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Employee Retention of BNSF Railway

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Employee Retention of BNSF Railway - April 5th, 2011

Employee Retention of BNSF Railway

The BNSF Railway (reporting mark BNSF), formerly known as the Burlington Northern Santa Fe Railway, is an American freight railroad company headquartered in Fort Worth, Texas; it is one of seven North American Class I transcontinental railroads and the second largest freight railroad network in North America. Only the Union Pacific Railroad, its primary competitor for Western U.S. freight, is larger in size.

It was formed December 31, 1996, as the Burlington Northern and Santa Fe Railway when the Atchison, Topeka and Santa Fe Railway was merged into the Burlington Northern Railroad. In 1999 BNSF and the Canadian National Railway announced their intention to merge and form a new corporation entitled the North American Railways to be headquartered in Montreal, Canada. The United States' Surface Transportation Board (STB) placed a 15-month moratorium on all rail mergers, which ended this merger. On January 24, 2005, the railroad's name was officially changed to BNSF Railway.[2]

The BNSF Railway is a wholly owned subsidiary of the Burlington Northern Santa Fe Corporation, the holding company formed by the September 22, 1995, merger of Burlington Northern, Incorporated, and the Santa Fe Pacific Corporation. According to corporate press releases, the BNSF Railway is among the top transporters of intermodal freight in North America. It also hauls enough coal to generate roughly 10% of the electricity produced in the United States. The company's three transcontinental routes provide a high-speed link between the western and eastern United States.
On November 3, 2009, Warren Buffett's Berkshire Hathaway announced that it would acquire the remaining 77.4% of BNSF that it didn't already own for $100 per share in cash and stock - a deal valued at $44 billion. The company is investing an estimated $34 billion in BNSF and acquiring $10 billion in debt.[3][4][5][6][7] On February 12, 2010, shareholders of Burlington Northern Santa Fe Corporation voted in favor of the acquisition.

Burlington Northern Santa Fe Corporation (BNSF; NYSE:BNI) shareholders today voted overwhelmingly in favor of the company's acquisition by Berkshire Hathaway Inc. (Berkshire; NYSE: BRK.A, BRK.B), securing a path for BNSF Railway to continue to build upon its position as one of America's premier freight transportation companies.

In all, preliminary results show that more than 70 percent of BNSF issued and outstanding shares not owned by Berkshire or its affiliates were voted in favor of the transaction, above the 66-2/3 percent required. Additionally, holders of at least a majority of the issued and outstanding shares of BNSF voted in favor. Both of these votes were required under Delaware law to adopt the merger agreement and were reported at a shareholder meeting held today at BNSF headquarters in Fort Worth. Representatives of Innisfree M&A Incorporated tabulated the votes and acted as independent inspectors.

"Tomorrow begins the first century of ownership of BNSF by Berkshire Hathaway. I'm looking forward to every day of it as our railroad does its part to ensure the future prosperity of the country," said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer.

"We are at an important milestone in our 160-year history," said Matthew K. Rose, chairman, president and chief executive officer of BNSF. "This is a vote of confidence in BNSF and the future of freight rail, and it demonstrates how well our business model is aligned with our new parent company. By providing cost-effective and energy-efficient transportation that also benefits the environment, we are moving the goods that are crucial to consumers and our economy as our nation powers its way out of the recession."

The merger is expected to close on February 12.

Over the long term, the nation's demand for transportation is destined to grow. As the most environmentally friendly form of surface transportation, rail is more fuel-efficient for moving freight than using the nation's crowded highways. If just 10 percent of the freight that currently moves by truck were diverted to rail, fuel savings would exceed 1 billion gallons per year and annual greenhouse gas emissions would fall by more than 12 million tons. And as the nation's demand for transportation continues to increase, rail is an obvious solution to meet this challenge.

As a leader in environmental stewardship, BNSF can move a ton of freight an average of 470 miles on a single gallon of diesel fuel. As the rail industry's intermodal leader, each BNSF intermodal train can take 280 or more long-haul trucks off the nation's crowded highways.
With BNSF's large system, it hauls many different commodities, most notably coal and grain, as well as intermodal freight.
Predecessor Burlington Northern Railroad (BN) entered Wyoming's low-sulfur coal-rich Powder River Basin in the 1970s through construction of the Powder River Basin Joint Line with Union Pacific Railroad predecessor Chicago and North Western Transportation Company. Coal goes north in unit trains on the three-to-four-track Joint Line to Gillette or south to Orin, where older BN lines and other railroads take it in all directions to coal-burning power plants.[9]
BNSF serves over 1500 grain elevators, located mostly in the Midwest on former BN lines.[10] Depending on where the markets are, this grain may move in any direction in unit trains, or wait in silos for demand to rise. Most commonly, grain may move west on the Northern Transcon to the Pacific Northwest and its export terminals, or south to Texas and Gulf of Mexico ports.[9]
The Atchison, Topeka and Santa Fe Railway's main contribution to BNSF was the Southern Transcon, a fast intermodal corridor connecting Southern California and Chicago. Most traffic is either trailers of trucking companies such as intermodal partner J. B. Hunt, or containers from the Ports of Long Beach and Los Angeles. The latter begins its trip on the three-track Alameda Corridor, shared with the Union Pacific Railroad, and then follows BNSF rails from downtown Los Angeles.[9] Its route, the Southern Transcon, has been almost completely double-tracked, and triple-tracking has begun in areas such as Cajon Pass.

Retention Successes
Structured interview and focus group results revealed the following railroad employee retention successes:

• Common features that many focus group participants liked about their job included the job variety, their coworkers, the pay and benefits, the lack of direct supervision, and a feeling of job security.
• Most focus group respondents intend to make a career out of working for the railroad industry and were generally satisfied with their jobs. Factors that were identified that will affect their decision to stay or leave include changes to benefits (e.g., if employees have to pay more for their benefits), pay (e.g., a lack of pay raises), and work schedules, including furloughs.
4.5 Retention Challenges
Structured interview and focus group results revealed the following railroad employee retention challenges:
• Hiring individuals locally rather than forcing employees to relocate to undesirable locations
• Reducing or eliminating furloughs
• Providing realistic job previews
• Improving work schedules. Suggestions included greater predictability and less time away from home. Further, working for the railroad industry creates a strain on family relationships and has caused some focus group participants to lose friends because of their work schedules and unavailability. The upshot is that many focus group participants noted developing strong friendships with those with whom they work. One focus group respondent summarizes working on the railroad as follows: “It’s affected my social life. It’s affected my relationships. I don’t get to see my friends or family like I used to. It’s all encompassing. It’s your life.” Another respondent summarizes with some hyperbole about the general trade-off involved in working for a railroad: “If you want to make some money, you can, but you have to give up everything.”
• Common features that many focus group participants disliked about their job included work schedules, labor-management animosity, and issues related to pay.
• Generally, if an employee leaves the railroad industry, he/she does so within the first 5 years or so of employment. RRB data support this observation. Figure 10 illustrates this trend from 1999 through 2002 using data collected by RRB. The withdrawal12 rate drops from a high of almost 20 percent during the first 30 days to around 5 percent after 5 years of service. After 5 years of service, the average withdrawal rate plateaus, dropping from 5 percent at 5 years of service to 2 percent by 15 years of service (RRB, 2006). Representatives from the Class I railroads gave the following reasons for the drop off in withdrawals: railroad employees become fully vested in their retirement benefits after 5 years, employees receiving incremental pay receive 100 percent of their salary after 5 years, employees have become familiar with the railroad lifestyle and have accepted thislifestyle after 5 years, and employees have had positive exposure to older employees who have made a career out of working for the industry.

1. Why do railroad employees leave?
a) Are there different reasons why employees from different crafts leave?
b) Why do new hires leave during training? Why do new hires leave during their probationary period?
c) Are there different reasons why employees with different amounts of service leave (e.g., those with less than 5 years of service versus those with over 20 years of service)?
2. In your experience, is there a certain amount of time (years of service) after which employees generally become career railroaders? To what do you attribute this drop-off in voluntary separations?
3. What changes in company employment practices have there been over the last few years to promote retention?
4. Tell us about one or two recent, particularly successful approaches to retaining railroad employees at your railroad? What makes each approach so successful?
5. What are your railroad’s top three retention challenges over the next 5 years?

Last edited by bhautik.kawa; May 24th, 2015 at 12:04 PM..
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