, the TTD said the workers that have remained after jobs have been cut are being stretched too thin.
“As carriers that have prescribed to PSR run fewer trains, understaffed shop craft facilities are reporting increasingly idle locomotives and equipment, but lack the workforce to keep the equipment in a state of good repair. In some cases, carriers are closing facilities entirely, increasing the workload for employees elsewhere who are already overwhelmed,” TTD’s October policy statement said.
“Carriers are also compensating for reduced staffing by requiring remaining employees to perform work outside their craft in addition to fulfilling their regular duties. At best, this may involve employees performing tasks with which they are not experienced. At worst, employees may be forced to do work for which they are not qualified,” the statement continued. “Furthermore, rather than maintaining appropriate staffing levels, carriers are mandating overtime for workers who are already stretched thin. In an industry where fatigue is a constant risk factor, exposing employees to additional fatigue by asking them to work longer and faster while performing multiple jobs is a recipe for disaster.”
With shippers also airing their concerns about some of the effects of PSR before the Surface Transportation Board earlier this year, the TTD policy statement questioned whether the U.S. government should be more involved in providing a check and balance to the railroads’ PSR efforts.
PSR “works for the few – wealthy investors who have little concern for anything other than their bottom lines. These investors are fickle, and when they have extracted every last cent out of the railroad industry, they will move on to the next sector. Meanwhile, we will be left with a hollowed-out system that does not serve its customers, has abandoned safety, and has pushed out thousands of skilled workers who may never return,” the statement said. “This trajectory can be changed, but doing so will require active engagement from Congress and federal safety and economic regulators, as well as a serious rethinking of operational strategy from freight rail carriers. TTD calls on them to reverse the damage caused by PSR before it becomes too late.”