Union Pacific (UNP) Aims Greater Efficiency With 750 Layoffs
In a bid to increase efficiency for utilization of its resources in a better manner, Union Pacific Corporation UNP announced in a filing with the U.S. Securities and Exchange Commission (SEC) that it intends to trim its workforce by up to 750 employees.
The process is expected to be completed by Sep 30, 2017 and is anticipated to generate productivity savings (annual) to the tune of approximately $110 million. Also, the company is projected to incur pre-tax severance costs worth approximately $90 million, with almost the entire amount forecasted to be recognized in the current quarter.
According to a report appearing in the Associated Press, of the 750 job cuts, two-thirds are managers and the remaining are other workers of this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In fact, this Omaha, NE-based railroad operator aims to do away with approximately 8% of its managers through this move. Majority of the employees to be shown the door are reportedly located at the railroad operator’s headquarters. However, the company’s vast network (spanning across 23 states in the United States) is expected to be impacted by this cost-cutting move.
Union Pacific Corporation Price
Union Pacific Corporation Price | Union Pacific Corporation Quote
Notably, dwindling coal shipments in the last few years have been hurting stocks in the railroad space, and Union Pacific is no exception. Therefore, in a bid to counter revenue woes, the company is planning to cut costs so as to drive its bottom line. Basically, the above job cut exercise is in line with the objective.
We remind the investors that Union Pacific is not the only railroad operator to announce a job cut this year. In fact, its fellow railroad operator, CSX Corporation CSX has already laid off around 2,300 employees so far this year. The workforce at this Jacksonville, FL-based company is expected to be trimmed further (to the tune of 700 positions) by year-end. This exercise is part of CSX’s efforts to improve efficiency under its chief executive officer (CEO) Hunter Harrison. Harrison joined CSX from Canadian Pacific Railway Limited CP in March this year.
Norfolk Southern Corporation NSC is also looking to drive its bottom line by cutting costs. To attain its objective, this Norfolk, VA-based company aims to generate annual productivity savings to the tune of $650 million by 2020 ($250 million reached in 2016 with an additional savings in excess $100 million projected this year).
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