The railroad looms large in Hermiston’s past, but it will likely play a much smaller role in the city’s future.
Union Pacific Railroad filed notice with the state on Tuesday that it will lay off up to 195 employees at the Hinkle Rail Yard in Hermiston and close the yard’s supply warehouse and mechanical shop. It stated the 195 layoffs would be completed by July 19 and are expected to be permanent. The bulk layoff is an escalation of the scores of layoffs that have happened incrementally at the rail yard since October 2018.
Hermiston Mayor David Drotzmann said his conversation on Tuesday with UP spokesman Aaron Hunt was a difficult one. The city of Hermiston’s June 2018 financial report listed Union Pacific as one of the city’s largest employers at the time, estimating the company employed about 500 people at Hinkle. Drotzmann said it was his understanding the latest layoffs will leave between 40 and 45 employees.
“It was both a conversation of frustration and sadness to realize an organization that has made such an impact on the community over the last 25 years is reducing to one-eighth of what it was,” he said.
He said the loss of so many jobs in the community will have an economic impact as families move away or cut back their spending significantly while facing unemployment. But he said he was more concerned about the effects on the individuals who lost their jobs.
“Those were good-paying jobs with great benefits,” he said.
After Union Pacific laid off more than 80 employees during the fall of 2018 and winter 2019, UP spokesman Tim McMahan declined to share how many employees Hinkle had, but said UP had 1,506 employees throughout Oregon. On Tuesday, he again declined to answer most questions submitted by the East Oregonian about the number of employees who will remain at Hinkle or what operations will continue there, but stated the company would move some of Hinkle’s operations to yards in Portland, Spokane, Ogden, Utah, Pocatello, Idaho and Nampa, Idaho.
“The workforce reduction is the result of accelerating (Union Pacific’s) continuous improvement plan and implementing Precision Scheduled Railroading principles,” he wrote in an email.
Union Pacific announced its Unified Plan 2020 last year to improve efficiency. It announced record earnings in 2018 of more than $6 billion, and during a first quarter earnings call with shareholders on April 18 announced record 2019 first quarter net income and a 15% increase in earnings per share compared with 2018, despite the fact that total volume decreased by 2% compared with the previous year.
During the call, Chief Operating Officer Jim Vena said UP increased train length by 7% and was focused on reducing “touch points” where trains are handled. He said the company had “stopped humping cars at Hinkle and Pine Bluff, Arkansas, and curtailed yard operations in Salt Lake City, the Kansas City complex and Butler Yard in Wisconsin, to name a few.”
State Rep. Greg Smith, R-Heppner, called the cuts at Hinkle “devastating” for the area.
“These are good family wage jobs with benefits,” Smith said. “That job loss is going to have a significant economic effect throughout the region.”
State Sen. Bill Hansell, R-Athena, said he found out about the job cuts on Tuesday afternoon.
Hansell questioned whether legislation, such as the recent gross receipts tax, is making neighboring states more attractive to business. That’s been the talk in some circles at the Capitol, he said, and perhaps Union Pacific relocating operations from Hinkle to Idaho and Washington signals that is happening. However, Hansell cautioned, he does not know if that’s the case here.
George Murdock, chair of the Umatilla County Board of Commissioners, said Union Pacific has long been a “major employer” in the county.
“These are the kind of jobs people occupy for an entire career, so their loss is particularly acute,” he said. “I had heard rumors that it was a possibility, but had hoped it was only a rumor.”
Murdock said his understanding was Union Pacific would continue to have a presence at Hinkle and the county will remain a major freight route. He said it will be important to work with the unions and affected employees in the coming months.
While the jobs represent a significant loss for the area, Hermiston’s increasingly diversified economy helps absorb the blow. Drotzmann pointed to the closure of the Simplot plant in 2004 and the closure of Hermiston Foods in 2017 as an example of times that Hermiston lost one of its largest employers but continued to grow.
“This community is really resilient,” he said.
That might be small comfort to the employees whose jobs have been cut in recent months. Locals took to community Facebook forums on Tuesday to share that family members had been laid off or to share condolences with friends who had lost jobs.
Oregon has designated CAPECO in Pendleton as the lead organization for when major job losses occur in Hermiston, and CAPECO will conduct trainings and job fairs for former Hinkle employees in June. In the meantime, some employees will be eligible to apply for transfer to one of Union Pacific’s other rail yards.