Oregon’s two senators in Congress are pushing Union Pacific Railroad for more answers in the wake of cutting almost 200 jobs from the Hinkle Rail Yard in Hermiston.
Sens. Ron Wyden and Jeff Merkley, both Democrats, expressed their concerns about the job cuts in a page-and-half letter Wednesday to Lance M. Fritz, chairman, president and CEO of Union Pacific Corporation. The decisions to reduce jobs at Hinkle Yard, close the supply warehouse and the mechanical locomotive shop, the senators stated, “will devastate this rural community by hamstringing the economic opportunities and stability of the entire region.”
While the railroad’s employees can relocate to other yards, they worried “the potential outmigration of much needed family-wage jobs in rural Eastern Oregon will do serious long-term damage to the local economy and tax base.”
Paul Chalmers, director of assessment and taxation for Umatilla County, said the total assessed value of Union Pacific’s property in the county is about $169 million, and the Hinkle Yard accounts for about 32 percent of that, or roughly $52 million.
The yard’s real market value, he said, is closer to $140 million.
What Union Pacific decides to do with the yard could affect the value and thus the taxes on that property. The railroad could cut jobs, for example, in a move to make Hinkle more automated. That could increase the property value.
But even major improvements seem unlikely to replace the economic loss from the jobs.
Union Pacific offered $25,000 signing bonuses for electricians to work at Hinkle in 2018, according to reporting from The Wall Street Journal, and the jobs averaged $40,000 in pay the first year and $60,000 the next. That pay, not including the bonus, works out to an average of $24 an hour. Using that estimate, the total payroll for the 195 jobs exceeds $9.7 million a year.
Using the common economic development trope that every $1 in the local economy goes through seven trades, the payroll from the 195 jobs multiplies to more than $68 million.
According to data in the city of Hermiston’s annual financial report issued in June 2018, Union Pacific was the city’s fifth-largest employer at roughly 500 employees. At the top of the list was Con-Agra Foods, at 1,600 employees, followed by the Wal-Mart Distribution Center, Good Shepherd Medical Center and Hermiston School District.
Assistant city manager Mark Morgan said in an email that Hermiston is working on a “small industrial lot project” with the Port of Umatilla to bring about 50 acres of industrial parcels (one of 5 acres in size) up to “shovel-ready” status. The project will extend roads and utilities to the parcels and connect the area on the southern edge of town to Highway 395.
A summary of the project lists the need for economic diversity as a driver behind the project, noting that in the past when large employers such as Hermiston Foods have closed it has been a “major blow” to the economy. The city hopes bringing in more options for employment at smaller operations will help.
“[Tuesday’s] announcement by UP only underscores why the Mayor and Council are committed to diversifying our employment base through this project,” Morgan said.
Union Pacific delivers freight to the Port of Morrow in Boardman. Ryan Neal, the port’s executive director, said he did not anticipate the port would sustain adverse effects from the cuts at Hinkle. But like others, he called the losses devastating for the area, particular because they are family-wage jobs.
“We don’t ever want to see those go away,” he said.
In response to Union Pacific’s announcement, Neal said, the port issued one of its own showing a total of 62 job openings at businesses operating at the port, including a physical security manager for Amazon, maintenance mechanics for Pacific Ethanol Inc. and Lamb Weston and forklift operators at Lamb Weston and Boardman Foods Inc.
Union Pacific started cutting jobs at Hinkle in October 2018. Wyden and Merkley stated in the letter those layoffs hurt agriculture producers and other shippers, who reported “difficulties reaching Union Pacific staff to resolve problems, or even reach a customer service representative.”
Union Pacific’s “failure to work with Oregon shippers,” the senators continued, could create more congestion on freeways and undermine the state’s transportation infrastructure. And the closure of the Hinkle mechanical locomotive shop would reduce oversight inspection of trains carrying hazardous loads through rural Oregon communities
To better understand the effects of eliminating the jobs, Wyden and Merkley asked Union Pacific for the following:
•The numbers of workers of each classification the company laid off or forced to relocate by Oregon county and facility, including car and locomotive repair and signal and track work.
•The number of these workers Union Pacific hired in the last three years.
•The investments Union Pacific made in Oregon facilities in the last seven years, including any at Hinkle.
The senators asked Union Pacific if the Federal Rail Administration reviewed workers’ safety concerns at Hinkle and other Oregon facilities since the company started layoffs in October. The East Oregonian reported on those safety concerns in late March: https://www.eastoregonian.com/news/local/union-pacific-layoffs-at-hinkle-yard-in-hermiston-draw-safety/article_3e56eb10-5197-11e9-93ad-07e07fbe8a36.html
Wyden and Merkely also warned Union Pacific about its consolidation efforts: “As UPRR adopts the Precision Schedule Railroading model to reduce operating rations, cutting rural workforce and facilities, there are many cautionary tales where this strategy has not performed well over the long term.”