Jan 4, 2020

Railroads cut workers as industry automates, implements cost-cutting strategies

Photo: Spencer Platt/Getty Images

More than 20,000 workers in the railroad industry lost jobs this past year, even as the U.S. economy continued its streak of moderate growth, the Washington Post reports.

Why it matters: Those numbers represent the biggest round of layoffs in the sector since the Great Recession — nearly a 10% drop in rail employment, per Labor Department data. Changes in the rail industry highlight signs of "ongoing pain" in the industrial sector, threatening middle-class jobs, the Post writes.

  • Some economists say American railways are enduring a "freight recession," with volumes dramatically dropping last year, notes the Post.

The state of play: President Trump's trade war has impacted U.S. agriculture and manufacturing, which in turn lowered demand for railroads to move products. The decline is also a result of the U.S. becoming less dependent on coal.

Yes, but: Railroad stocks soared after industry executives integrated automation and cost-cutting strategies to maintain profitability, "doubling down on the idea that rail's future entails longer, faster trains and fewer workers," per the Post.

  • Employment losses are expanding thanks to a technique called Precision Scheduled Railroading (PSR), which efficiently directs rail traffic.
  • Some on Wall Street view these shifts as a model for other industries during tough times. Norfolk Southern and Union Pacific stocks jumped 30% last year, according to the Post.

Worth noting: Rail industry leaders remain optimistic as Trump looks to finalize the U.S.-Mexico-Canada Agreement (USMCA), as well as a trade deal with China.

The bottom line: Freight declines have previously foreshadowed economic slumps "because they’re a barometer of how much stuff is heading to market," the Post writes.

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Manufacturing should bounce back in 2020

Illustration: Aïda Amer/Axios

Last year was one to forget for the world's manufacturers, as industry metrics declined to some of the lowest levels in years.

The state of play: Investors and industry insiders see the sector mounting a comeback in 2020 as the trade war and tariffs are expected to recede, global demand is expected to increase and companies begin to reroute their supply chains.

Go deeperArrowJan 15, 2020

Why U.S. manufacturing and services are moving further apart

Data: Institute for Supply Management; Chart: Axios Visuals

While U.S. manufacturing has fallen into its deepest hole in a decade, the all-important services sector keeps chugging along.

What's happening: The Institute for Supply Management's gauge of the U.S. services sector yesterday produced a reading solidly in expansionary territory and above expectations. That was a far cry from the company's manufacturing index, which last week hit its weakest level since June 2009.

Go deeperArrowJan 8, 2020

U.S. economy adds 145,000 jobs in final report of 2019

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 145,000 jobs in December, the government said on Friday, below economists’ expectations of 160,000. The unemployment rate held at 3.5% — a 50-year low — while wages grew 2.9% from a year earlier, the smallest gain since July 2018.

Why it matters: The U.S. job market held up in the final month of 2019, but heads into the election year with a slowing pace of job creation and wage growth.

Go deeperArrowJan 10, 2020