CSX Transportation, one of the largest rail operators in North America, is not worried about the auto industry’s potential strike impacting their bottom line, according to their CFO. Sean Pelkey, who spoke at a transportation conference in New York last week, said that even if a strike was to occur, it most likely wouldn’t last long enough for his company to feel any ripple effects.
“The intel we have, our best guess, is even if there is a strike, hopefully, it will be short-lived,” Pelkey said. “There will still be vehicles that need to be moved, and when you think about the supply chain for inbound products, I don’t think auto companies will cut that off day one.”
The United Auto Workers (UAW) union, which is currently in the process of voting to move forward with a work stoppage, has nearly 150,000 members ready to walk off their jobs due to discrepancies around wages, benefits, and job security. According to some estimates, this could result in $5 billion in losses after 10 days.
According to the finance chief, the auto industry isn’t the only subset of his customers that may have a decreased need for CSX services moving forward. He said the chemical sector has been lagging, consumer demand in paper and pulp has dropped to the point where freight demands are decreasing, and livestock feed is more now commonly trucked in locally than shipped out via rail.
Pelkey, when discussing the finances of his own company, said he still needs to cut $2 million from CSX’s budget. He also claimed the company is focused more on outsourcing, particularly in the maintenance area. This will translate into further cost savings, regardless of any strikes, and get the company closer to its ideal budget.
“Our best guess, is even if there is a strike, hopefully, it will be short-lived.”
CSX’s finance chief also mentioned the company’s labor issues, which he aims to overcome. Shifting its focus from conductor training to engineer training, the company is looking to build more flexibility into its protocols to respond more dynamically to shifts in demands for service.
“[That] might mean you’re running… a couple million a month heavy versus where you’d want to be, but you do the math… it pales in comparison to what you could translate that into in the spring if and when we see some growth opportunities,” Pelkey said.