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Rail News Home Rail Industry Trends

11/11/2003



Rail News: Rail Industry Trends

Streamlining CSX to eliminate three management layers, up to 1,000 non-union jobs


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Michael Ward's made it clear in recent weeks that part of what it’ll mean to keep CSX Corp.’s eyes on the productivity prize is to pare back management layers.

In a move designed to help CSX speed up the decision-making process and improve productivity, the company plans to streamline the management structure at a number of CSX companies, eliminating organizational layers and realigning certain functions — and, in the process, cutting up to 1,000 non-union workers during the next six months.

The goal is to create smaller, more responsive organizations that'd enable CSX to drive up operating income and "deliver stronger results" more quickly, said Ward, CSX's chairman, president and chief executive officer, in a Nov. 10 prepared statement.

"Despite tremendous successes in growing our revenue over the past three years, I am not satisfied with our efforts to control costs and improve productivity," he said. "The initiative ... will result in broad changes in the way we do business."

Under the streamlining initiative, CSX plans to reduce management layers from 11 to no more than eight, and increase the number of direct reports for many managers. It'll net a non-union workforce reduction of between 800 and 1,000. The cuts will be made during the next six months "through a structured process, one layer at a time, beginning at the top of each organization," according to CSX, which currently employs 34,000.

"We will put managers and decisions closer to our customers, increase accountability at every level and establish a far more competitive cost structure," Ward said. "Throughout this effort, we will use a thoughtful and disciplined approach that respects the dignity and contributions of all our employees."

Outplacement services and benefits will be provided to those who do not make the cut.

A result of an organizational assessment that focused on management efficiency and processes, clarity of roles and responsibilities and departmental structure, the organizational redesign will cost CSX between $60 million and $80 million — a hit CSX largely will absorb during the next two fiscal quarters. The company should benefit from the "full effect of the savings" by mid-2004, CSX officials believe.

The streamlining mind-set's been in effect for several weeks. Earlier this month, CSX announced Executive Vice President and Chief Commercial Officer P. Michael Giftos plans to retire March 31, 2004, at which time his responsibilities would be transferred to Senior Vice President-Merchandise Service Group Clarence Gooden.

In September, CSX Transportation Executive Vice President and Chief Operating Officer Alan Crown retired, and Ward assumed Crown's responsibilities.

"Because CSX is now largely a rail-based company, I will be getting even closer to our operations, our customers and our employees," Ward said in a Sept. 11 prepared statement. "We are going to sharpen our focus on service to our customers, productivity and process improvement."


Contact Progressive Railroading editorial staff.

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