Contributing factors include a significant drop in revenue from key freight customers (coal and petroleum); millions less in federal funding, along with a jump in required matching funds and at least $15 million per year to implement a positive train control (PTC) system as required by an unfunded federal mandate.
"Employees from across the company have examined the way we do business, helping to find greater efficiencies wherever possible," said ARRC President and CEO Chris Aadnesen. "Our team took the utmost care to ensure reductions would not negatively affect the way we interact with customers. We will continue to provide the exemplary service our passengers, freight and real estate customers have come to expect from the Alaska Railroad, as a positive icon of this great state."
Because ARRC curbed hiring as the revenue picture became clear last year, 25 of the 54 eliminated positions are already vacant, thus lowering the number of actual layoffs to 29.
"It is very difficult to ask members of the railroad family to leave jobs that they love and need," stated Aadnesen. "Our human resources department will work closely with every affected employee, offering all the support possible."
Eliminated positions represent an eight percent reduction in the year-round and seasonal ARRC workforce, which equates to an annual estimated cost savings of $4.5 million in wage, salary and benefit costs.
This latest reduction in personnel comes on top of two layoffs in recent years. In 2008-2009, ARRC eliminated 191 positions after the economic downturn. In early 2012, ARRC eliminated 52, mostly seasonal, positions after the Flint Hills North Pole refinery cut production of refined petroleum products.
In addition to personnel reductions, ARRC is implementing several other cost-cutting measures. These include improving efficiency through modified asset use and service levels, right-sizing fleets and improving maintenance practices for vehicles and heavy equipment, conserving fuel and other expense reductions, improved purchasing procedures and controls. ARRC will also continue to seek opportunities for new and expanded revenue sources.