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Alaska Railroad Announces Layoffs, Blames Global Recession

By | June 19, 2012

Photo courtesy Alaska Railroad Corporation.

The Alaska Railroad is eliminating 52 positions. The layoffs seem to be evidence that the global economic downturn that started a few years ago, is finally impacting Alaska. And if the trend continues, railroad officials fear more cuts may be looming for the state’s only rail service.

Officials blame the layoffs at the Alaska Railroad on decreased fuel hauls from the Flint Hills Refinery in North Pole to Ted Stevens International Airport. Bruce Carr is Director of Strategic Planning for the Alaska Railroad. He says the cuts will impact Anchorage and beyond.

“They are both in Anchorage and Fairbanks and perhaps in other locations up and down the railroad as well. We have eliminated a yard crew in Anchorage, a yard crew in Fairbanks and several other positions.”

Not all of the positions are filled, Carr says, so the actual number of people getting pink slips will be fewer than 52. In late 2008 and early 2009, 191 positions were eliminated, reclassified or made seasonal in a series of layoffs at ARRC. Overall, 35 people were let go. Carr says Railroad officials knew they had to make more cuts this Spring, after they lost millions in business from the Flint Hills Refinery.

“We had to make some adjustments because it was a significant loss of revenue for the Alaska Railroad in the neighborhood of $5 million. And that was not foreseen and we had to make adjustments to our business plan.”

The $5 million equals about a 5 percent freight revenue loss for the railroad, which has an annual revenue of $100 million and a profit of about $15 million. Carr says the cuts are a result of a domino effect that at the Ted Stevens International Airport.

“Ted Stevens airport is experiencing a reduction in flights for freight for you know their cargo flights, so their demand is down and as a result the flint hills demand is down, along with the rest of the market.”

Trudy Wassel is the Business Manager for the airport. She says 80 percent of the revenue generated at at the Anchorage Airport is from Cargo Planes.

“Basically, when the airplanes leave Asia they can carry more cargo, less fuel. They will land in Anchorage and get gas and then continue on to deliver their cargo to the the other United States cities.”

Wassel says Cargo flights began declining sharply in 2009. Officials at Flint Hills say about the same time higher energy and crude prices made it impossible for them to compete with Asian fuel suppliers. As a result, the refinery in North Pole shut down a jet fuel unit in 2010 and are now in the process of shutting a second unit down. Flint Hills has one remaining unit at North Pole. Neal Fried is an economist for the State of Alaska. He says the state is starting to feel the affects of uncertainty in European and Asian markets.

“Alaska’s very much tied to the global economy. Whether it’s selling our fish, our minerals, our energy, or whether it’s the effect it has on the price of oil.”

But Fried says, in the big scope of things, the layoffs at the Railroad are fairly minor.

“You know, you never want to lose 50 jobs, certainly jobs like the Alaska Railroad jobs because they are above average jobs. But when you look at our broader job market right now. There were better times to be looking for a job. But they’re better here in Alaska than in most other places.”

Carr, with the railroad, says this round of layoffs will not affect passenger rail service, but he’s worried a plan by Congress to slash 25 to 30 million dollars in federal transit administration grants could. Alaska Railroad officials say they should know more by the end of the summer. Meantime, the Alaska Railroad employees who will be let go, in this round of layoffs, should be informed by July 1st.

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