In another sign of the fallout of low energy prices, BNSF Railway says it has furloughed about about 4,600 of its employees nationwide over the past several months.
The furloughs amount to about 10 percent of the Fort Worth-based company’s workforce, matching the layoffs made by the railroad in 2007 and 2008, according to statements made by Matthew Rose, executive chairman of BNSF at an energy conference in Billings, Montana.
The company also has stopped hiring and is offering buyouts to its older employees, making it the greatest reduction in force at the railroad since the beginning of the Great Recession, Rose is quoted as saying during the Montana Energy conference.
BNSF is not disclosing how many employees have been laid off in Fort Worth or in any individual state, said Mike Trevino, executive vice president for external communications in Fort Worth.
Reduced demand means we are operating fewer trains ... ,
Mike Trevino, BNSF executive vice president for external communications
Individual reports of BNSF laying off employees have been published by news organizations across the country, and the 4,600 total was reported on social media about two months ago, he said. BNSF is part of Warren Buffett’s Berkshire Hathaway, based in Omaha, Nebraska.
“Furloughs have been occurring over the past few months ... as demand for freight movements have declined, mostly driven by declines in the energy sector,” Trevino said. “Reduced demand means we are operating fewer trains ...”
“Furloughs are not uncommon in our business as we always adjust staff to match customer demand. As that demand comes back, we plan to bring back furloughed employees to match the customer needs,” Trevino said.
In May, BNSF said it was planning employee furloughs due to a drop in freight shipping demand across its rail network. At the time, the railroad declined to say how many employees would be impacted but that they are “at different locations across our network.”
The railroad is the biggest player in North Dakota’s oil patch, hauling most of the 1.1 million barrels that moves out of the region daily. Oil drilling has been curtailed significantly in North Dakota’s Bakken Shale and other fields following the collapse in oil prices.
The railroad also is the biggest hauler of freight in the Upper Great Plains.
Just last year, the railroad was expanding rapidly, adding 6,000 workers and 500 locomotives to meet demand for shipping and ease backups caused by severe winter weather.
The demand declines are not impacting locomotive acquisitions by the company, since those are based on long-term contracts that were previously in place. The overall capital expenditure plan is down for the year, but at $4.3 billion still the third largest in the company’s history.
The demand declines are not impacting locomotive acquisitions by the company, since those are based on long-term contracts that were previously in place, Trevino said. Some of those locomotives are built at the General Electric's locomotive plant near the Texas Motor Speedway.
Despite demand declines, BNSF still has a robust capital expense plan in place for 2016 at $4.3 billion planned for 2016, he said. The money would be spent on locomotives, rail cars, track and maintenance.
While the 2016 spending plan is $1.5 billion lower than the $5.8 billion spent last year, “it is still our third largest capital expense plan in our history,” he said.
BNSF spent $5 billion on equipment in 2014 and $4 billion in 2013, Trevino said.
The railroad joins Union Pacific Corp., CSX Corp. and Kansas City Southern in ratcheting down spending amid a drop in carloads, led down by coal.
Total traffic for large U.S. railroads fell 2.5 percent last year and the declines have continued in the first two weeks of 2016, according to the Association of American Railroads.
This report contains material from Associated Press and the Star-Telegram archives.