Who will fetch Lance's coffee?

Edited November 14, 2018

Union Pacific is hacking away at its management payroll . . . again. Just a few weeks ago it let go many of the 475 exempt employees (out of some 3,500) who were deemed unneeded and also terminated 200 contract workers. Now more of that targeted group is being hustled out of offices. It’s like torture by dripping water—it never seems to stop. One source calls it a “devastation of Union Pacific management.”

Don’t say Chief Executive Lance Fritz didn’t warn you. When it launched Precision Scheduled Railroading five weeks ago, he promised to do so in a measured manner that would not startle or punish shippers or arouse the sleeping bears at the Surface Transportation Board. So far that seems to be the case. Yet he vowed that this exercise would not be “PSR Lite.”

Not so lucky as the customers, therefore, are the chief worker bees. There is no way you can show one of seven people the door and not rip your carefully nurtured corporate culture apart. And it’s not being done in a friendly manner. Rather, you show up for work and are met by strangers who escort you immediately off the property, your personal possessions to follow in a box by and by. I can all but hear the wail.

One friend there says some of the railroad’s best people are being booted. As he puts it: "No one can figure out the pattern. It's quite possible that each department head gets to make the choices of how to cut budget or headcount. I am aware of very senior people losing their positions in the same department where the most junior were released. In other departments, it looks like functions were eliminated. In some ways, that's what makes the situation more unnerving for those awaiting the next wave."

Yes, another round of dismissals is to follow in 2019, people are telling each other in Omaha. The result is that everyone fears for his or her livelihood, and morale resides at the South Pole. Remember, only a year ago the HR folks, in their wisdom, downgraded hundreds of management jobs, insuring that even if you survive Round Two of Precision Scheduled Railroading, your next raise will come about the time the last SD70 is retired. Therefore, this is the opportunity of a lifetime for railroads headquartered in Fort Worth or Norfolk or Montreal or Calgary to cherry-pick Union Pacific’s talent, because nobody is going to turn down a good offer.

All this is good for the owners, who will get share buybacks for Christmas. Shippers will applaud if the result is, as UP implies, more dependable service. And Lance can fetch his own coffee. My point is that there is a cost incurred, payable later, when you kiss your institutional competence goodbye.—Fred Frailey