Headcount among the U.S. Class I railroads rose nominally between January and February but declined nearly 11% year-over-year, according to data submitted to the Surface Transportation Board (STB).
The year-over-year drop in February comes as labor unions are watching how a proposed merger between Canadian Pacific (NYSE: CP) and Kansas City Southern (NYSE: KSU) would affect the employees working for both companies (see below).
The U.S. operations of the Class I railroads employed 114,968 employees in February, a 0.53% increase from January but a 10.6% drop from February 2020.
Meanwhile, the train and engine (T&E) category, which can be sensitive to market demand and the need for network capacity, rose 0.6% between January and February to 45,794 employees. But the year-over-year T&E headcount was down by nearly 11%.
The year-over-year declines could be attributed to precision scheduled railroading (PSR), which all of the Class I railroads except privately held BNSF (NYSE: BRK) have adopted. PSR is an operating model that seeks to streamline operations, cutting costs in the process.
Rail union BMWED to monitor merger proceeding
CP announced plans on March 21 to acquire Kansas City Southern (KCS) for $29 billion. The deal is subject to STB approval, and it may not happen until mid-2022 at the earliest.
Rail shippers have said they would be watching how STB oversees the proceeding because of concerns that a merger could reduce rail shipping options.
But local media focused on how a merger would affect jobs.
CP said in a presentation describing the proposed merger that the purpose of the acquisition isn’t to reduce jobs.
The merger is “not about cuts, line rationalizations or cutting [headcounts]. It’s about growing this business, growing our network,” CP President and CEO Keith Creel said on March 21.
The merged company would be named Canadian Pacific Kansas City, or CPKC. Calgary, Alberta, would serve as the global headquarters of CPKC, and Kansas City, Missouri, would be the U.S. headquarters. The Mexico headquarters would remain in Mexico City and Monterrey, CP said. CP’s current U.S. headquarters in Minneapolis-St. Paul would remain an important base of operations.
The Brotherhood of Maintenance of Way Employes Division (BMWED), which is affiliated with the International Brotherhood of Teamsters (IBT), said it will monitor company filings to STB. If the transaction is approved, the union is ready to negotiate implementing agreements with the involved carriers, the group said.
“While this merger creates some fear and uncertainty, it also presents an opportunity. This transaction has the potential to bring additional train traffic onto American freight railroad tracks, and those tracks should be constructed, inspected and maintained by BMWED-represented railroad workers,” said BMWED-IBT President Freddie Simpson in a Thursday statement. “It also presents an opportunity to bring all of CP’s and KC’s subsidiary properties under a single collective bargaining agreement, with uniform work rule, benefits and rates of pay.”
“I hope that CP and KCS will be transparent with the BMWED throughout this process, and that we can find a way to grow its maintenance of way work force for their expanding operations,” Simpson said.