Union Pacific considering hiring slowdown as economic outlook darkens
Union Pacific Corp’s (UNP.N) chief executive officer said on Thursday the railroad operator was considering slowing down the pace of hiring in the second half of the year amid a cloudy economic outlook, becoming the latest U.S. company to evaluate its staffing plans.
CEO Lance Fritz told Reuters in an interview the outlook was turning a “little cloudier” for consumer-facing companies, which is making railroad volume difficult to predict.
Commentary from one of the top U.S. railroad operators is the latest sign the U.S. economy is running into troubled waters, with some economists predicting a mild recession.
“The hiring plan is being looked at and adjusted,” Fritz earlier said during an investor call, as it lowered its U.S. industrial production forecast to a decline of 0.7% from a 0.5% fall estimated earlier.
A possible slowdown in hiring comes at a time when railroads are struggling to move cargo on time, which has invited severe criticisms from regulators and customers.
However, the company said it expects operating ratio, a key profitability metric for railroaders, to improve this year, even if it comes down to cutting costs rather than relying on volumes.
Shares of Union Pacific, which connects West Coast ports to key terminals such as Chicago, lost its gains in the day to trade flat in the afternoon session.
The company’s first-quarter profit trounced Wall Street estimates, as core pricing hikes and fuel surcharges offset the impact from a 1% fall in volume.
Operating ratio was 62.1% in the quarter, compared with 59.4% a year earlier. The lower the ratio, the better it is for the company.
Operating revenue for the quarter ended March 31 rose 3% to $6.06 billion, in line with analysts’ estimates.