Union Pacific Acts on Delays

From Bloomberg News

Union Pacific Corp., owner of the largest U.S. railroad, intends to hire 5,000 train-crew workers, 800 more than its previous plan, to help end delays that forced the company to turn away shipments and reduced profit.

“We are leaving business on the table that we could have moved if our service was better,” said Chief Executive Richard Davidson, who announced the increased hiring at a transportation conference in New York. “We have been experiencing significant business demand that has taxed the capacity of our resources.”

The crew shortage led to delays after business unexpectedly surged in late 2003 as the U.S. economy gained strength. The Omaha-based company last week said second-quarter profit would fall to as little as 60 cents a share from $1.10 a year earlier because of the delays and higher fuel costs.


The cargo congestion snags also have been apparent in Southern California. About one-quarter of Union Pacific’s freight either originates in Southern California or ends up here. And in the summer and fall, the enormous ports in Los Angeles and Long Beach see their volumes surge 30% or more as Asian goods arrive for back-to-school and holiday seasons.

About 2,000 of the new train-crew workers already have been hired, Davidson said at the Merrill Lynch conference. The workers being added will enable about 400 conductors to be promoted to engineer positions, helping to accommodate expected increases in demand this year, he said.

The railroad, whose trains are running about 10% slower than at this time last year, also is adding about 700 locomotives and relocating workers to areas such as the Pacific Northwest where there are shortages.

“It is way too soon to declare victory, but we believe our recovery plan is working,” Davidson said. “The network has stabilized.” He didn’t say when he expected the delays would end.

Union Pacific this year will increase its total workforce by as many as 1,500 people, or about 3%, after retirements and resignations, Davidson said.

Union Pacific shares fell 16 cents to $57.92 on the New York Stock Exchange.