Southern Pacific Set to Cut 10,000 More Jobs

Southern Pacific Transportation Co., which has cut 3,000 employees from its work force in the past year, announced plans to eliminate another 10,000 of its remaining jobs over the next few years.

The dramatic cuts, which will affect about one-third of the railroad’s workers, will occur through attrition and buy-out plans to be negotiated with Southern Pacific’s 15 unions, a company spokesman said.

Company officials said the cutbacks would be necessary whether or not the Southern Pacific railroad merges with the Santa Fe railroad. The two railroads’ parent companies have already merged to form Chicago-based Santa Fe Southern Pacific Corp., but the railroads have been operated separately pending regulatory approval.

“We could run an efficient railroad with 20,000 people,” the spokesman said. “If we don’t get our payroll down, we’re going to lose traffic because of our high cost structure and we’ll lose work force because the trains aren’t running.”

Competition from such lower-cost, merged railroads as the Burlington Northern and the Union Pacific, as well as from truckers, has hurt Southern Pacific in recent years.

“Our carloadings have declined at least 33% over the last 10 years, with a scaling down of Pacific Northwest lumber, the closure of (automobile) plants at Fremont and South Gate, the loss of Kaiser Steel at Fontana and the shrinkage in the Arizona copper industry,” said Mike Mohan, the company’s executive vice president, in a letter to employees.

“Many of the labor agreements that are keeping our costs high and making us uncompetitive are the result of collective bargaining agreements,” Mohan said. “They were right for the time, but conditions have changed radically.”

Workers were informed of the reductions Monday by means of Mohan’s letter and a videotaped presentation.

A union official who asked not to be identified by name said the reduction plan was an attempt to “divide and conquer” the unions. He said his union wanted the company to honor its contracts.

The company spokesman discounted suggestions that the announcement of huge job cuts was a ploy to win major wage concessions in forthcoming union negotiations.

“We are facing a very tough situation,” he said.

Earlier this year, Southern Pacific said it planned to shut down its historic Market Street headquarters here if, as expected, the merger with the Santa Fe goes through.