on Thu Mar 8 10:50:25 2018
Jacksonville Daily Record
CSX targets 6,200 more job cuts
Railroad wants reductions by 2020; executive says the company was “bloated.”
By Max Basch, Contributing WriterAfter cutting 4,600 jobs last year (including consultant positions), CSX Corp. is targeting an additional 6,200 job cuts over the next three years, reducing total employment to 21,000 by the end of 2020.
Monday Mar. 5, 2018 06:00 AM EST
“We will achieve this principally through attrition,” Executive Vice President and Chief Administrative Officer Mark Wallace said Thursday at the company’s investor and analyst conference in New York.
Wallace joined the Jacksonville-based railroad company in March 2017 when Hunter Harrison was brought in as chief executive officer.
“We understand at CSX that every job has to add value. We were a bloated organization,” Wallace said.
Harrison, of course, began implementing an overhaul of CSX’s operations that included the job cuts.
“What Hunter had done in a short period of time in transforming the organization was simply amazing,” said James Foote, who took over as CEO when Harrison died in December.
“We are committed to following through with what he has started,” Foote said.
The conference served as an introduction for CSX’s top officers after it overhauled its executive suite last year.
Foote said he had done just about every job there is in the industry before becoming CEO.
“This is not my first rodeo. I’ve been in the railroad industry for 45 years,” he said.
“The company showcased the new management team, which is a combination of highly experienced Canadian National veterans and mid-level talent that Hunter Harrison had hand-selected within the CSX ranks shortly before he passed,” Credit Suisse analyst Allison Landry said in her report on the conference.
“We think that all of this helped to ease investor concerns about execution of the Precision Railroading strategy, as well as the depth of the bench at CSX,” she said.
Analysts indicated there were no surprises in CSX’s financial forecasts.
“CSX’s much-anticipated analyst meeting did not disappoint. Management supported its previously disclosed 2020 margin target with confidence, enthusiasm, and plenty of detail,” said Amit Mehrotra of Deutsche Bank in his report.
“Key financial targets were largely set/communicated prior to the conference. What CSX needed to do at this conference was to provide a more detailed path to realize these targets and for management to gain investors’ confidence. We think they achieved both,” said Fadi Chamoun of BMO Capital Markets in his report.
Morgan Stanley analyst Ravi Shanker, who maintains an “underweight” rating on CSX’s stock, was more skeptical than others about CSX’s outlook.
“CSX’s analyst day was impressively heavy on detail but light on breaking news given the slow-drip of long-term targets coming into the event. However, we still believe the path to the new, lowered bar post-Hunter Harrison will be more challenging than the market thinks,” Shanker said in his report.
But many analysts were pleased with what they heard Thursday.
“All told, the event was positive. 2017 was clearly a year marked with many significant events, beginning with Hunter Harrison joining the organization as CEO,” Robert W. Baird analyst Benjamin Hartford said in his report.
“Despite his tragic passing, the event made clear that the significant changes made over the last 12 months provide the foundation for a transformation in CSX’s network, its service and margin profile, and its long-term growth potential,” he said.