The Union Pacific railroad car shops in De Soto, one of the oldest and largest employers in Jefferson County, informed its hundreds of employees Thursday afternoon (April 30) that they were being laid off, effective immediately but subject to a potential recall on June 1, De Soto City Manager Todd Melkus said.
Melkus said he was unsure exactly how many employees were laid off.
“Don’t (hold me to) these numbers, but I know there’s 200-300 people that work there,” he said. “I would have to guess a lot of them are from the De Soto area, whether they live in the city limits or not. I personally know a lot of people who work there who live within 10 or 15 miles of here and are local people.”
Melkus said he received phone call Thursday afternoon from Ben Jones, a company spokesman, who advised him of the move by Union Pacific, whose presence in De Soto dates back to 1872 with the creation of the Iron Mountain railroad machine shops on 55 acres of land donated by the city.
“He (Jones) was just letting me know the situation, and said they were going to be unfortunately laying everybody off, and they were going to review the situation on May 18; and best-case scenario, they’ll open back up June 1. But there’s no guarantee on that,” Melkus said.
As of this afternoon (May 1), neither Jones nor another company spokesperson could be reached for comment.
Melkus said he pressed Jones about whether UP would make the move permanent and close the shops, which perform maintenance and repairs.
“I did flat-out ask him, is this serious enough to where we’re talking about, it could go on for a long time, or possibly even shutting down for good, and he said he had not had anyone confirm that with him, from above his main position in management,” Melkus said. “They just pretty much said that they’re going to revisit it May 18 and see what they can do.”
Melkus added that Jones told him of other cost-cutting measures at Union Pacific, which is headquartered in Omaha.
“He said he’s having to take a week off a month, unpaid,” Melkus said. “So they’re definitely cutting costs across the board, but unfortunately it does affect a lot of people in our community, and hopefully this doesn’t last very long. But he really didn’t have much insight on that. It’s kind of a week-by-week situation, it sounds like.”
Although the car shops technically are outside city limits, the city has provided them water, sewer, police and fire protection services for many years and even exempts the company from paying double on water rates as required of non-resident customers by city ordinance. The city has tried twice in recent years (2013 and 2018) to annex the car shops but was unsuccessful both times after legal battles with the De Soto Rural Fire Protection District, which provides fire protection for the shops and in return collects about $125,000 a year in property taxes.
Last week, Union Pacific reported strong financial results for the first quarter 2020, with net income of $1.5 billion, $100 million higher than the first quarter last year. Chief Executive Officer Lance Fritz also reported that the company had achieved “an all time best operating ratio of 59 percent.”