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Union Pacific sees 'outstanding' results 1 year into efficiency push, but workforce has been cut 13%

In the past year, the average length of a Union Pacific Railroad train has grown by about 21 freight cars.

The distance a typical freight car travels in a day has climbed by 20 miles to more than 200.

And the railroad now has 2,600 locomotives parked and idled.

Those are some of the initial results of the “precision scheduled railroading” plan Union Pacific rolled out a year ago, a strategy that seeks to streamline operations by running trains faster and making more efficient use of rolling assets.

But that drive for efficiency has also taken a big toll on the workforce of one of Omaha’s largest and most important employers.

Just in the past year, the Fortune 500 company that’s essentially been based in Omaha since Abraham Lincoln was president has cut its nationwide employee numbers by 5,700 to about 36,700 — a reduction of more than 13%. And its leaders are projecting hundreds of additional job cuts yet this year.

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The dive Union Pacific and other railroads have taken into precision scheduled railroading has been well received by Wall Street. The operational efficiencies lead to a lower “operating ratio” — essentially the percentage of each dollar received that is spent running the railroad. And that makes the railroad more competitive and profitable.

The increased operating efficiency helped Union Pacific last week post a third-quarter earnings gain of 3%. That was despite the fact that total rail volume was down by 8%.

Jim Vena

“We have made a number of changes in our operations in the past year, and the results have been outstanding,” said Jim Vena, Union Pacific’s chief operating officer.

But railway workers unions see the industry’s efforts to speed up trains and run more efficiently as a locomotive barreling down the tracks right at them.

“Railroad workers understand that (precision scheduled railroading) is a direct attack on us — a war being waged by the carriers — that affects employees of all carriers, in all crafts,” said Mark Burrows of Railroad Workers United, an association of rail unions.

The unions say precision railroading could ultimately compromise safety for both workers and the public. They say the concept is in part built on deferred maintenance, lax safety standards, reduced infrastructure investment and cuts in manpower.

Lance Fritz

Lance Fritz, U.P.’s chairman, president and CEO, maintains that the precision plan will boost productivity and be more reliable for customers while not compromising safety. The railroad also said its capital investments this year will total $3.1 billion, close to the $3.2 billion spent in 2018.

Jeff Windau, who analyzes Union Pacific for investment firm Edward Jones, said that while the railroad is still early in its implementation of precision railroading, the operational gains it offered up last week showed strong progress.

But he said for workers, one of the unfortunate byproducts of faster trains and reductions in rolling stock is a smaller workforce.

“There is a lot of management fortitude that’s required,” Windau said. “When terminals get shut down, you’re dealing with employees and people’s lives. There’s some pain in doing that.”

Union Pacific a year ago became the latest rail carrier to implement precision scheduled railroading, an operational tactic that in recent years has been fundamentally changing the railroad industry across the country.

“You think of railroads as this stodgy old industry because it’s been around forever,” Windau said. “But what’s happening is really an interesting story as carriers seek to improve efficiencies.”


A Union Pacific train carrying coal travels through North Platte in 2012. Lower coal consumption has contributed to a decrease in railroad shipping volumes in recent years.

While precision railroading has many elements, it basically revolves around shifting the operational focus from moving trains to moving individual freight cars, trying to get them to customers on fixed point-to-point schedules.

To keep freight moving, switching of cars is minimized. That limits the time cars spend “dwelling” in terminals, waiting to be sorted, switched and routed to their destinations.

“They don’t want to have a lot of assets laying around,” Windau said.

Not only does that get the cars moving faster, less idle time allows the railroad to maintain fewer cars to move the same amount of freight. Reducing idle time and running longer trains similarly reduces the need for locomotives.

Another concept of precision railroading is seeking to balance directional traffic east-west and north-south to allow for more efficient, two-way use of assets and crews.

The goal of precision railroading isn’t necessarily cutting costs and workers. But if an unneeded locomotive can be set aside, the crew that operates it can be furloughed or laid off, too. The railroad would also no longer need the crews that maintained the locomotive.

“It will generate productivity in terms of locomotive utilization, car utilization as well as crew utilization,” Fritz said in October 2018 after Union Pacific rolled out what it called Unified Plan 2020.

When it comes to the bottom line, Union Pacific’s goal was to reduce its operating ratio from 62% to 60% by 2020, ultimately planning to take it to 55%. By the end of this year, it wanted to achieve $500 million in operational savings.

In January, Union Pacific coaxed industry veteran Vena out of retirement, tasking him with implementing the precision plan. Vena already had the playbook down, having worked on a similar strategy during a four-decade career with the Canadian National railway.

Union Pacific was coming to precision railroading after many other major carriers. But Vena said he thought U.P. could become an industry leader.

Vena said as he toured the railroad’s facilities, his discussions showed many front-line rail workers had also bought into the vision.

“They want to get better,” he told industry publication Rail News. “They see the endgame.”


Union Pacific's Bailey Yard in North Platte, the largest railroad switching station in the world.

As Union Pacific has rolled out Unified Plan 2020, it has shut down a number of rail facilities across the country. U.P. operates in 23 states.

In Nebraska, the railroad earlier this year closed a maintenance facility in Morrill, a move that cost the jobs of 68 workers. Since June, cuts in North Platte at Bailey Yard, the world’s largest switching facility, led to the layoffs of 133 workers.

Just last week, Union Pacific also shut down its Neff Hump switching facility in Kansas City, Missouri. The railroad earlier this year shut down similar facilities in Hinkle, Oregon, and Pine Bluff, Arkansas. Vena said at the time that with reduced switching volumes, the yards were simply no longer needed.

“I don’t wake up in the morning and say ‘I am going to shut down another hump yard,’ ” he said.

U.P.’s earnings report Thursday provided an opportunity for the railroad to show a snapshot of its first-year progress under precision railroading. Company officials offered up the results of a number of performance metrics they’ve been tracking.

Just in the past nine months, the average length of a train is up 1,050 feet to over 8,000 feet, a gain of 15%. (By the way, given the average train speed of 24 mph, that means typically you’d spend another 30 seconds at a crossing waiting for a train to pass). In the railroad’s southwestern United States corridor, trains are 18% longer.

Systemwide, the average locomotive is also 18% more productive, allowing the railroad to park more of them.

The focus on moving cars rather than trains has cut idle time for cars in terminals by 20%. On-time delivery has also improved by 10 percentage points, the railroad said.

“All we are trying to do is move cars as fast as possible,” Vena said.


Union Pacific's headquarters at 14th and Douglas Streets in Omaha. The Fortune 500 company is one of the city's largest employers. 

There’s even a metric that measures how efficiently the railroad is using its people, called daily railcar miles per full-time employee. That’s up 4%.

However, even with the drop in traffic, the employment cuts laid out last week exceed what would be expected with that level of worker efficiency.

Union Pacific said the 13% overall job reduction includes a 13% cut to its train, engine and yard workforce and 15% cuts in management, engineering and mechanical fields.

The railroad declined to provide location-specific job reductions, including at its headquarters in Omaha. A company memo obtained by The World-Herald showed that the company cut about 160 Omaha employees in February, but Union Pacific employees say there have been other rounds of cuts as well.

Union Pacific officials said they expect further workforce reductions in the final quarter of the year. While they did not give a specific number, it appears from their target to involve roughly 1,200 in additional jobs. That would bring the 15-month total of lost jobs since precision railroading was launched to nearly 7,000.

While industry officials frequently talk about the efficiencies gained through precision railroading, rarely mentioned is what such deep job cuts do to employee morale. There was no such talk amid the metrics offered up during last week’s briefing.

Amid a previous round of cuts last year, Fritz acknowledged in a statement that the job cuts are “extremely difficult decisions to make because we recognize the impact they have on families, friends and co-workers.”

Union Pacific leaders last week did not share any metrics on safety. Vena reported only that the railroad’s “incident experience” had not improved and that it was “committed to getting better.”

When it comes to the bottom line, Union Pacific said its operating ratio for the third quarter set a company record, at 59.5% — already eclipsing the 60% target set for next year. For 2019, Union Pacific is on track to reach its $500 million operational savings goal.

The operating efficiencies have helped the railroad become more profitable despite the shipping volume reduction from uncertainty over tariffs and trade and reductions in coal consumption. Fritz said the operating gains will leave the railroad in an even stronger position once rail volumes pick up again, as they inevitably will.

“We are in a great place to compete for business,” Fritz said. “That’s where the work that the operating team has been doing on train size really pays off. Volume growth is going to be our friend.”

Vena said there is still much more operational efficiency to be gained. It’s a long game that will play out for years.

“We have to be smart about it,” he said. “You don’t want to blow up the place.”

'The Race to Promontory: The Transcontinental Railroad and the American West'

More than 13 million people visited Omaha in 2018, boosting the economy and saving you money

The number of out-of-town folks checking out the Omaha scene has climbed for the ninth year in a row, and the dollars travelers spend also is on the rise.

A study done by Tourism Economics for the local convention and visitor’s bureau shows the visitor count in 2018 topping 13 million.

That’s an annual growth of 3.5%, which is faster than the average 1.9% growth of the last five years. Included in the numbers are guests coming for business meetings, conventions, sporting events, leisure travel and visits to family.

While here, the tourists spent $1.3 billion, marking 4.3% growth over the previous year and also outpacing the five-year 2.8% average.

Deborah Ward, a spokeswoman for Visit Omaha, the local convention and visitors bureau, said the analysis by the Oxford Economics company covers Douglas County and was gleaned from hotels, airline, gas tax and other 2018 information.

She sees the findings as a testament to how the Omaha area has grown and developed its fun side.

“I credit that growth to the caliber of the experience you now have,” Ward said. “The quality of our live performances, the quality of our attractions. ... Living here, we kind of take those things for granted.”

An earlier survey released in 2017 asked guests where they visited. Ward said the rankings went like this: the Henry Doorly Zoo & Aquarium, Old Market, Bob Kerrey Pedestrian Bridge, downtown convention center and arena now known as the CHI Health Center, Durham Museum, Children’s Museum, Joslyn Art Museum, Lauritzen Gardens.

She noted ongoing work to improve tourist magnets, including a combined $1.3 billion going into the airport and downtown riverfront area, and the zoo’s $27.5 million sea lion exhibit set to open next year.

Tourism is important to local residents, Ward said, for reasons including the jobs it creates and dollars it saves households.

Consider these other highlights from the report released Monday:

  • Tourist/visitor activity last year sustained 17,826 jobs, both directly and indirectly. Tourism is the city’s eighth largest private sector employer.
  • Tax revenue generated by tourism spending reportedly saved each Omaha household $750 in annual taxes. (That’s the additional amount the household would have had to pay to maintain current government services if tourism went away.)
  • Of the 13.1 million visitors last year, about 5.7 million stayed overnight, while 7.4 million were daytime guests.
  • Of the $1.3 billion tourism dollars spent, $836 million came from those who stayed overnight and $471 million came from day guests.
  • A quarter of the tourist dollar is spent on food and drinks; another quarter is spent on retail; nearly 20% is spent on hotels; 15% on transportation; and 15% on recreation.
  • Visitor spending on recreation grew 5.6% in 2018, above its five-year average of 4%. Visitor spending at hotels grew by 3.5% last year, rebounding from a near-flat 2017.
  • Visitor spending since 2014 increased by $170 million, with nearly one-third of that increase coming from retail purchases. Local transportation spending grew by $15 million since 2014, with 90% of that increase just in 2018 as gas prices shot up.

A recap of the Henry Doorly Zoo's arrivals and departures in 2019

  • Tax revenue generated by tourist spending totaled $286 million. That’s $122 million collected in federal taxes, $83 million in state taxes and $81 million in local taxes. In all, that’s up from $268 million two years earlier.

Feds investigating 11 deaths at West Virginia VA hospital as homicides

CLARKSBURG, W.Va. — Four months after Melanie Proctor’s father was buried with military honors for his combat service in Vietnam, she came home to her farm to find an unfamiliar tan SUV in the driveway.

Two federal agents stepped out into the hot sun in August 2018.

“We’re here about your father,” the FBI agent said. “We don’t believe he died of natural causes.”

Flipping open a laptop on her kitchen counter, the agents showed Proctor her dad’s records from the three days he had been hospitalized at the local VA medical center.

What the line graph showed was alarming.

In the early morning hours that April, Felix McDermott’s blood sugar had bottomed to dangerous levels. The retired Army sergeant his family knew as “Pap” died the next morning from severe hypoglycemia.

Someone had given her father, who was not a diabetic, a deadly injection of insulin, the investigators told Proctor — and he was not the only one.

Multiple veterans had died under similar circumstances on the same ward, and the agents had come to Proctor’s farm in a hamlet 42 miles east of Clarksburg to ask the unthinkable: They wanted to dig up Pap’s body.

Proctor agreed, and her father was one of seven bodies exhumed in an investigation of 11 suspicious deaths at the Louis A. Johnson VA Medical Center, according to a person familiar with the case who, like others, spoke on the condition of anonymity because it is ongoing.

The 14-month inquiry is the latest criminal investigation to engulf the Department of Veterans Affairs, intensifying questions about whether the country’s largest health care system is doing enough to protect the veterans in its care.

The cascade of inquiries threatens to undermine trust in the long-troubled agency and undercut President Donald Trump’s promises to reform the system, the foundation of his pitch to veterans as he runs for reelection.

In Clarksburg, a small Appalachian community four hours west of Washington, hospital officials said they alerted VA leaders as soon as they learned that their medical staff suspected foul play.

The deaths from the second half of 2017 through July 2018, initially found to be of natural causes, are now being investigated as homicides. Federal authorities say they have identified a person of interest in the case.

The probe has come to focus on a now-fired hospital employee, a woman who worked the overnight shift as a nursing assistant and left last year, according to people familiar with the case.

The Washington Post is not using the woman’s name because she has not been charged. Through her son, she declined to speak to a reporter.

“When you have someone who is 80-something years old and they had health issues, you’re thinking, ‘This was their time,’ ” said Proctor, 53. “You don’t question it. None of us had a clue something was wrong.”

Investigators have identified similarities in nearly a dozen deaths: Elderly patients in private rooms were injected in their abdomen and limbs with insulin the hospital had not ordered — some with multiple shots, according to people familiar with the case. The insulin, which was quickly absorbed, was given late at night when the hospital staff had emptied out. Within hours, the veterans’ blood sugar levels plummeted.

The person of interest was assigned to monitor several of the veterans who died in what are known as one-on-one bedside vigils for patients who need extra attention.

Despite these common denominators, the medical staff and those with oversight of hospital procedures were slow to identify a pattern — a failure that could have cost lives, several people familiar with the investigation said.

The Clarksburg medical center reported 26 deaths from late 2017 through June 2018, according to an internal VA database that tracks mortality rates across the system. The suspicious deaths accounted for close to half of them, according to the data reviewed by the Post.

The case has also brought new scrutiny to VA’s internal controls. The medical surgical ward in Clarksburg, known as 3A, did not have surveillance cameras, according to people familiar with the case. The woman is believed to have had improper access to the medical supply room. The medicine carts on the floor also were routinely left unlocked.

Wesley Walls, a hospital spokesman, said the facility has “many protocols in place to safeguard medication.”

But lawmakers are still demanding answers.

“All of us are up in arms,” said Sen. Joe Manchin III, D-W.Va., describing the reaction of his colleagues on the Senate committee that oversees veterans’ care. He said he is incredulous that hospital leaders in Clarksburg took so long to put the pieces together.

“You mean to tell me that for nine months you didn’t know what was going on in your hospital?” Manchin said. “Either you didn’t care, or there was a lack of competency.”

The insulin deaths have set off rumors and unease in a community where the VA medical center is a local institution.

Linda Shaw, an Air Force veteran who has post-traumatic stress disorder, has canceled her therapy appointments at the hospital, which she says she is afraid to enter.

“I do not feel safe there.”

Video immigration hearings put strain on judges, asylum seekers

DALLAS — In Fort Worth, a judge in a black robe sits in a small courtroom with no place for the public to watch the proceedings.

Thirty miles to the east in a Dallas courtroom, a government attorney sits before a judge's empty bench.

At a federal lockup hundreds of miles away in Big Spring, detainees in prison garb line up in front of a camera.

In all three places, their images are beamed back and forth to each other so that asylum-seekers and other immigrants can learn their fate on big flat-screen TVs.

This is immigration court, where some attorneys and judges say a rapid expansion in the use of video conferencing is exacerbating difficult conditions in a system plagued by a backlog of more than 1 million cases.

Garbled voices and dropped video signals are just some of the aggravations for those in immigration courts. Attorneys for immigrants say they are inefficient. Judges cope with crushing caseloads. There's little electronic filing.

The number of migrants taken into custody along the U.S. southern border soared to nearly 1 million during the government's 2019 fiscal year that ended Sept. 30, according to Trump administration data released this month. The backlog has nearly doubled under President Donald Trump.

Attorneys worry that due process will suffer for both detained immigrants and those free but fighting deportation.

"It's way messier than I have ever seen it," said Dan Gividen, an immigration attorney who until May had been deputy chief counsel in Dallas for Immigration and Customs Enforcement, or ICE.

Paul Hunker, ICE's chief counsel for the Dallas region, defends the system, including the use of video hearings, which federal immigration law allows.

"It is fundamental to immigration due process that persons in removal proceedings can understand the charges against them, be heard and defend themselves," Hunker said in a statement. "Immigration hearings conducted by video teleconference fully accommodate these requirements."

Headaches extend beyond the video hearings.

On the tenth floor of the Earle Cabell Federal Building, a line weaves down the hallway toward Judge Richard Ozmun's immigration court. Inside Courtroom 3 on this day are many immigrant children. Ozmun towers over them, rubbing his temples near his thick white hair. Then, he rubs his eyes, too.

"I am going to be continuing cases for several years," the judge says to an attorney.

Judge Ozmun finds himself uttering almost the same refrain day after day:

"Some of these cases are years out."

"We are so overloaded with cases."

In the last year of President Barack Obama's administration, the backlog in the immigration courts was 516,000 cases. Now it is more than 1 million cases.

The Transactional Records Access Clearinghouse, a Syracuse University nonprofit, says cases for immigrants wait an average of two years, but some judges are scheduling cases to be heard six years out.

The number of immigrants apprehended at the border— there were 550,000 in 2016 and about 810,000 thus far this year — has overwhelmed an already overtaxed system. Trump's Justice Department has attempted to remedy things by, for example, decreeing a year ago that judges must complete 700 cases each year to earn a satisfactory performance rating.

Union leaders for the judges say they should control their dockets in the interest of due process, not quotas or goals. Changing case priorities — because of Justice Department orders, some more recent immigrant arrivals take precedence over the cases of immigrants who have been waiting longer — adds to the backlog, too, they said.

"We've seen this constant shuffling of the docket back and forth continuing on," Ashley Tabaddor, an immigration judge speaking as president of the National Association of Immigration Judges, said in a Sept. 26 press conference. "We've seen interference with every element of the judge's role. And we've seen the court essentially turned into a widget factory where everyone and every part is being treated as they're some sort of property being wiggled around."

In Dallas, on another court day, Ozmun is plowing through a day's docket of 60 cases again.

He's preparing to call a break. But attorney Amanda Doom stands up and asks if she might squeeze in her case. It's for a 16-year-old Honduran girl who was approved for a special visa for juveniles who have been abused, abandoned or neglected. A critical portion of the process has already been approved — and her deportation case needs to be terminated.

ICE attorney Eric Bales agrees to let the girl's hearing happen right away. The judge teases that he's being kind.

"That's because I didn't have to carry 800 pounds of files today," Bales jokes.

Piles of file folders are not unusual in immigration courts. That's because, despite years of planning, the courts still don't have an electronic filing system.

All parties quickly agree that Daffne Canales has passed requirements to get her visa and get going on her new life in the U.S.

Outside, the jean-clad teenager beams. Friends take turns hugging her. "You don't have to come back again," Doom says.

She also said such smooth proceedings are rare. The way things have gone for Laura, a 29-year-old asylum-seeker from Mexico, is rare, too. But not nearly as rare as it used to be.

The woman, who asked to be identified by her first name only because of security concerns, crossed the border in Nogales, Arizona, before making her way to relatives in the Dallas area.

The mother of two says she fled because of the constant threat of violence from cartel gangs. There are beheadings in the central Mexican region where she lived. "I want a better future for my children. I don't want them to grow up in fear."

But navigating the system can be mind-boggling. The Department of Homeland Security sent her two notices to appear at different places at the same time on the same day.

One was for her first official hearing in the civil immigration court. When she arrived, she was told she wasn't on the docket.

Laura then rushed to the other Dallas location she'd been told to go to by the second DHS document, where government contractors place ankle monitors on immigrants as an alternative to detaining them.

But once there, she says, she was told to go to a third location, an ICE office. There, she was told to report back in May of 2020.

Lawyers and immigrants have complained for at least a year about being given fake or dummy court appearance dates issued by the government.

Justice via video has been around since at least 1996. But its use has widened rapidly in recent years. Attorneys are fighting the hearings, but federal courts have said that such hearings are "consistent with legal due process," said Hunker, the regional ICE chief counsel.

But video hearings give an unfair advantage to the government, said Gividen, the ex-government attorney. "You can just make a better impression in person," he says.

Many immigration attorneys agree with him. Video conferences hamper direct contact between immigrants and their attorneys or make it difficult to examine key documents.

Amiena Khan, executive vice president of the judges union, says many judges understand why the government is using more video courts to deal with the backlog crisis.

"The agency is looking to speed the entire process up," she said. But with many of the changes, "what they are actually doing is lessening the effectiveness and efficiency of the court." The judge made clear she was speaking as a union official, and not in her capacity as a New York-based judge.

She is scheduling cases into 2024.

This report includes material from the Washington Post.