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Railroads furlough more workers in gamble business will improve

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in Compensation and Benefits,HR Management,Human Resources,Leaders & Managers,Management Training

Major railroads announced more furloughs of employees in recent days as they try to decide between getting rid of workers completely or keeping them on retainer in hope the economy will improve soon. 

CSX Transportation announced recently it is furloughing 27 shop workers at Corbin, Ky.

BNSF Railway last week furloughed 100 mechanical department employees at its Alliance, Neb., shop.

CSX gave the Corbin shop workers no idea when they might be called back because the railroad’s management is uncertain how long it will take for shipping demand to pick up. They were given as¬surances of four months of health benefits.

CSX has furloughed 2,400 employees and put 30,000 rail cars in storage in roughly the past year.

Some railroads – like Union Pacific – have furloughed about 10 percent of their workforce in a belief they need to be ready when demand for rail shipments picks up as soon as this year.

Others – like BNSF Railway – have laid off a greater percentage of their workforce amid economic predictions the current recession is likely to last a long time. About 7.8 percent of BNSF’s workers are furloughed.

A furlough means workers retain their benefits and sometimes a small part of their salaries while they wait to be called back to full-time work. A layoff means they lose their benefits, their salaries and their jobs.

Furloughs can be expensive for railroads but give them an opportunity to call back their experienced workers for a quick rebound from economic downturn. Union Pacific expects to spend about $50 million on furloughs this year.

At the same time, the railroad expects to avoid a slow response to economic recovery, which hurt its business after the recovery from the dot-com bust of 2000.

Layoffs cut the railroads’ expenses even more, but mean they must hire new employees when business improves, retrain them and risk losing business to other railroads that can fill demand more quickly.

BNSF officials said their Alliance shop workers would be called back when demand for rail improves but they gave no indication when it would occur.

They blamed a decrease in coal shipments as a big part of the reason for the furloughs. About 1,600 BNSF employees still work at Alliance.

The most recent rail volume reports gave no indica¬tion that an economic turnaround would occur soon. For the week ending May 16, the amount of freight carried by railroads reached its lowest level so far for 2009, according to the Association of American Railroads.

Total ton-miles of carload and intermodal freight carried by U.S. railroads dropped to 26.2 billion, down 24.3 percent from the same time last year.

Economists are split on how to interpret the weekly results. Some suggest it shows the freight rail market has bottomed out. Others say the dismal reports on freight volume will continue for awhile.

A National Association for Business Economics study released last week showed that more than 90 percent of economists say the recession is likely to end this year.

Economists surveyed for the study predicted unemployment would average 9.1 percent for this year, which would be the highest rate in the past quarter century. The 2008 unemployment rate averaged 5.8 percent.

“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” said National Association for Business Economics President Chris Varvares. “The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines.”

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