(Reuters circulated the following on May 15.)
CHICAGO —U.S. railroad Burlington Northern Santa Fe Corp. has idled more than 400 employees across its network, because of weakness in parts of the U.S. economy.
Citing “general business levels” in certain areas that it did not identify, The Fort Worth, Texas-based company made the announcement late on Monday .
According to an agreement with its unions, BNSF said the employees will receive some regular income, plus full health and welfare benefits.
Railroads are still hiring in many areas to compensate for attrition and handle more coal and intermodal transport — which uses standardized containers that can be hauled by truck, ship or train. But some areas — including lumber, other construction-related businesses and domestic automakers — have weakened.
“The operating efficiency story is really losing steam here, and with the slowing economy it’s going to be tougher and tougher to have those upside revenue surprises because of housing and automotive,” said Shawn Campbell, a principal with Campbell Asset Management, which earlier this year sold its holdings in Union Pacific Corp. and Norfolk Southern Corp. due to concerns about the U.S. economy.
“Am I concerned that the wheels are coming off? No,” he added. “But, I’m not surprised that housing and automotive are slower and that at the margin in those areas the rails may be decreasing capacity as a result.”
BNSF spokesman Pat Hiatte said in a statement: “We continue to carefully monitor business demand, and we will recall furloughed employees as soon as business levels allow.”
BNSF also said a further 30 employees have been furloughed, or laid off, and they will receive benefits for just 30 days.
Earlier this year, No. 1 railroad Union Pacific said it had laid off more than 100 workers and placed more than 450 more on part-time contracts citing softness in some sectors of the U.S. economy.
CSX Corp., another major U.S. railroad, also previously told Reuters it had laid off around 300 rail workers, due in part to seasonal business but also to softness in some parts of the U.S. economy.
Shares of Burlington Northern were up $1.84, or 2.1 percent, at $91.01 in afternoon trading on the New York Stock Exchange. The shares have traded in a 52-week range of $95.45 and $63.92.
The Dow Jones transportation average index was up 1 percent.