The late Hunter Harrison brought his operating principles called Precision Scheduled Railroading (PSR) to the Class 1 Railroad of Canadian National Railway(CN) in 2003 as CEO. Today, PSR has or will have taken over every Class 1 railroad in the US. While some railroads aren’t going “All In” on PSR, they are implementing PSR principles in the management of their operations going forward. I understand Railroad Retirement,but I don’t pretend to understand all of the risks and challenges that PSR will have in running an efficient railroad. I’ll leave that to the professionals. I do comprehend the side effects of management implementing PSR on the reduction of the railroad workforce. While management will use terms like “efficiencies” and “reallocation of capital” and other jargon terms, it means basically that they are considering reducing the labor force through attrition or layoffs. Frankly, I don’t know of any privately run for profit business that doesn’t try to do more with less, so railroads are no different in this way. My purpose for this post isn’t too alarm anyone and set off panic but to help prepare individuals. Preparation is the most important thing you can do to limit the upheaval of a layoff or a forced early retirement. If this happens it could have a significant impact on your savings goal and railroad retirement. Here are five things you can do to prepare.
- Budgets. When you are faced with a layoff or an unplanned early retirement it can shatter you financially if you are not prepared. It is important to make a promise to follow a budget every month and to make every effort to get out of debt. You should also carefully consider any loans that you take out, and what would happen if you were not able to pay them back. If you were to lose your job and you were already on a budget, it is much easier to see what you will need to change to keep your finances under control while you look for a new job. Take the time to write up a bare-bones budget now, so you know what to cut when you need to.
- Emergency Fund. It is also important to have an emergency fund on hand. This emergency fund should cover three to six months of your expenses. It takes most people between three to six months to find a job. Even if you do not have the entire amount saved when you lose your job, you will be able to make your severance and any other unemployment stretch much farther because you have saved that money. It will also help to protect any money that you have saved for railroad retirement. Your emergency fund is just one step in disaster-proofing your finances. There are many reasons to have an emergency fund, and you should start working on it today. You may want to save before you pay off your debt in this situation.
- Education. You should continually be looking to improve your skills and certifications. If you can receive additional training or certification through your current company you should take advantage of that. You may receive the job over another candidate who has more years of experience but is lacking in the certifications or newer computer skills that your job requires. This will also help you to find a higher paying job, as well. There are also many free online education outlets that can help increase your skill set. For example, my local library in Greenville offers free access to online education platforms.
- Networking. Additionally, it is important to continue to network at all times. As you build relationships with those around you in your company and in other areas of the railroad industry you will have contacts that can help you to find a new job. Most job hires come as a result of whom you know. It may be that you hear about a job through a certain person, or you can use someone as an additional reference. I highly recommend you be active on LinkedIn. It is a tremendous networking tool to connect with individuals who can help advance your career.
- Stay Focused. While you are at your company you should work with a positive attitude and give it your very best commitment. This may protect you from being laid off, but it can also help you to receive good references when you are looking for a new job. It is important to do your best work at all times possible and to build a good business reputation.
Take the five steps above and apply them to how you handle money and your career regardless of any concerns you might have around job security. All of them are sound advice that you can start implementing immediately. At Highball Advisors, we work with clients and assist them not only with planning for their railroad retirement but with other financial challenges (as highlighted above) that might come down the track. You need to be prepared for all of life’s challenge.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved.