Surely, seems to indicate that the recen kerfluffle at NS has also possibly, similar ramifications at BNSF…
FTA:"… [in part] The railroad did not disclose how many jobs were affected, but people familiar with the matter say that BNSF cut 8% of its management workforce. That would translate into roughly 400 positions based on the January employment figures the railroad reported to the Surface Transportation Board.
“As a business tied to the industrial and consumer economies, we must always adapt our resources to meet demand. The freight market faced significant headwinds last year and our outlook for 2024 remains uncertain, as it does for many of our customers,” the railroad said in a statement. “To ensure our long-term success, it is necessary to make workforce decisions that respond to a complex and ever-changing freight environment. While these decisions are never easy, we must position ourselves to continue providing the industry-leading service our customers expect.”
The cutbacks come less than two weeks after Warren Buffett, chairman of BNSF parent Berkshire Hathaway, said the railroad’s 14% earnings decline in 2023 was deeper than expected. The railway’s operating ratio increased 2.5 points to 68.4% last year, which lagged the other five big systems.
Warren said a few years ago, don’t remember exactly when since time seems to go by fast, that BNSF may have to look at doing some PSR things. They may have not gone to the extremes of other class ones, but they did start doing some things right out of the PSR playbook.
Berkshire Hathaway may be somewhat immune to Wall Street, but maybe not as much as it once was since adding the Class B shares.
Per port web site public data and other industry publications:
The Port of Los Angeles handled 8.63 million TEUs in 2023 which was a decline of 12.9%.
The Port of Long Beach handled 8.02 million TEUs in 2023 which was a decline of 12.7%.
The Northwest Seaport Alliance (Seattle and Tacoma) handled 2.97 million TEUs in 2023 which was a decline of 13.7%.
That surely impacted BNSF volume. Other freight volumes were also down.
I don’t think Mr. Buffett expects an OR in the high 50s but BNSF has had some years in the low 60s and that level seemed to generate net profit in a range which seemed to meet his expectations, based on his annual letters and management discussion and analysis in the Berkshire Hathaway annual report.
A quick comparison with UP.
In 2023, UP had $24.119 billion in revenue, had Net Income of $6.379 billion (26.4% of revenue), and an OR of 62.3.
In 2022, UP had $24.875 billion in revenue, had Net Income of $6.998 billion (28.1% of revenue), and an OR of 60.1.
In 2023, BNSF had $23.876 billion in revenue, had Net Income of $5.087 billion (21.3% of revenue), and an OR of 68.4.
In 2033, BNSF had $25.888 billion in revenue, had Net Income of $5.946 billion (23.0% of revenue), and an OR of 65.9.
I bought a lot of his stock in 2008 and have never regretted that decision. His investment approach is rather bizarre in places though, in my view. He could do a lot better but holds back because his former mentor (Munger) I think taught him only to invest based on pure financial ratio analysis and some other mysterious metrics that seem to indicate a good buy. The former is pretty easy but the latter is a complete mystery to me and the rest of Wall Street.
Onto the companies he owns like BNSF and the companies he has a stock position in but does not own outright. He noses in on the management of each. I know in the case of Kraft-Hienz (KHC), he is the guy that pushed that merger together. In the case of CitiBank (C), he is the guy that pushed hard on the reorg which included massive layoffs. So his invisible hand is in a lot of places. But then people ask why does he hold Kraft-Hienz for so long and even now when it is only starting to turn around (he has the reputation in part as a bag holder in regards to some stocks). Why is investing in lost cause Sirus XM Radio (SIRI). Nobody really has a clue and he could do better in a lot of cases.
So having said all that, have not really heard much in regards to BNSF comments or possibly missed them in the press. My feeling is outside of the metrics he does not understand railroads like he does insurance companies, banks, and manufacturing concerns. BNSF I think was his first railroad holding and he bought it pretty cheap in 2008 when he started accumulating shares. I have no clue myself what his direction is with BNSF. Wall Street is now looking at railroads not so much as a long-term buy and hold as they us
Completely agree he is unhappy with BNSF and partly it is OR but there is something else he is using as well vs just OR…no clue what it is. It is not OR by itself though in my view.
Buffet bought the BNSF when it was the best run railroad in the industry. Then sat back and did nothing as the people who made it into the powerhouse it was were run off due to not worshipping at the Church of PSR run by EHH. Then with all the good railroaders railroaded out of there they lost their edge.
Thats a little far fetched in my view. He bought the railroad in 2008 or 2009, mainly because it was cheaply priced due to the financial crisis and that is how Warren Buffet operates. He had no clue if it was the best run railroad or not other than what he could figure out via OR and/or whatever measure he is using. Though before he bought it because he would be a major purchaser and due to how stock buys work when your above a ownership percentage, BNSF had Senior Management meetings with him and gave him more inside info that a regular stockholder does not have access to. Even then it is somewhat of a risk and some gut instinct is required to move forwards to close the purchase.
All that aside. It’s been close to, if not over 15 years now. A lot of those people at purchase time left due to normal turnover and retirement. Executives tend to want to retire when they think the company is in the best shape reasonably possible so they don’t get clawed back if there is a major issue. Railroads are a solid stock investment and implementation or no implementation of PSR doesn’t have a lot of impact on their future. UP has been around since the Civil War era.
Also, just general trivia here. It was Warren Buffet that convinced Bill Gates to buy a large position in CN and hold it and for some reason Waste Management.
The NFL games conclusion should and could have been handled a lot better by the Vena. Understood the UP is a 24 by 7 operation but if you have employees voting with their feet like that on weekends, it’s an issue HR should address with incentives or floater days off. Badly handled by Vena.
Rail Management and Labor are one of businesses first ‘Us vs. Them’ competitions - a competition where each trivalizes the others position to the point of absurdity. It was that way during my 51+ years of rail employment, 20 years of Management and 31+ years in the Crafts.
Some managements understand the necessity to work together - some don’t.
Very Gooid points ! Seems these techniques only seem to come after schooling in that School of Hard Knocks…Only a very few seem to understand the points naturally…And they, unfortunately, are few and far between…[2c]
You do realize that this has only been going on for the last 100 years or so. Historically, layoffs peak on weekends, holidays, first day of deer season and lots of other repetitive times.
You must have missed the first part of the article, the UP did give them extra time off and they used it. But they were still laying off.
The bottom line is if you want trains to run you need crews, if the crews layoff it’s going to cause the service to be interrupted. Back in the day we used to shut down the railroad for Chritmas and New Years, but that was a HUGE disruption to the network and caused more problems, as a result they don’t do that anymore.
Pretty sure Vena made it clear it was using illness as an excuse.
I think the issue here is the railroad treatment of sick days. In non railroad world, sick days are not time off that you can collect each year. They have never been in my work experience. In my non-railroad work experience if you take a sick day and your not actually sick and you get caught…it never ends well. Now floater days off and personal days are a different issue and nobody cares about those as long as notice is given in advance. I am not sure why this confusion and maybe someone could clarify if this is union agreement stuff or railroad stuff.
Really? You don’t say.[:O] Seriously though just because people do this does not mean it is OK nor does it mean an employer should expect it as a given. With a paid position in any occupation, your expected to take vacation or personal days for the above. Not sure how the layoff process works in as far as reasons given or how the priority is determined via reasons given. Obviously, Vena is stating that reasons given…matter to him as CEO. If I were trying to manage that mess, it would matter to me because it blurs the stats used to determine if there is a workforce environment issue.
Understand that. It used to be that way in the military between Officers and Enlisteds, though just really bizarre the military has liberalized / relaxed in that area some and railroads have not. Also a little sad that the military is ahead of railroad managements in that respect.
I would opine that it’s a sign of the times. People want their weekends off, because everyone else has weekends off.
Perhaps this could be somewhat alleviated by having the railroads figure out a way to have more consistent scheduling. Most other industries that require 24/7 schedules have.
I realize there are variables in railroading that a 9-5 schedule can’t accommodate, but not knowing whether you can make your kid’s last soccer game or your sister’s wedding because you might get called is apparently not sitting well with the worker bees.
OTOH, I recall an anecdote from some years ago wherein a boss was complaining that his people took 40% of their sick days on Mondays and Fridays… (Clearly a M-F operation)
When the CSX Atlanta Division was my territory - among the T&E Unions on the various crew districts on the division - they implemented virtually EVERY form of crew calling you can think of. From all pool FIFO calling to all assigned with designated call times and Deadheading if the assigned train was outside of its window - and virtually every combination in between. There is no silver bullet that answers the need to move trains and for crews to ha
Not really a change from what used to be. The real change was when jobs and extra lists were gutted which resulted in the implementation of harsh & non-negotiated attendance policies. If anything, this is leaning the boat slightly toward the old normal.
Back when the unions were ready to strike over “quality of life” issues, among other things, I thought the unions failed to answer the carriers’ contention that TE&Y people had plenty of time available vis a vis vacation and personal paid leave days.
Yes, we have the personal paid days and vacation that can be taken as single days when we wish to. That is, only when the carrier gives approval to take one. We have a program of reserving those days in advance. However, the number of available slots are limited, with some dates blocked out. (Interestingly, some major holidays aren’t blocked out.) Those advance notice days aren’t supposed to be denied, but I have heard of some having them denied when trying to activate them. If you have a spur of the moment issue, you might receive a miracle and get a day approved. Usually, “manpower” issues will have them being denied.
The only way to get time off in that case is to lay off sick/sickness in family. Before the paid days, laying off in either of those status resulted in points against the attendance policy. The paid days don’t count against the policy. The Federal
Pity the carriers don’t allow the enlightened approach used by the pre-9/11 Waffle House – you can take all the unpaid days off you want as long as you find your qualified replacement.
If you had an ‘advance scheduled’ appointment and some manpower concern came up, you’d already have someone who agreed to serve in that ‘window of time’ who presumably had worked his or her schedule to be legal to work your shift or hours.
Never gonna happen for obvious reasons, but it did work in restricted context.