They FIRED 45,000 Railroad Workers — Now Locomotives Sit ROTTING

Added: 2026-05-11

[00:00:00]In 2015, America's freight railroads employed roughly 170,000 workers. By 2022, nearly a third of those jobs were gone, and thousands of diesel locomotives sat parked in storage yards >> [music] >> from Nebraska to New Mexico.

[00:00:16]But the railroads didn't go bankrupt.

[00:00:18][music] The freight railroads posted record profits year after year, while the workforce shrank and the equipment rusted.

[00:00:27]So, what happened?

[00:00:28]And why is almost nobody talking about it?

[00:00:32]Nobody was paying attention to Hunter Harrison back in the late 1960s. He was just a young carman oiler at the Frisco Railroad, greasing axle bearings on freight cars >> [music] >> at a maintenance shop in Memphis, Tennessee.

[00:00:44]He had not gone to business school. He had barely finished high school. But Harrison was watching everything that moved through the railyards, and more importantly, everything >> [music] >> that did not.

[00:00:56]One afternoon, the Frisco's operations chief, a man named Bill Thompson, stopped by the control tower at Tennessee Yard. Thompson pointed out the window at the tracks below, packed with freight cars sitting idle, and asked Harrison what he saw.

[00:01:11]Harrison told him he saw a lot of business. Thompson shook his head. He told Harrison he was looking at a lot of delayed traffic just sitting there doing nothing. That exchange rewired Harrison's entire understanding of railroading. A freight car parked on a siding is not generating revenue, and neither is a locomotive idling in a yard or a crew waiting for a late consist to arrive.

[00:01:34]Harrison took that lesson and spent the next three decades building a system around it, a philosophy that would eventually reshape every major railroad in North America.

[00:01:44]He called it precision scheduled railroading.

[00:01:47]>> [snorts] >> How does a carman oiler with no college degree end up reshaping an entire industry? By starting small and proving the skeptics wrong at every stop.

[00:01:57]The concept was deceptively simple.

[00:01:59]Instead of waiting for trains to fill up before dispatching them, you run them on fixed schedules.

[00:02:05]If a train is supposed to leave at 8:00 in the morning, it leaves at 8:00.

[00:02:09]Whether there are 60 cars hooked up or 100.

[00:02:12]You move freight point-to-point instead of routing it through sprawling classification yards where cars can sit for days.

[00:02:19]You measure delivery times in hours, not days.

[00:02:22]>> [music] >> And you cut anything that does not directly contribute to moving trains faster with fewer resources.

[00:02:29]Harrison first tested precision scheduled railroading at the Illinois Central Railroad in 1993.

[00:02:35]Illinois Central was a small freight line running between Chicago and New Orleans, and its finances were in terrible shape. The operating ratio, which measures how many cents a railroad spends to earn a dollar of revenue, sat at a dismal 98 cents.

[00:02:50]The company was barely surviving.

[00:02:53]Harrison drove that operating ratio down to 60 cents on the dollar.

[00:02:57]The transformation was staggering.

[00:02:59]But Harrison was not satisfied with fixing one small railroad. What happened next would change the entire North American freight industry.

[00:03:08]When Canadian National Railway acquired Illinois Central in 1998, Harrison came with the deal.

[00:03:14]He became Canadian National Railway's chief executive in 2003.

[00:03:18]And applied the same playbook across a continental rail network stretching from the Gulf Coast to the Canadian prairies.

[00:03:25]Canadian National went from having the worst profit margins among North American Class 1 railroads to having the best.

[00:03:33]Wall Street took notice, and investors started asking why every railroad could not deliver numbers like that.

[00:03:39]This is where the story takes a turn nobody expected.

[00:03:43]In 2012, hedge fund manager Bill Ackman and his firm Pershing Square Capital Management launched a proxy battle to install Harrison as chief executive of Canadian Pacific Railway.

[00:03:55]It worked.

[00:03:57]Harrison took Canadian Pacific Railway's operating ratio from over 80% down to under 59% in just 5 years.

[00:04:04]Shareholders made billions of dollars on the transformation.

[00:04:08]And then Harrison did something nobody expected. The same year he left Canadian Pacific in early 2017, he made his final move. He resigned and took over CSX Transportation, the third largest freight railroad in the United States, headquartered in Jacksonville, Florida.

[00:04:26]What happened next inside CSX was swift.

[00:04:30]In just the first 2 years under precision scheduled railroading, known as PSR, the railroad cut 22% of its equipment maintenance workers, the people who kept locomotives and freight cars in safe running condition.

[00:04:42]16% of train crews were eliminated. 11% of maintenance of way employees, the crews who inspected and repaired the physical track, were gone.

[00:04:52]The locomotive fleet shrank by 900 units. Over 26,000 freight cars were pulled from the network.

[00:05:00]Harrison did not live to see the full consequences of what he had set in motion at CSX.

[00:05:06]He died on December 16th, 2017, just 8 months into his tenure as the railroad's chief executive officer, from complications of a sudden illness at the age of 73.

[00:05:18]But his system did not die with him. If anything, it spread faster after he was gone.

[00:05:24]Norfolk Southern, Union Pacific, Kansas City Southern Every remaining Class 1 railroad that had not already adopted PSR rushed to implement their own version. Wall Street expected it.

[00:05:37]Shareholders demanded it.

[00:05:40]And the railroad executives who questioned PSR were replaced by those who embraced it.

[00:05:45]What comes next is the part that still does not make sense to a lot of people.

[00:05:49]The layoffs accelerated throughout the entire industry.

[00:05:53]According to the Bureau of Labor Statistics, the rail transportation sector lost 40,000 jobs between November 2018 and December 2020.

[00:06:02]The Surface Transportation Board estimated that large freight carriers employed 30% fewer workers in 2022 compared to just 4 years earlier.

[00:06:12]The numbers at individual railroads were even more striking.

[00:06:17]Union Pacific, operating out of its headquarters in Omaha, Nebraska, eliminated more than 10,000 positions in under a decade.

[00:06:25]A 25% workforce reduction.

[00:06:29]Norfolk Southern's headcount dropped from roughly 30,000 employees in 2015 to about 19,000 by 2022.

[00:06:38]At the International Association of Machinists, whose members maintain diesel locomotives at Class 1 railroads, membership fell from around 7,700 in January 2018 to just over 5,100 by January 2023.

[00:06:54]These were not administrative positions or redundant middle management.

[00:06:58]These were the mechanics who inspected wheel bearings, the track crews who measured rail gauge in the rain, the signal maintainers who kept the wayside detection systems running.

[00:07:08]And it was not just the railroad workers disappearing. The machines were disappearing, too.

[00:07:13]Across the country, thousands of diesel-electric locomotives began appearing in long, silent rows on storage tracks, desert sidings, and fenced-off yards in the rural West.

[00:07:25]BNSF Railway had roughly 2,500 locomotives parked by the spring of 2020.

[00:07:34]Union Pacific sidelined between 3,000 and 4,000 units across its sprawling network.

[00:07:40]Norfolk Southern announced plans idle 500 locomotives by 2021.

[00:07:45]CSX had already retired 900 from its active fleet. [music] Pay attention to the scale because it explains everything that happened afterward.

[00:07:54]Industry analysts estimated [music] that 20 to 30% of the nearly 39,000 registered North American locomotives were sitting in storage at any given time.

[00:08:05]Many of them were older models, GE Dash 8 locomotives built in the 1980s and the 1990s, slowly being stripped for salvageable parts or left to corrode on remote sidings in Arizona and New Mexico where the dry heat preserved the paint but could not stop the rust from creeping through the undercarriages.

[00:08:24]Some of these storage lines stretched for miles, visible from highway overpasses and satellite imagery.

[00:08:31]Hundreds of locomotives lined up nose to tail with their batteries disconnected and their air brakes bled off.

[00:08:37]These were not broken machines. Most of them ran fine.

[00:08:41]They were parked because the railroads had calculated that fewer trains hauled by fewer locomotives operated by fewer workers produced a better number on the quarterly earnings report. The operating ratios kept dropping, the stock prices kept climbing, and the storage yards kept filling up with machines that nobody needed anymore.

[00:09:00]Now, you would think that cutting this many workers and parking this many locomotives would mean the railroads were in financial trouble.

[00:09:07]They were not. Not even close.

[00:09:10]The six Class 1 freight railroads in the United States posted combined earnings exceeding $24 billion in 2023 alone.

[00:09:20]So, where was all that money going? Not into track maintenance, not into locomotive overhauls, not into hiring the inspectors who check wheel bearings at 3:00 in the morning.

[00:09:30]It was going into stock buybacks.

[00:09:32]In 2022, Union Pacific spent $6.3 billion repurchasing its own shares at its corporate offices in Omaha.

[00:09:42]CSX spent $4.7 billion.

[00:09:46]Norfolk Southern had announced a $10 billion share repurchase plan just months earlier in March 2022.

[00:09:55]At several Class 1 railroads, the money spent on buying back stock exceeded the total amount spent on employee compensation that same year.

[00:10:03]It gets worse.

[00:10:05]Surface Transportation Board Chairman Martin Oberman estimated that since 2010, the rail industry had spent $46 billion more on buybacks and dividends than on capital investment in the railroad infrastructure itself.

[00:10:20]That is $46 billion that could have gone into track upgrades, new equipment, safety technology, or staffing.

[00:10:29]Every dollar of that $46 billion went to Wall Street instead.

[00:10:35]If you're finding this useful, consider hitting subscribe so you don't miss the next one.

[00:10:40]We cover railroad and infrastructure stories every week. And here's where things started to go wrong in ways the quarterly earnings reports could not predict.

[00:10:50]The railroad workers who remained on the job were stretched dangerously thin.

[00:10:55]Employees from coast to coast described unpredictable schedules, mandatory overtime with little notice, and attendance policies so punitive that calling in sick could trigger a disciplinary review.

[00:11:08]In 2022, 12 rail unions representing over 100,000 workers came within days of launching a national strike.

[00:11:16]The core demand was not even about pay.

[00:11:19]It was about paid sick days. [music] At the time, railroad workers covered by these contracts had zero guaranteed days of paid sick leave.

[00:11:29]Congress intervened in December 2022 to prevent a rail strike that would have paralyzed the nation's supply chains.

[00:11:37]Lawmakers imposed a labor contract on the industry, and they declined to include a paid sick day provision.

[00:11:43]The workers went back to their locomotives and freight yards, [music] and the trains kept running.

[00:11:49]Then came the moment that forced the entire country to pay attention.

[00:11:53]Then, on the evening of February 3rd, 2023, Norfolk Southern freight train 32N was rolling through East Palestine, Ohio, a small town of about 4,800 people near the Pennsylvania border.

[00:12:08]The train was hauling 141 freight cars, 20 of which contained hazardous materials including vinyl chloride and butyl acrylate.

[00:12:17]Somewhere along the route, a roller bearing on one of the rail cars began to overheat.

[00:12:22]That car had passed through three separate freight yards without being inspected by a qualified car mechanic.

[00:12:28]A wayside heat detector finally caught the failing bearing and triggered an alarm in the locomotive cab. A crew of two and their trainee applied the emergency brakes. The overheated axle snapped apart beneath the freight car, triggering an emergency brake application that sent 38 cars piling into each other along the tracks.

[00:12:45]Several tank cars caught fire almost immediately.

[00:12:49]Hazardous chemicals burned on the tracks for days, and emergency crews eventually conducted a controlled release of vinyl chloride that sent a towering [music] plume of toxic black smoke into the sky above the Ohio countryside.

[00:13:02]Residents within a 1-mile radius of the East Palestine derailment site were evacuated from their homes.

[00:13:08]Dead fish appeared in the local creeks.

[00:13:11]Families reported headaches, nausea, and a chemical taste that lingered in the air for weeks after they returned.

[00:13:18]What the investigation uncovered next made the situation even worse. The National Transportation Safety Board and the Federal Railroad Administration both confirmed that the derailment was caused by an overheated wheel bearing that had gone undetected during the [music] train's journey.

[00:13:34]A union official from the Transportation Communications Union testified before Congress that Norfolk Southern had been slashing the number of expert car inspectors for years. [music] Instead of the full 90 to 105-point mechanical checks performed by qualified carmen, the railroad had been relying on abbreviated 12-point visual inspections conducted by the train crews themselves.

[00:13:56]Those shortened checks were originally designed as a temporary stopgap to move a freight car to a proper inspection facility.

[00:14:02]Under the pressures of precision scheduled railroading, known as PSR, they had quietly become the primary method of inspection across much of the industry.

[00:14:12]Railroad Workers United, a rank-and-file coalition representing workers from every rail craft, issued a statement that landed hard. They said the wreck of train 32N had been years in the making, the product of decades of cost-cutting, workforce reductions, and deferred maintenance. And East Palestine was not an isolated event.

[00:14:34]In early 2024, a CSX freight train derailed in Morgan County, West Virginia, after a track geometry defect went unrepaired, releasing hazardous material into the surrounding area.

[00:14:47]Months later, a collision involving Norfolk Southern trains in Easton, Pennsylvania, sent two locomotives tumbling into the Lehigh River, leaking diesel fuel into the water.

[00:14:59]The Surface Transportation Board responded by ordering all Class 1 freight railroads to submit regular employment data, so federal regulators could monitor whether staffing levels were adequate for safe rail operations.

[00:15:11]A proposed Railway Safety Act gained bipartisan support in Congress.

[00:15:15]Norfolk Southern's chief executive officer promised the company would become the gold standard of safety in the railroad industry.

[00:15:22]But here is the detail that everyone keeps overlooking.

[00:15:25]>> [music] >> The fundamental financial structure of the industry has not changed. The railroads are still governed by the same operating ratio logic that Harrison embedded in their corporate DNA decades ago.

[00:15:37]Head count remains >> [music] >> lean.

[00:15:39]Locomotive maintenance budgets remain tight.

[00:15:42]And the thousands of diesel locomotives that were parked during the great precision scheduled railroading contraction are still sitting in those desert storage yards on remote sidings behind chain-link fences. Their paint fading under years of sun and wind and neglect.

[00:15:58]Meanwhile, the freight railroad industry is actually hauling about 21% less cargo than it did in 2006.

[00:16:05]Despite a growing American economy and rising demand for consumer goods, the railroad's share of the overall freight market has been shrinking year after year, losing ground to trucking on taxpayer-funded highways.

[00:16:19]The Class 1 railroads made their record profits not by carrying more freight, but by carrying less of it more cheaply, turning away unprofitable routes, running longer and heavier trains with smaller crews, and funneling the savings into shareholder returns.

[00:16:35]Hunter Harrison once stood in a railyard control tower in Memphis and looked out at freight cars sitting still on the tracks.

[00:16:42]He saw waste.

[00:16:44]He spent his entire career trying to eliminate it.

[00:16:47]What he might not have imagined is that decades later, the railroads would be defined by a different kind of stillness.

[00:16:54]Rows of diesel locomotives lined up across the American landscape, their engines cold, waiting for a dispatch call that may never come.

[00:17:04]Carmen and track workers who spent entire careers keeping the system running were cleared out of the shops and sent home.

[00:17:11]Small towns along the main lines live with the consequences of decisions made in corporate boardrooms hundreds of miles away.

[00:17:18]The trains are still running across this country, but there are fewer of them with fewer people aboard. And on tracks that carry the weight of an industry that chose its shareholders over nearly everything else.

[00:17:31]Whether that was ever really about efficiency or whether it was about something else entirely depends on where you are standing along those tracks, and whether you are one of the people who got left behind.