Union Pacific to Lay Off Nearly 500 Workers

Cuts are first of several rounds, part of railroad’s strategy overhaul

A Union Pacific employee climbs on board a locomotive in a rail yard in Council Bluffs, Iowa, Photo: Nati Harnik/Associated Press

 

Union Pacific Corp. UNP -2.41% plans to lay off about 500 employees before the end of the year, the first of several rounds of job cuts as the railroad implements a new operating plan to turn around its performance.

The company, one of two major freight railroads in the Western U.S., has been struggling this year with congestion and service issues that have depressed its profits.

The Omaha, Neb.-based company also plans to eliminate 200 contract positions according to an internal memo reviewed by The Wall Street Journal. The job cuts will occur across the railroad network. Union Pacific had a little more than 42,000 employees as of June 30, including 6,300 nonunion workers. The job cuts will affect both types of positions.

“These steps are part of reducing our general and administrative support structure by roughly 30% by 2020,” Chief Executive Lance Fritz wrote in the memo Tuesday. “We will also need to drive efficiencies in other parts of the railroad.”

The layoffs were announced as part of other restructuring ahead of the company’s earnings announcement on Thursday. Those include consolidating operating regions from three to two, creating a centralized engineering organization and selling Selma Farm, a corporate retreat near St. Louis that the company inherited as part of a 1986 merger.

Union Pacific this month started implementing elements of a railroad operating plan that uses fewer assets and runs trains on set schedules to ease congestion on its network and improve its operating performance. The playbook mimics one developed by the late Hunter Harrison, who applied the practices at two major Canadian railroads before he moved to the Jacksonville, Fla.-based railroad CSX Corp. last year.

 

By Paul Ziobro for wsj.com

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