Union Pacific Corp. (NYSE: UNP) announced that they were to cut 750 jobs mostly located at the Omaha headquarters. Cuts are to include 500 management and administrative jobs as well as 250 hourly positions starting in September aimed to reduce costs at the company. These cuts will eliminate about 8% of the company’s employees and will reduce annual costs by about $110 million. This plan is expected to cost about $90 million including $15 million that will be put aside to pay plus pension benefits and other expenses.
Net income through the first six months of this year for the company totaled to $2.2 billion which is up 14% from last year. On Wednesday, shares of the company rose 1% and closed at about $106 a share. Shares have grown about 15% in the past year.
In recent years, the company has been trying to reduce a benchmark called the operating ratio where the lower the dollar in revenue is spent on expenses, the better it is. Union Pacific’s operating ratio last year was a 61.8 but is now aiming to deep lower to 55%.
Union Pacific announced on Wednesday that they would offer early retirements or buyouts to certain salaried employees in order to reach the number of planned cuts. If the goal is not reached in total numbers, job terminations will expect to take place. Nebraska Labor commissioner John Albin plans to contact affect Union Pacific workers with details on job fairs and re-employment programs.