Talk about buzz kill! Right in the middle of the Trump Administration’s “Made in America Week” publicity event, The Financial Times reports that iconic US railroad company CSX is not planning to buy new locomotives to haul additional coal — and it is laying off 700 workers at various facilities, too.
Adding insult to injury, the company’s CEO Hunter Harrison told the Financial Times that “Fossil fuels are dead,” and that “coal is not a long-term issue” for the company.
Bad News For Coal, And US Workers, Too
Despite his verbal spike into the heart of the coal industry, Harrison foresees that coal will continue to be part of the CSX business model, at least for the short term.
In fact, in the first two quarters of this year that sector of the CSX business is up significantly from over last year.
That’s because the export market is making up the difference as US power production shifts from coal to natural gas and renewables.
So, why the layoffs?
Well, those are part of a much larger, and very painful restructuring organized by Harrison, a “legendary” railroad executive who was lured away from his former employer, Union Pacific, earlier this spring.
Harrison is bringing a “precision hauling” model to CSX, and the hurt is already on, as reported by the Jacksonville Business Journal (CSX is based in Jacksonville, Florida):
The drop in expenses is the result of CSX thinning its locomotive fleet, workforce and hump yards…The fleet has been trimmed by 900 locomotives and could be trimmed 100 more. The workforce has lost 2,300 employees and could lose 700 more. The railroad started the year with 12 hump yards and could end with three, Harrison estimated.
In an email statement to Florida’s First Coast News, a CSX spokesperson elaborated on the company’s new operating model:
“CSX is NOT just reducing headcount as a way of improving efficiency – we are changing the way the railroad operates, which is resulting in greater operational efficiencies (fewer trains moving more freight faster) which sometimes also results in a reduction in the number of employees required to operate the railroad…”
The Ripple Effect
The advent of precision operation, longer trains, and other efficiency improvements could have a ripple effect on locomotive manufacturers.
That trend may already be under way. The US locomotive industry was pretty hot during the Obama Administration, but things have cooled down considerably since then.
In February, shortly after President Trump took office, the Star-Telegram of Texas reported that GE’s Fort Worth locomotive plant would lay off about 250 workers due to slack demand.
If locomotive manufacturing does rev up again, that doesn’t necessarily translate into more jobs. As with employees in other manufacturing sectors, US locomotive workers are losing ground to robots.
Coal And Sustainability: Perfect Together?
If and when CSX ratchets down its coal business, a heavy burden will lift from the shoulders of the company’s sustainability planners.
The company’s slogan is “How Tomorrow Moves” and its mission statement is “CSX is committed to being the safest and most progressive railroad in North America,” neither of which are particularly consistent with the coal industry.
The disconnect is even more jarring when you take a look at the company’s “Environment & Efficiency” page:
Environmental sustainability is at the core of CSX’s value proposition. As the most fuel-efficient mode of freight transportation on land, rail will continue to enable significant emission reductions, while driving economic prosperity.
CSX has a three-pronged approach to sustainability, which includes reducing the environmental footprint of operations, engaging openly on sustainability issues, and supporting sustainable developments…
The company’s Sustainability Statement hammers home the point:
…We are committed to the journey — as a business partner, an employer, a community member, an environmental steward and a value creator for shareholders. By thinking and acting sustainably, we will deliver excellent customer service and strong financial results and position the company for a strong future.
At CSX, sustainability is the way we manage and operate our business to best serve our customers, care for the environment, secure profits and drive long-term prosperity…
Not much room for coal there!
Life After Coal
The coal issue aside, railroads have energy efficiency built into their DNA. Whenever CSX shifts out of coal hauling, it could pick up plenty of business elsewhere as manufacturers seek more climate-friendly modes of transportation.
In 2008, for example, CSX reported that it could haul one ton of freight 423 miles on just one gallon of fuel.
The company’s work on reducing emissions from its diesel engines is also worth a mention. A few years ago CSX embarked on a pilot project to test LNG (not necessarily a good thing, but whatever) and it has already introduced hydrogen fuel cell technology at some of its railside operations.
Last year, CleanTechnica took note of a sign that CSX may be easing out of its relationship with the coal lobby, too, so stay tuned.
Photo: by Don O’Brien via flickr.com, Creative Commons license.