Eastern Railroad Discussion > The ax falls at CSX

CSX announced this morning that Michael Ward and Clearance Gooden (CSX President) are retiring May 31, 2017. 

Fredrik J. Eliasson, a 22-year veteran of the Company and its current Chief Sales and Marketing Officer, has been appointed as President of CSX effective February 15, 2017.

It was also announced that CSX will cut 1,000 management positions - cuts will begin mid to late March.

 1.000 managers to be let go and to ALL be notified by mid to late March
Jacksonville HQ and "field" personnel
They are to get:
1. an enhanced severance package
2. an enhanced pension benefit
3. outplacement services
4. certain "eligible" employees to get the self-select separation option

CSX has currently an unknown amount of managers that were to retire 12/31/16 but the gave them all a "deal" to stay
thru the first Quarter most having their contracts ending on 4./ 3 /17.

So 1,000 seems like a "BIG" number but with the filling or not filling of those jobs and the likely early retirement of people
and people just moving on from the company i would be the actual loss of "jobs" is under the 600 to 700 number and
I figure 200 of those to be "field operations" people  ( Good bye Asst. Division  Managers / Asst. Division Engineer's / Asst. General Foreman / Asst Terminal Superintends)
and the like also i would look for Cut's in the Police Force as they are considered company officers as well)

Next round for CSX will be Sales of sections of the railroad that where not deem part of the Core System
especially routes where someone eels can do the first mile last mile work and hand frgt off to CSX for the line haul
Think Hanover Subdivision / Ohio River Sub and so forth

Then look for consolidation of your dispatcher cneters and jobs etc.
 

It's hard for me to imagine having a 1000 more officers than you actually need to do the work.

I imagine some of the 1000 will flow back to one of the crafts.

junctiontower Wrote:
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> It's hard for me to imagine having a 1000 more
> officers than you actually need to do the work.

Happens all the time, and a lot of management compensation systems actually encourage it.  In many formula approaches, supervising 20 people gets you more pay than supervising 10.  Administering four direct reports and impacting $30mn of budget gets you less than overseeing $60mn of budget. Encourages bloat.

(In a business like a railroad, where there are a lot of silos, things can be worse.  Guys are protected, always stay in the same boss umbrella, passed along, etc. If they really get in trouble, they may be able to resume their craft, etc. )

You must not be a railroader & see all the do nothing clueless managers, asst. managers, sr. managers, avp, lead manager, support manager, blah blah blah that are tripping over themselves.

junctiontower Wrote:
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> It's hard for me to imagine having a 1000 more
> officers than you actually need to do the work.

Too many Chiefs and not enough Indians

nsrlink Wrote:
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> You must not be a railroader & see all the do
> nothing clueless managers, asst. managers, sr.
> managers, avp, lead manager, support manager, blah
> blah blah that are tripping over themselves.
>
> junctiontower Wrote:
> --------------------------------------------------
> -----
> > It's hard for me to imagine having a 1000 more
> > officers than you actually need to do the work.

Amen, brother, amen!

AmHog Wrote:
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> I imagine some of the 1000 will flow back to one
> of the crafts.

A friend of mine with CSX made mention of quite a few young Trainmasters hired off the street.  They will have no craft to go back to, and frankly, won't be missed.  I met one the other day that looked like he was barely out of high school.  Maybe my age is showing but I can remember when a Trainmaster was a person who had spend 40+ years on the railroad and had worked their way up through the operating ranks.

My other thought is that if CSX can cut 1,000 management jobs and still operate...they had too many managers to begin with!

> My other thought is that if CSX can cut 1,000
> management jobs and still operate...they had too
> many managers to begin with!

Or another way of saying it is, they had too many managers for the railroad CSX is today compared to the railroad that CSX was several years ago. With some lines downgraded, coal traffic sharply reduced forever, etc, it's time to whack the junior management ranks. Plus, when the economy starts to cool off (inevitable at some point), the railroads will be among the first to notice. 

The question I have is whether NS, UP, and BNSF will whack their junior management ranks too.

Just for the record, my question was kind of retorical.  If you can run the business with a thousand fewer managers, then obviously you had way too many.  It's just surprising to me that with the almost constant crisis mode CSX has been in for the last 30 years, that it ever would have been allowed to get to this point.

BNSF reduced management by 9%  during 2016,  per what they told us in print
 

Or???? Could there be the makings for a merger?  CSX and any one of the remainging MIssissippi and West 4, CN, KCS, BNSF or UP?

How about NS and KCS?

They're just showing EHH that they know how to make cuts and don't need a outsider to do it for them, IMHO

Ed Stewart
Jacksonville, FL

I'm sure EHH will make more cuts, including the new Prez who might as well leave his shoes on.
 

Bill Miller
Galt, ON

calsubd Wrote:
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> They're just showing EHH that they know how to
> make cuts and don't need a outsider to do it for
> them, IMHO

​I tend to agree with this, but we shall see.......

As far as mergers, I don't see it happening anytime soon.

Not that I am a fan of Trump, but he is more friendly to business so it is possible the STB under him will approve mergers.

Sharon Evans
Glen Allen, VA

The "eligible employee" self select process is always a crap shoot for the company.  In essence it says something like, people with 25 years of service who are at least 50 years old and not covered by a collectively bargained agreement, can pull the pin voluntarily. The company will give you 1-3 -5 yesrs of additional salary, pension credits, medical help to age 62, cash, lots of good stuff.

The people who jump at this deal are often the people you need to keep. And want to keep. They can get another job in a flash. And they may possess skills that cause you to make a consulting arrangement to keep them aboard for a few months after you induced them to leave.

The incompetent, useless slugs won't take this deal. They know nobody will ever hire them. They stick around, and you'll have to buy them out, being careful not to violate age, gender, orientation, race etc rules when you do. They wait to get bought out as a group, made whole through age 65, and have their employment lawyers at the ready.

deeck Wrote:
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> 
> Then look for consolidation of your dispatcher
> cneters and jobs etc.
>
Will all of the dispatchers be back in Jacksonville again?  

Lackawanna484 Wrote:
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> The "eligible employee" self select process is
> always a crap shoot for the company.  In essence
> it says something like, people with 25 years of
> service who are at least 50 years old and not
> covered by a collectively bargained agreement, can
> pull the pin voluntarily. The company will give
> you 1-3 -5 yesrs of additional salary, pension
> credits, medical help to age 62, cash, lots of
> good stuff.

One of the 'ways of life' I 'discovered' as a computer consultant at a number of large organizations (5 Fortune 500 companies and 2 large city governments) is that when times are 'good', more 'divisions' and 'groups' and 'fifedoms' are created and staffed to do whatever they are charged to do.  I've even seen it happen in charitable organizations as well.  Then, when times get 'tough', first they cut labor costs - the front line workers, blue collar and white collar alike. 

Then they thin the ranks in management using buyout offers.  Management buyout offers have been a way of life in big corporations for the past 30 years or so...maybe longer.  I witnessed buy-outs and push-outs at several Fortune 500 companies.  One company first offered their management with more than 25 years service something like 5+5...5 years added to service and 5 years added to age and pension calculated from that.  They followed it up less than a year later with 3+3, which netted even fewer 'voluntary retirements'.  About 6 months after that offer, a bunch of management types, regardless of age or years of service, were unceremoneously escorted off the premises without prior warning.

In short, whether CSX or NS or any other railroad is reducing 'head count' (don't you just love that term?  Instead of treating employees as people, they are simply head count numbers...), it's simply doing what must be done when times get tough.  The significant loss of coal and oil loads in recent years necessitate the shift to 'lean thinking' and 'lean management'.  It's simply a recurring cycle that runs 15-20 years in many industries.