(The following story by Kathy Adams appeared on The Virginian-Pilot website on January 29, 2009.)
NORFOLK, Va. — Norfolk Southern Corp. will lay off 100 additional train and engine service employees over the next month, bringing the number of job cuts at the railroad to more than 500 since October, said Stephen Tobias, its vice chairman and chief operating officer, during a Wednesday conference call with financial analysts.
The job cuts have come across the Norfolk-based railroad’s 22-state network, but no one has been laid off locally so far, spokeswoman Susan Terpay said in an e-mail.
The company, which employs about 30,200 workers systemwide, operates a large rail yard in Chesapeake and the Lambert’s Point Docks and Coal Terminal in Norfolk, in addition to its home offices downtown.
“We furlough train and engine service employees where the volumes and business activity won’t justify the head count in a given location,” said Donald Seale, Norfolk Southern’s executive vice president and chief marketing officer. “We only furlough employees as the last resort.”
Prompted by the recession and a steady drop in freight volumes, the company has cut 758 jobs since April through furloughs and reduced hiring, Tobias said.
The railroad also stopped running 60 trains and put 127 locomotives out of operation, cutting 43,800 train starts, and scaled back operations in Columbus, Ohio; Sheffield, Ala.; and Reading, P a., he said.
The savings helped Norfolk Southern achieve 2008 income of $1.7 billion – a 17 percent increase from 2007 – on revenue of $10.7 billion, it announced Tuesday. Growth in shipments of fuel, containers and coal helped. It also benefited from increased shipping rates and fuel surcharges, which lag about 60 days behind diesel price fluctuations, Seale said.
But falling oil prices will prevent railroads from posting gains related to fuel surcharge s this year, analysts have warned. Instead they’ll have to rely on cargo volumes and their ability to raise prices, which may be more difficult as demand wanes.
The financial downturn hurt railroads nationwide as industrial production and consumer spending slowed. CSX Corp. and Burlington Northern Santa Fe Railway Co. also have taken steps to reduce expenses.
Norfolk Southern also trimmed its 2009 budget for capital expenditures, such as new construction, technology and equipment. It plans to spend $1.4 billion this year,
9.5 percent less than in 2008, said Deborah Butler, executive vice president of planning and chief information officer.
More cuts may be necessary if freight volumes don’t meet the railroad’s expectations, the executives said. However, the company also is continuing to prepare for future growth.
It announced Tuesday that it will open a new intermodal terminal in Titusville, Fla., on Feb. 16 and start a new route that cuts transit time by a day between Florida and Chicago.
“We are all concerned about the volatility in the marketplace, like everyone,” Tobias said. “But… by reacting responsibly, we’re able to act and will act to circumstances as they evolve.”