News & Reviews News Wire CSX’s Foote: Blaming PSR for rail problems is ‘nonsense’

CSX’s Foote: Blaming PSR for rail problems is ‘nonsense’

By David Lassen | July 19, 2022

CEO outlines ongoing crew shortages, need for changes in jobs

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Man speaking at microphone
CSX CEO Jim Foote speaks to the Midwest Association of Rail Shippers conference on Tuesday, July 19. (Trains: David Lassen)

LAKE GENEVA, Wis. — It just may be that CSX Transportation CEO Jim Foote is a bit weary of hearing about the evils of Precision Scheduled Railroading.

In his customary blunt style, Foote gave that impression Tuesday when speaking to the Midwest Association of Rail Shippers about ongoing service issues for his railroad and the industry as a whole.

“Everybody says, oh, my God, he’s beholden to Wall Street,” Foote said. “Do you have any idea how much money CSX has lost because of our failure to move freight? Enormous amounts of money. This doesn’t benefit me. This doesn’t benefit the shareholder. This doesn’t benefit anybody.

“This is not the way any person would want to run the company. And that’s why we’re working so hard. Because if we don’t serve the customers, we simply don’t make any money. That’s what we’re here for.

“We need to do a lot of things differently, and it has nothing to do with principles of scheduled railroading. That’s just nonsense. We’ve been talking about that way, way, way too long. It’s just an excuse. It’s an excuse to blame the railroad management for something they intentionally did. It’s insanity.”

Foote, like many railroad executives, contends the ongoing problems are strictly a matter of crew shortages.

“If I had the decision to make over again … we would have never laid off an employee,” Foote said. “Never. But there was no vision of the future, there was no idea what we expected to encounter.”

The expectation, he said, was that the business would follow the usual cycle of layoffs and recalls it has used through past. This time, though, it didn’t work that way. Train and engine crews were cut from about 7,000 at the end of 2019 to about 6,000; when workers were recalled, that number increased to 6,800.

The railroad then hired another 2,000 people — but today finds itself with about 6,600 train and engine employees.

“We’ve hired 2,000 employees and we’re going backwards,” Foote said.

“We have an issue with retention. … Half of them, in the first six months, quit, many of them in the early days of when they’re actually called to go to work on a regular assignment, or for the first time when they realize they’re going to have to work on a weekend or a holiday, or on their kid’s birthday.”

While he says the situation is “beginning to stabilize,” he says the company must find a way to make its jobs more desirable — echoing a theme he made in May at the North American Rail Shippers meeting in Kansas City, when he called for better relations with workers [see “Foote calls for fundamental change …,” Trains News Wire, May 10, 2022].

“We need to provide employees with greater flexibility,” he said. “Is it a different kind of bid arrangement, where they can go work on this kind of job one day, and this kind of job another day — yard jobs, where they can have a regular assignment and work regular days off, and then the people that want to make more money can bid the road jobs.

“We need to understand and we need to communicate and work more with our employees, so we can change what clearly has become a frustrating environment them. If we’re going to be successful … we must have a happy, productive, unionized workforce.”

Foote also touched on the naming of a Presidential Emergency Board to address the ongoing dispute between railroads and unions over a new national contract.

“It’s very frustrating for me, it’s very frustrating for union leadership, and it’s extremely frustrating for our employees that it takes 2½ years for contracts to be renewed,” Foote said. “… It hasn’t been helpful with the retention issue that we’ve had. This could be one of the main rain clouds out there that will go away, and we’ll be in a great spot.”

49 thoughts on “CSX’s Foote: Blaming PSR for rail problems is ‘nonsense’

  1. Mr. Foote, As a stockholder, I believe you AND all of the other bonus receivers over the last 4 years should, 1.return with interest (use credit card balance transfers as the rate) ALL of the bonus monies you have been paid in that time period. 2, have your salaries reduced by 30% unless and until the railroad performance metrics improve to the best over the last decade as a goal. 3. return to the company treasury all stocks you have been granted since the PSR program was announced.
    Or, please tender your resignation effective 1 October.

  2. Gee, I bet the fact that the two largest shareholders of CSX are Vanguard and BlackRock has nothing to do with what’s happening. You know, the monster corporations that have their tentacles in nearly every major American company, pushing their “ESG” agenda.

    BlackRock’s Larry Fink and his buddy at the World Economic Forum, Uncle Klaus Schwab, are laughing at us all.

  3. Not a fan of PSR but what’s being touted out there as PSR is neither precision, nor it is scheduled, nor by definition is it railroading. Shuffling engines and cars around by theoretical formulae will *never* work. Ignoring boots-on-the-ballast experience — and the needs of shippers/receivers — is foolish at best, dangerous at worst.

  4. “No vision”? There was a “vision”, future, projection, or whatever is “CSX-speak” for what management thought was going to happen. Also, there was “path” to recovery if things went wrong. CSX got both wrong. HHH died in 2017 leaving CSX in disarray; Foote deserves our gratitude for putting things in order and making it a better company. Perhaps now is time for a change.

  5. Foote is ‘nonsense’ and should be fired, along with all the other supporters of the ‘nonsense’ PSR.

  6. Would be interesting if a survey of short line and regionals were taken to determine the percentage of T&E folks furloughed of those “private” carriers versus C1″s.

  7. And Foote is the guy who said (paraphrasing), “We need a major reset in our relationships with our T&E employees” one week, then turned around and issued a full-throated call for one-person crews the next.

  8. And Foote is the guy who said (paraphrasing), “We need a major reset in our relationships with our T&E employees” one week, then turned around and issued a full-throated call for one-person crews the next.

  9. Worship the almighty OR and what do you get? Every other metric in the toilet.

    Life is a balancing act. Find that balance. It should be obvious to all this [current situation of lost employees, lost customers, etc]. isn’t it.

  10. Ahem, Mr. Foote You spent a good portion of the last 4 years savaging the company with a meat-ax. CSX has the worst record in the industry for service failures and accidents. It hasn’t figured out how to get thru western gateways expeditiously. It’s failures to synchronize transloads with OTR trucks are a big part of the ATA estimate of $75billion in lost time at a time when we need every truck driver hour to be productive, not sitting waiting. In short, Mr. Foote is author of a host of foreseeable, avoidable failures.
    The industry has not just one invested party–shareholders–but two more: shippers and the general public in the form of government. The company is obligated to all three, not lop-sidedly to only the share-holders. The cost of an inefficient, take it or leave it management is a drag on the national economy. The country cannot hobble along with an inefficient transport system and compete with China and Europe. We’ll either get it right or get left in the dust.
    Mr. Foote seems to have made a career at CSX of derstruction papered over with public pronouncements charachterized by prevarication fortified with amnesia

  11. Foote has no skin in the game. he’s going to.make millions regardless of how the company does just like the other class one CEOs. and it is mostly because of PSR that the railroads are in the predicament they are in, thanks to wall street and greedy CEOs who don’t know the first thing about railroading

  12. I have never forgotten an Amtrak crew talking about the “Nazi Southern” management.
    Too many RR management think in dictatorial ways.

  13. Here is what Napoleon said after losing at Waterloo….

    “My regrets are not for myself but for unhappy France! With twenty thousand men less than I had we ought to have won the battle of Waterloo. But it was Fate that made me lose it. ‘ The Emperor then told why he did not thoroughly understand the battle.”

    Sound familiar?

  14. Lake Geneva. No railroads, no industry. But a nice resort community for execs to practice using their company credit cards.

  15. String him and the rest of the CEO’s up
    Have them lace up and walk a mile in our boots and have their phones ring all the time for a call at any time and stay out of town at the budget hotels we stay at for 6 months. And go through all the Crap they implement on us.
    Maybe, just maybe they would get a taste of what real work and no life is like instead of living how they do.

  16. Regionals and shortlines seem to do a better job running their respective businesses than the big boys. Why? Because they are customer focused and pursue traffic if they can make a buck.

  17. He’s right.
    Don’t blame a model – PSR.
    Blame his inept management team which would have a hard time running a lemonade stand.

  18. It is at least time to nationalize the infrastructure, an interstate rail system, and institute open access to qualified operators. This should go a long way toward reintroducing completion with consequent concern for service. The OR should no longer reign supreme and society should benefit from the contributions that the efficiency of the steel wheel on the steel rail can contribute.

    1. Seriously? You want to turn the railroads over to a government that can’t manage the Postal Service, Social Security, the Interstates, the air traffic control system, the Veterans Administration, etc., etc., etc.
      You can NOT be serious.

  19. Excuses, excuses, excuses! That’s all that comes out of the mouths of modern railroad executives. They say PSR isn’t the problem and that they aren’t beholden to Wall Street, which is a big, fat lie.

    My support for railroad nationalization grows each day.

    1. I share your frustration, but with nationalization we would trade one disaster for another – which, with government involved, would be a disaster for decades. I sincerely hope that Class I mid-level management – the up-and-comers (who weren’t laid off, anyway) – see the disaster their superiors have created. The message to Wall Street in the future needs to be: we will make you a lot of money, but you need to understand the long-game nature of our business. EHH sold “get rich quick” snake oil to Wall Street and now the industry is in a bind; future private-industry railroad leadership needs to have the courage to change the message, not hand it over to the government.

  20. Let’s see, I constantly hear on this forum that private industry would do a better job than government in running things. It doesn’t seem to have done so this time, and the blame is squarely on the B schools and their financialist short term out look. In 1929-32 most industries that had skilled workers took a long time to lay them off, but not today. Miss a quarter, heads roll usually at the lower end, management stays the same and pays itself bonuses. Couple that with the worst hours of work schedule of any major industry–no wonder the chickens have come home to roost. But railroads are just part of the problems with our failed economy.

  21. “But there was no vision of the future, there was no idea what we expected to encounter.”

    In other words, there was a massive failure by the senior management, starting at the Board of Directors and on down several levels from there. The only justification for the exceedingly generous, almost obscene, pay levels for those folk is that they have the skill set to keep the business running smoothly despite economic ups and downs. Perhaps eliminating the bonuses and slashing the salaries until operations return to an acceptable level will wake them up. As Robert Ray says, a number of large industries have exhibited the same inadequate management.

  22. In some defense of Foote it’s not just the railroads. Companies everywhere are having trouble hiring people. Airline travel is evidently a disaster right now. Not only are the airlines short of people but airports and TSR are also well below the number of employees needed. Oil companies can’t drill wells because they can’t find employees. Restaurants are cutting hours because they are short of employees.

    1. But Robert, if they hadn’t laid off their employees, or so many (the big companies with deep pockets) they would not be in the mess they are in today. Yes they would have taken a financial hit they could of afforded but what is it costing them today?
      Unlike the service industry RR’s and airlines can’t just go hire people and turn them loose, months of training first.
      Yes maybe some trimming but not to the bone.

  23. “If I had the decision to make over again … we would have never laid off an employee,” Foote said. “Never. But there was no vision of the future, there was no idea what we expected to encounter.”

    So Foote has worked his entire career in the RR business, over 40 years, been many ups and downs in the economy and he hasn’t figured out till now if you lay people off because business is slow it will come back to haunt you?
    Definitely a sign of a poor leader. A leader is suppose to have vision
    The people make the company, and in the RR business that largely falls on the operating folks.

  24. Folks, you make good points.

    However, Mr. Foote’s own statement is the most telling, “If I had the decision to make over again … we would have never laid off an employee,” Foote said. “Never. But there was no vision of the future, there was no idea what we expected to encounter.”

    PSR was developed in 1993 by EHH to maximize investor reward by reducing costs as low as possible. A low OR provided the vehicle for stock by-backs and high ROIs to investors. However, Wall Street investors are not interested in the future. They only look at the next quarter or two. If they look a year into the future, that is their “vision of the future.”

    CSX started PSR in 2017, well before the pandemic. According to “Breakthrough,” “However, this focus on OR may have certain drawbacks because the priority is placed on short term gains. As a result, these railroads tend to focus on traffic that fits this model and do not seek shippers who are not a good fit.” Further, “CSX is continuously experiencing service issues after eliminating nearly 40 percent of their lanes at the end of 2018.”

    In 2021, President Biden directed all government agencies to fire employees that refused to take the covid shots. CSX, like other railroads, jumped on that bandwagon and fired T&E employees who saw the shot for what it was and refused to take the shots.

    Railroading is a complex undertaking with many moving parts. To a small degree, Mr. Foote is correct solely about blaming PSR. With that said, the blame lies squarely with Mr. Foote for failing to grasp the ramifications myopic short- term decisions on long-term impacts.

    In short, Mr. Foote shot himself and CSX in the foot. There is no one else to blame.

    1. Most of us understand that a vaccine is a life-saving defense to thwart a deadly disease. If not for misinformation, we would have had the requisite percentage of the population immunized and we would be more able to resist new waves of disease, leading to its ultimate elimination. Epidemiology is our friend.

    2. Mr. Boza: I liked everything you wrote before and after the “T&E employees who saw the shot for what it was and refused to take the shots”. Note well the comments below.

  25. Dumb question here. If you are running a Precision SCHEDLUED Railroad, why can’t you have precision scheduled work assignments???
    Mr. Foote and his colleagues threw everyone under the bus well before the pandemic hit. As I recall before the pandemic hit the railroad industry eliminated the equivalent of an entire class one railroad in terms of jobs abolished and employees laid off.

  26. And this guy is in charge of a major railroad? Talk about being in denial about PSR!! Of course he is going to say what he said. Wall Street will ruin the Class One railroads if regulators don’t stop the nonsense. A twenty-plus year UP railroader I know said morale is terrible, and UP management care less about the employees than anytime in his career.

  27. His lack of employees is definitely a direct result of PSR no doubt about it no matter what he might try to dodge. PSRs idea after all is doing more with less and cutting a workforce to the bone was a principle of that. Now he’s backpeddling because he’s cornered and he knows the root cause of the problem. People who don’t work for the railroad don’t understand how railroad management has handled its employees for the last 150 years . They’ve ruled with an iron fist and couple that with a harsh dose of intimidation built into their way of handling people and lives and well they have what they all are dealing with today. It’s many factors coupled with the furloughing of to many, it’s availability policies( which by the way tie directly into their psr philosophy of more with less) that almost completely eliminate any time away from the job. It’s the lack of extra help when they’d call a brakeman on heavy workload trains that they absolutely will not do. It’s frontline supervisors that think firing people is a way to the top( that further demoralized the rank and file and steers them into a state of mind that speaks like a prison chain gang). It’s a lack of pay that the railroads refuse to acknowledge as they make massive amounts of money. It’s the top telling everyone that we’re going to eliminate your job. Would anyone hire out on a railroad and quit a career they might have had beforehand when the railroad you hire out on tells you that? I don’t think so. Many that don’t know won’t ever know what working on a railroad is really like. I’ve made a career of 25 years on a major class one and I’d like to say the first 20 years were very satisfying. The railroad is still a great profession in my opinion, but the way management has its way of doing things right now is a complete mess and needs to stop or we will have a nuclear winter in the industry.

    1. Thanks Eric, for your service. I hope that you were able to work during times when employees had it better than they do know.

      News flash: Railroads have depended on a skilled and dedicated, but docile, work force. As for the “docile” part, those young men and women no longer exist in today’s incoming work force. Jim Foote will have to be his own T+E crew because there will be no one else.

  28. Baloney. Foote received over 5 million dollars in bonus for poor performance. Get a PERFORMANCE BASED BONUS ONLY!

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