Union Pacific Lays Off 750 Employees in Cost-Cutting Move

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Researched by Industrial Info Resources (Sugar Land, Texas)--Less than a month after reporting a 19% rise in profits from a year earlier, Union Pacific Corporation (NYSE:UNP) (Omaha, Nebraska) is laying off 750 employees, mostly at the railroad company's Omaha headquarters. Industrial Info is tracking $915 million in active Union Pacific projects.

Union Pacific includes 32,100 route miles, 42,900 employees and an annual payroll of $4.1 billion, according to its website. Capital spending in 2016 amounted to $3.5 billion.

The personnel cuts include about 500 management positions and administrative jobs and about 250 hourly positions, according to the Omaha World-Herald. Chief Executive Lance Fritz said in a prepared statement the railroad company "has leveraged employee attrition and technology to reduce general and administrative costs. Unfortunately, attrition alone will not keep pace with our need and ability to reduce these costs," according to the Omaha newspaper on Wednesday.

The reorganization will result in annual savings of about $110 million, the company said in a filing with the Securities and Exchange Commission (SEC). The layoffs will result in a pretax charge of about $90 million. The company expects to complete the reorganization by September 30, according to the SEC filing.

Union Pacific reported nearly $1.17 billion in net income for the quarter ended June 30, compared with $979 million in second-quarter 2016. Operating revenues totaled $5.25 billion, up 10%.

The rise in earnings was helped by a 25% increase in coal-shipment revenues. The upswing in coal for the first half of this year is in contrast with past years, where coal shipments have fallen. Union Pacific executives said in July that coal shipments may not be as positive during the second half of the year. For related information, see July 21, 2017, article - Coal Shipments Give Boost to CSX, Union Pacific Income.

U.S. coal rail traffic has risen for each of the past seven months. The Association of American Railroads (AAR) reported that U.S. coal shipments in July totaled 13,097 carloads, up 4% from July 2016. For related information, see July 11, 2017, article - Boost in U.S. Rail Shipments Reflects Bump in Coal Volumes.

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