Railroad operator Union Pacific Corp. said on Tuesday it would cut 475 employees in the fourth quarter and signaled more workforce reductions to come as it seeks to boost profitability by the end of 2020.
Union Pacific, which connects 23 states in the western two-thirds of the United States, in April warned it was unlikely to achieve its profitability target in 2019 due to service problems and congestion on its rail network.
In a memo, Omaha, Neb.-based Union Pacific said it also would eliminate 200 contract positions.
The railroad had 42,114 employees on June 30. The latest staff reductions will be across the network and affect both union and non-union workers. Union Pacific said the cuts are “the first of what likely will be additional workforce reduction initiatives through 2020.”
Union Pacific aims to reduce its operating ratio — a measure of operating expenses as a percentage of revenue and a closely watched gauge of railroad performance — to at least 60 percent by the end of 2020.
Railroads boost profits by lowering their operating ratio.
Union Pacific is scheduled to release third-quarter results on Thursday.