Norfolk Southern Corporation · NYSE:NSC
Norfolk Southern — Investor Day (June 2009)
12 slides from Norfolk Southern's investor day presentation, Jun 4, 2009
Slide 1: Mark Manion, Executive Vice President and Chief Operating Officer
Mark Manion Executive Vice President and Chief Operating Officer 1 As market conditions have changed, we’ve responded by reducing expenses. We have done so while continuing improvements in service and maintaining a strong safety process. As you’ll hear today, the systems we developed and implemented
Slide 2: Rail Industry Safety
Rail Industry Safety 4 Months 2009 Preliminary (Injury Ratio per 200,000 Employee-Hours) The railroad industry has made great improvements in Safety over the last several years and the railroads of North America are widely recognized as the safest mode of transportation. Norfolk Southern is the reco
Slide 3: TOP Response to Volume Changes: Road Train Crew Starts
TOP Response to Volume Changes Road Train Crew Starts More than just a transportation company, we recognize that we are a critical part of our customers’ distribution function and as such, we must consistently provide the optimal level of service to our customers. That’s as critical now, in a down m
Slide 4: TOP Response to Volume Changes: Yard Assignments
TOP Response to Volume Changes Yard Assignments Similarly, we have also been adjusting terminal operations as well as local service schedules. And again, with a close eye on network velocity, car handlings, route miles, and car days per shipment, so as to assure that these cost and service component
Slide 5: Net of Car Rents
Net of Car Rents (in 000’s) We focus on service and network velocity as we adjust our operation because we are keenly aware of the direct relationship to our operating costs. Many of our costs, particularly car hire rents paid to other carriers are time based costs. Network velocity is critical to m
Slide 6: Fuel Consumption
Fuel Consumption (Millions of Gallons) As you would expect, reduced train operations have resulted in less fuel consumed. But savings also reflect initiatives in fuel efficiency which you’ll hear more about later. For four months, fuel consumption is down 21% and in April it was reduced 26% below pr
Slide 7: Train & Engine Service Active Employees by Month
Train & Engine Service Active Employees by Month We’ve been judicious about our T&E furloughs. We began reductions last fall and now have over 1,400 T&E employees furloughed. While we’ve reduced our employee count, it’s important to note the real savings comes from reducing crew starts (which you sa
Slide 8: Overtime Paid
Overtime Paid (In Millions) T&E Non-T&E Keeping in mind some amount of overtime is inevitable — such as on overtime maintenance of way crews repairing storm damage, T&E crews completing their work as opposed to calling out an additional 8 hour straight time crew — that said, we’ve reduced overtime e
Slide 9: Cars Stored
Cars Stored 8 Total: 34,576 With business volumes down, we now have over 34,000 cars in storage. In response, our Mechanical department — which is responsible for maintaining rail cars and locomotives has initiated various cost reduction initiatives. As an example, we have had aggressive car program
Slide 10: Locomotives Stored
Locomotives Stored 9 Similarly, as demand weakened we placed more locomotives in storage, enabling us to reduce associated repair and maintenance expenses. We’re now approaching 700 locomotives in storage. Reduction to locomotive programs are: 116 EMD Engine Overhauls 224 Truck overhauls for 112 Loc
Slide 11: Engineering Budget Reductions
24% Reduction: Track and Signal Materials 24% Reduction: Equipment & Machine Repair Expense 9% Fewer Work Trains 10% Reduction: Straight Time Labor 28% Reduction: Maintenance Programs - Rail Grinding, Ballast Cleaning, Thermit Welding, Track Undercutting Engineering Budget Reductions A strong physic
Slide 12: Composite Service Performance 2008 vs 2009 Comparison
Composite Service Performance 2008 vs 2009 Comparison 4 pts. Improvement: 7 pts. 5 pts. But again, all these initiatives have been accomplished while assuring continued high levels of service to our customers and with an eye toward future growth. We have, in fact, been able to push our service level