CSX To Fire Over 20% Of Management-Level Employees

Tyler Durden's picture

Earlier today, the WSJ reported that railroad giant CSX Corp, currently embroiled in a protracted activist investor fight, said that Michael Ward, its chairman and CEO will retire in May as railroad veteran Hunter Harrison and an activist investor try to shake up the company and grab the top spot. Harrison, a railroad veteran who unexpectedly announced his early departure from Canadian Pacific Railway in January foregoing tens of millions in potential bonuses, has been working with Paul Hilal of the Mantle Ridge activist fund, to become the company’s next chief executive. Last week, the WSJ reported that CSX privately offered the chief executive position to the 72-year-old Harrison, but negotiations broke down when Hilal refused to back away from some compensation and governance demands.


CSX Chairman and CEO Michael Ward, far left, is retiring from his positions at CSX effective May 31

However, in a separate report today, it appears that CSX is already preparing for full concessions, and as First Coast News reported earlier in the day, CSX employees learned Tuesday that the company will be eliminating about 1,000 management-level positions, out of a total 4,500 . The majority of cuts will be in Jacksonville, Florida, where CSX is based

The layoffs will include positions both in the field and at company headquarters, the company told employees in an e-mail.  Impacted employees will be notified in mid-to-late March, the e-mail says.  The spokesperson for the company, Gary Sease, says the layoffs are due to an "involuntary separation program." Currently, there are more than 2,500 management employees in Jacksonville.

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The announcement came on the same day that the company announced the retirement of CEO/Chairman Michael Ward and president Clarence Gooden, effective at the end of May, effectively leaving the company without operation guidance. 

The company said it was discussing the CEO positions with Hunter Harrison, a former head of Canadian Pacific Railway, who is backed by Mantle Ridge that owns nearly five percent of CSX's stock.  Harrison is known in the railway business as a turnaround specialist who improves companies bottom lines by reducing workforce.

While CSX said the retirements are not "intended to preempt or otherwise affect any discussions" CSX is having with Harrison and Mantle Ridge, they certainly will achieved the desired effect of dramatically "streamlining" the company.

The e-mail says the company will implement a program to give impacted employees enhanced severance pay and pension benefits, along with outplacement services.  The company also plans to implement a voluntary separation program. 

CSX also said that Fredrik Eliasson, its current chief sales and marketing officer, has been named president, cementing that two of its top executives won’t be staying, regardless of whether a deal is struck.  CSX said it has been considering the changes announced Tuesday for more than a year, and that the appointment of Mr. Eliasson isn't intended to “pre-empt or otherwise affect” discussions CSX is having with Mr. Harrison.

CSX employs nearly 36,000 people in the eastern U.S. in their railway, real estate and technology operations. The company is one of downtown Jacksonville's largest employers.

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BlindMonkey's picture

The IT portion is very dysfunctional.  They could stand to make some changes there.

SILVERGEDDON's picture

Take that management flushed salary, and compensate the troops with itt, and watch productivity soar. 

Or, give the savings to that group of lard belly suits in the lead photo - gosh, which is the most likely scenario ? 

aelfheld's picture

The ones to benefit from this are Harrison, Hilal, and Mantle Ridge.

 

Everyone else is, at best, going to be sucking hind teat.

 

And don't be surprised if CSX is up for sale within 5 years.

BuddyEffed's picture

I wonder what percent of their engines and rail cars are on sidelines indefinitely?

Any correlation/causation?

Shocker's picture

Sucks to see, another one for the list

Layoff List: http://www.dailyjobcuts.com

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JRobby's picture

Trump rally in Jacksonville in 3,2,1...........?

When you have to lay off 1,000 to make room in the budget for 1............

HARRISON PRESS RELEASE 03/01/2020: "Although the plan I implemented in early 2017 created successful results by any measurement, the continuing slowdown in overall demand along with burden of my incredibly high compensation package, has left the company in a shambles so I am off to retirement and consulting for some as of yet unknowing victim. 

Wulfkind's picture

Haven't seen something like since 2000 when after CSX got into a bidding war with Norfolk Southern for Conrail when the government was trying to sell it.

 

CSX went into debt to help fund what portion of Conrail they bought to keep Norfolk Southern from buying it all.  Then the dot com crash happened and CSX stock plummited and they were going through rank and file at CSX headquarters and giving folks some boxes and giving them marching orders.

Logan 5's picture

"I've been workin' on the railroad, all the live long day" ~ OH WAIT!!!

~Sandhills Sixteen

 

In other news ~ THE EYES OF TEXAS ARE UPON YOU

Muad'Grumps's picture

So much for the reflation trade.

Raffie's picture

Been waiting to see the RR companies axing people.

RR freight is deflating... sooner or later the ax is coming. Then onto trucking companies.

Logan 5's picture

One things 4 certain'... They ain't gonna be AXEin' them if they want their jobs & pensions back.

 

& oh by the way... FUCK WARREN BUFFETT

Raffie's picture

Well killing or cutting back pensions are all the rage now days due to poor money handling policies or just thieft.

Teamsters, my brother knows 4 who retired years back and some got a %50 cut in their pension and this just starting.

Pensions going to be in a mass bloodbath soon and the only winners will be the heads of the Unions. Who after the blood bath will take all the money and retire to the good life.

 

Offthebeach's picture

Who needs to go to a pension fund and borrow money? Fed gov prints it, prints 20 trillion, and offers it to TooBigToFail Banks.

Pension funds like every other "saver" have be porked.

gatorengineer's picture

I think it went the other way.... There was massive consolidation in freight companies.... railroads being intrinsically more efficient survived longer...

Maybe they can claw some of it back with boxcars of illegals heading south....

JRobby's picture

Indeed Sir!

It is amazing how little these "contract" long haul truck drivers make. They are like indentured servant / gypsies.

Raffie's picture

Teamsters do alot..

In Seattle there is 5 concrete companies, ALL TEAMSTERS.

So when they strike Seattle is shutdown.

Boeing uses Teamsters to drive from forklifts to tractor trailers.

Handful of Dust's picture

Legacy, Bitches.

"I wasn't there for 8 years for nothing!"

 

~ Soweeto Obama

Bill of Rights's picture

Amazing a thread where not a single troll has said TRUMPS FAULT

ejmoosa's picture

Obama's war on coal did take a bite out of profits in this industry....

Handful of Dust's picture

Give them time. The npr trolls are still at Starbucks for lunch. They'll be back.

JRobby's picture

The trolls have found out that Soros' planned fate is a bullet in the head.

So naturally, there will be some scrambling to see if MOM WILL LET THEM BACK INTO THE BASEMENT OR IF IT HAS BEEN "LEASED" TO UNCLE ERNIE

Arnold's picture

Watch for bed bugs Uncle Earnie.

south40_dreams's picture

Any savings will quickly be squandered. That's the only sure thing here

aelfheld's picture

Have you read about Harrison's & Hilal's 'compensation demands'?

 

That 20% is being let go to free up the money to meet those demands.

Seasmoke's picture

This economy has gone off the rails.

WillyGroper's picture

looted.

turnaround specialist...chainsaw wielding hitman.

besnook's picture

wow, a company firing management before labor. mamagement should unionize. lol.

rejected's picture

"as a turnaround specialist who improves companies bottom lines by reducing workforce."

Oh yea,,, reduce the worker bees. Always the answer for American Corporations.

First you reduce,,, then you cannot provide some services. Business declines. Then you can some more employees and even more services. Business declines. The Graveyard death spiral in business. But by then who cares about the company... Each layoff, each cut in services means more money in bonuses and might even notch up the stock a little providing management their little gold parachute.

When trucking carriers and Rail carriers are in trouble that should clearly explain the real condition of the economy.

buzzsaw99's picture

4500 managers? wtf? is this an onion piece?

cowdiddly's picture

3rd day at work on a pipeline job during morning meeting where we were being chewed out because we had somehow managed to get behind schedule 3 weeks in the first 3 days. ;>)

"You and You, get your shit together and come with me".

Next day----Damn Bossman, what did those two guys do?

"Aw, they didn't do nothin, I just fired them to get the rest of you bastards attention."

Works like a charm and I learned from the best, when it absolutely has to be done by yesterday

RIP Mr. Benefield, he worked us like dogs but boy did we make the money and always called you back.

buzzsaw99's picture

Peter Gibbons: The thing is, Bob, it's not that I'm lazy, it's that I just don't care.

Bob Porter: Don't... don't care?

Peter Gibbons: It's a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don't see another dime, so where's the motivation? And here's something else, Bob: I have eight different bosses right now.

Bob Slydell: I beg your pardon?

Peter Gibbons: Eight bosses.

Bob Slydell: Eight?

Peter Gibbons: Eight, Bob. So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled...

[/Office Space ]

grunk's picture

Run out of the company on a rail.

insanelysane's picture

Well run company if 1 out of 5 managers are unnecessary.  Top management should be rewarded hansomely since they didn't let the organization become top heavy with 1 out of 4 managers being unnecessary.

How exactly do you end up with 1,000 extra people in a company???

Moe Howard's picture

Like barnacles on a ship's hull.

Chief Wonder Bread's picture

Good point but only within a range of possibilities. One could iterate that down to an absurdity. 

gatorengineer's picture

You would have to know the definition of Management.  I would suspect alot of them are track repair planners, customer service...... Cut out maintenance, and fuck customers that don't really have an option....

edifice's picture

Largess. They have to put the MBAs somewhere. It is a cancer especially prevalent in non-profits. Most are very top-heavy. 

darteaus's picture

Sad, but true:

So a Japanese company and a North American company decided to have a canoe race on the St. Lawrence River. Both teams practiced long and hard to reach their peak performance before the race. 

On the big day, the Japanese won by a mile. The North Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. 

A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the North American team had 8 people steering and 1 person rowing. So, North American management hired a consulting company and paid them a large amount of money for a second opinion. 

They advised that too many people were steering the boat, while not enough people were rowing. 

To prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. 

It was called the"Rowing Team Quality First Program“, with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices, and bonuses. 

The next year the Japanese won by two miles. Humiliated, the North American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments in new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year’s racing team was outsourced to India.

Archive_file's picture

Dry goods shipping: Down.
Rail traffic: Down
Warehouse inventory: Down

Down, down, down...,

gatorengineer's picture

Delivery by Drone?  JDAMs in 30 minutes or less....

edifice's picture

I'm surprised Domino's hasn't adopted drone delivery. They could fly your pie to you in 10 minutes. No tip required.

silverer's picture

But top management:

"...foregoing tens of millions in potential bonuses". Pretty cool, eh?

indygo55's picture

Depression is the name. Its always been a depression and in ten years or so we will look back and call it a depression. Its just being obscured by massive credit money creation at exponential rates and highly specalized educational and media brainwashing to make us look away, to be distracted by useless things. When will the currencies they create to enrich themselves cease to be accepted? Its when the brainwashing wears off and you find yourself eating old dog food from a can. Then you'll know. For some, even that won't wake them up. 

conspicio's picture

One word for the rail industry...COAL. When your business model was built on it, and it slowly goes away (Thanks Obama!), well, you better get a new business model quickly or this is what happens. To be fair, they have been in trouble for at least 5 years and done very little. House cleaning is a great place to start with this one.

Some choice quotes over the past few years:

"One thing to bear in mind is that coal's drop has led to its becoming less of an influence on CSX's results, albeit while still having a major role. In 2010, coal made up nearly a third of CSX's overall revenue and a quarter of total volume. Now, CSX gets about a fifth of its sales from coal, and coal-shipment volume represented just a sixth of its total transport. Given just how badly coal has fared, the railroad industry has to think that the negative impact from lagging coal operations will hit rock-bottom soon." ~Dan Caplinger

"CSX warned that its coal shipment volumes to power plants in the United States could be down by 5% to 10% in 2013. This is after domestic coal shipments were down 21% in the fourth quarter from a year earlier. The trends were like that all year, with a 26% drop in the third quarter and a 27% drop in the first half of 2012." ~John Ogg

silverer's picture

Trumps moves won't effect the US economy directly for some time, even though the markets are bobbing in anticipation. As far as the CSX employees go, it looks like their jobs were NOT cemented by the Obama eight year "recovery". Crickets on that I'm sure on MSM. How about the "CSX Bar and Grille" for alternate employment? Or is Florida already "swamped" with bartenders and waitresses? lol

Adahy's picture

CSX is worthless.
Causes so much shit around here.