Union Pacific to Cut 1,800 Jobs

OMAHA, Feb. 9--Union Pacific Corp. has sent packets to 1,800 employees explaining their options for early retirement under an economy-inspired cutback announced by the Omaha-based company in December, the Omaha World-Herald reported.

U.P. spokesman John Bromley said the packets were sent last Friday to employees who were 52 or older and not in senior management.

The packets outline the details of a voluntary early retirement program that includes a monthly annuity, monthly paycheck and medical coverage, which is based on age and years of service.

The employees have until March 5 to inform the company whether they want to take the early retirement package, Bromley said. The 2,000 job cuts are to be completed by mid-year.

The railroad has said it would cut 2,000 jobs and that 1,200 of those cuts would complete the 5,200 job cuts that the railroad had planned as a result of its 1996 merger with Southern Pacific Rail Corp. The rest are the result of an economic slowdown that decreased the demand for shipping freight.

Bob Turner, senior vice president of corporate relations, said that normally employees become eligible at about age 55 for a reduced pension. Employees at age 65 can receive a full pension.

This is how the early retirement program works for non-union employees: It adds 10 years toward qualifying a person for a pension, up to age 65, and then applies any remaining years toward increasing job experience, up to 40 years.

For example, a person who is 60 and has worked for the railroad for 25 years could retire with benefits equivalent to someone who is 65 with 30 years' experience.

Union job cuts have to be negotiated with the workers' respective unions, Bromley said. Unionized jobs include train crews, engineers, maintenance workers, mechanics and conductors.

The 2,000 jobs set for elimination represent roughly 4 percent of Omaha-based U.P.'s 50,000-person work force, of whom about 4,000 work in the Omaha area.

The railroad took a $72 million charge for the job cuts during the fourth quarter, which ended Dec. 31.

About half of the 2,000 jobs, including 200 to 300 in Omaha, will come from normal attrition. The rest will come from an early retirement program and firings, the railroad has said. The reductions will include union and non-union employees from every part of the railroad's 23-state system.

"We always try to use attrition first to achieve any necessary reductions in our work force," U.P. Chairman and Chief Executive Officer Dick Davidson said in December. "However, the level of overall economic activity has slowed so dramatically during the fourth quarter, we must accelerate the pace of cost reductions to match demand for our services."

The railroad also has announced it will reduce its $2 billion-a-year capital spending budget, which will cut the working hours of hundreds or thousands of other railroad employees during 2001. By reducing the number of projects, the amount of work required goes down as well, affecting the number of people working.