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Rail News: Kansas City Southern

KCS cuts jobs to offset sluggish economy


Kansas City Southern Industries has joined Union Pacific Railroad and Norfolk Southern Corp. in the Class I workforce-reduction parade to combat a weakening economy.

KCS March 26 announced a cost-reduction plan designed to trim 170 employees — or 6 percent of its 3,000 workers — and temporarily lower base annual salaries of mid-level managers on a voluntary basis, effective immediately.

Joining the mid-level managers are senior vice presidents, who agreed to lower their salaries by 7 percent, and even Chairman, President and Chief Executive Officer Mike Haverty, who OK’d his own 15 percent salary cut.

"KCS is not immune from the economic slowdown that’s under way and we, like many others, must realize cost savings now in order to keep our company competitive," said Haverty in a prepared statement, adding that the reductions wouldn’t compromise the railroad’s customer service nor impact its strategic development plans in Mexico and Panama.

KCS plans to continue with its $75 million capital program this year to maintain the railroad’s infrastructure, but will shelve Management Control System, the company’s upgraded computer system, until economic conditions improve. MCS is designed as a more versatile operating platform that would knit together shipment schedules all the way through interchange using the same data customers use to record their shipments.

KCS in July 2000 spun off its financial services companies into newly created Stilwell Financial. The company’s operations last year earned $25.4 million, a 149 percent increase compared with 1999’s $10.2 million.

But KCS also has been trying to lower its corporate debt of $675 million, with plans to pare down that debt between $100 million and $200 million in 2001 by reducing capital spending.

Contact Progressive Railroading editorial staff.

More News from 3/27/2001