(The following story by Gregory Richards appeared on The Times-Union website on February 6.)
JACKSONVILLE, Fla. — CSX Corp. reduced its workforce by about 120 jobs Thursday — roughly 100 from its Jacksonville headquarters — as the railroad continued with a management restructuring plan announced last fall. Its aim is to cut a bloated cost structure and create leaner, more flexible company.
The employees whose jobs were eliminated held the positions of assisant vice president and director, said CSX spokesman Gary Sease. Their terminations were effective immediately and were not voluntary.
They were notified during a day-long process of individual meetings with their supervisors. The remaining employees will meet today in several “town hall” style meetings with senior executives that will update them on the progress of the realignment.
Overall, CSX plans to reduce its workforce by 800 to 1,000 non-union employees by roughly the end of March. The restructuring was announced in November, and the first wave of cuts came in December when 20 senior vice presidents and vice presidents were told to go.
That it happened before didn’t make the news any easier for CSX employees Thursday. Some talked of great tension in the air, and one said it made it difficult to focus on doing work.
“Everybody is just wondering what’s going to happen next,” said a CSX employee who asked that his name not be revealed for fear of being fired. “Nobody around here is making any major [personal] purchases right now.”
But several employees said that while it may be painful initially, the cuts are what is needed to improve the long-term health of the railroad. Analysts agreed.
“CSX is doing what everybody else has done, they’re just slower at it,” said Lawrence Kaufman, a Denver-based former railroad executive who is a columnist for Rail Business newsletter and Trains magazine. “I applaud them for doing it.”
For the past several quarters, CSX faced reduced earnings and poor service along its 23,000 mile rail network in the Eastern United States. The company’s overall revenue declined from $8.152 billion in 2002 to $7.793 billion last year.
One of CSX’s key financial indicators, its operating ratio, or ratio of costs-to-revenue, was 87.4 percent last quarter. That’s down from 88 percent the previous quarter, but is still the highest of any large U.S. railroad, said Anthony Hatch, an independent railroad analyst based in New York.
The job cuts are expected to save CSX about $80 to $100 million annually as it shrinks its management layers from 11 to eight. The process is expected to be over by the end of March, CSX Chairman and CEO Michael Ward told investors in a conference call last week.
Beginning at the top of the 24-year-old company’s management, the transformation requires each management layer to redesign the layer below it. The goal is to create a more efficient railroad that is better suited to face competition in a deregulated railroad environment. That will produce savings that last longer and are greater than the headcount reduction, Ward said when unveiling the restructuring in November.
The peer review process both eliminates and creates some positions. Some employees who were called into their boss’s office Thursday were met with the good news of expanded responsibilities, Sease said.