In joint interview, Norfolk Southern, Union Pacific CEOs make case to merge
The CEOs of Atlanta-based Norfolk Southern and Omaha-based Union Pacific are spending a lot of time together these days.
Mark George and Jim Vena are back and forth to each other’s headquarters frequently, they told a crowd at Railway Age’s annual industry conference in Chicago last week. It was their first time appearing on a public stage together.
The two are proposing to merge their regional railroads into the country’s first transcontinental railroad company, headquartered in Nebraska and run by Vena. Whether federal regulators approve the deal will have major implications on how the country’s freight rail industry functions.
The CEOs sat down with The Atlanta Journal-Constitution on the sidelines of the conference for their first joint interview since the announcement last summer.
While their initial application outlined cutting Norfolk Southern’s Atlanta headquarters by more than half, the two leaders insist the companies are already acting to proactively prevent as many job losses in both staffs as possible.
A unified Union Pacific also has no plans to leave Norfolk Southern’s prominent Midtown building, George confirmed.
The merger is set to be decided by the Surface Transportation Board, a federal panel responsible for the economic regulation of freight rail.
After the two companies’ initial application was deemed incomplete, they have promised to refile by the end of April with hopes to secure approval in 2027.
Editor’s note: This interview has been edited for clarity and length.
On Atlanta’s possible loss of a corporate headquarters and headcount in the proposed merger, and that impact on morale:
George: There’s no denying it, that uncertainty creates anxiety. The fact that we agreed that the corporate headquarters was going to be in Omaha, and that when you have corporate functions, there’s going to be overlap, and there would have to be some consolidation that takes place in Omaha — yeah, that creates certainly some functional anxiety in various teams.
But we always said from the beginning, and I think increasingly, as Jim sees more and more about the railroad and about what we do: There’s always going to be a big, big presence in Atlanta. There was before we moved the headquarters here. Just remember that. We had a huge presence here, because this is the center of the Eastern network.
This is where you can travel to anywhere on our network, nonstop from Hartsfield International. So there’s a reason why we always had a very, very big presence here, and the reason why Jim is going to want to continue to keep a big presence in Atlanta, because traveling to Bellevue, Ohio from Omaha is not so easy, but traveling anywhere from Atlanta is very, very easy.
And then our technology team, which is a big, big piece of our Atlanta presence, I think is going to be in large ways heavily relied upon by the combined company. We can recruit easier in Atlanta. We can retain easier in Atlanta for that profile employee, especially with our partnership with Georgia Tech, where we do a lot of recruiting.
Vena: The way companies work now, if you step back … it’s not the old days where you need everybody centralized in one place.
What you do is … as Mark described, can you get to the network? Can you have touch points with customers? Can you attract smart people with proper education from the college system and everything else that’s there? So when you put that all in the mix, Atlanta is real important to us. It will be significant and we will have a lot of employees there.
George: When you travel around, you go up Peachtree, West Peachtree, you see a Microsoft building. You see a Google building. You see a lot of companies that are using Atlanta as a satellite center … They’re leveraging the presence of a talent pool in Atlanta. Again, I think the new company is going to leverage the talent pool that sits in Atlanta.
We’re going to be attritting down, both of us in parallel, to go into this merger lean, so as few people lose their jobs as possible. That’s the goal.
Vena: The top of the house is where the biggest impact is going to be, because it’s pretty simple. You only need one CFO, right?
If you’re a middle manager of some sort somewhere in the two companies, and we say to you, listen, your job is going to be impacted because we’re consolidating, we still are hiring across all our (unionized) crafts.
And we say to them, ‘At this point, we don’t have a management job for you, but we do have a unionized job that will pay you $160,000 a year average, that will allow you to pay your mortgage, and as soon as a job opens up, through attrition, we’ll bring you back.’ So there’s ways for us to mitigate what we’re doing, and we’re taking all the steps possible to make sure, because our employees are real important for us.
We don’t want people at 35 years old losing their job and going home and telling their loved one they have no opportunity to be able to bring that paycheck in and pay off their mortgage and get ready to send their kids to school.
So I’ll hire them first into a unionized job that can pay them really good money, that can get them through the tide to be able to become a manager again and use that skill set that they have. Some of them will accept it, some of them won’t.
On the newly reintroduced bipartisan Railway Safety Act. (First introduced in the wake of Norfolk Southern’s 2023 East Palestine, Ohio, derailment, it features many new railroad industry regulations, including mandating the use of defect detection technology, increasing penalties for rail safety violations, requiring two crew members on all trains and adding inspection rules.):
George: I would say we support enhancing safety, but our vision is having a bill that addresses what the (National Transportation Safety Board) itself has said should be done. We’ve already adopted a lot of the practices. But that ought to be the basis of a law: what the NTSB said were the root causes (of East Palestine).
The RSA was drafted way before the NTSB filings were crafted, and they don’t make any logical sense. Many of them, you have to really search hard and squint to see if there’s a correlation between what they’re mandating and a safety enhancement.
Vena: Railroads are the safest form of land transportation …. And we have continued to improve.
If you want to pass something … you have to look at it on the lens, does it actually help the railroads improve? If it limits — which it does — some of the technological advances that have helped us get better, then that’s a negative. And the way some of it is crafted, it actually would limit us on being able to move ahead technology-wise.
So there’s components of that Railway Safety Act that I would support. But there’s three or four items in there that need to be thoughtful, listen to the railroads and have the feedback.
George: Let’s get a little bit specific. They’re putting limits on speed, limits on length. Those have a direct cost implication, and it’s unclear whether that provides any incremental safety benefit, but it will definitely drive our costs up.
So that’s one area where we know that all that really does is force you to have more people driving more trains, because you’re making them shorter and slower. So that will drive up cost to the consumer, so we don’t like that.
Vena: If you want to legislate, let’s legislate on the things that are important. We need to be safe. We want to get safer. We want to be able to have a better product for people, and that’s what it’s all about.
And some of the things aren’t tied to the logic of where the true numbers are and what the issues are.
If they listen to us, yes (I can support it). If they don’t listen to us and it stays the way it is, I’m not supporting it, because it actually damages us as an industry. It doesn’t improve safety.
George: We’re self-motivated, which is why we’re investing in all this technology, and it’s paying huge dividends. You see it in our accident rates.
But, labor wants you to use more manual inspections. Right now, we inspect every single car with eyes on it, walking at every single yard, even if it was inspected 100 miles earlier because it had a stop, we’re reinspecting it again.
And this act wants you to have even more of those physical inspections, despite the fact that now with technology, three out of four defects are being picked up by technology. And they don’t want us to be able to rely on the technology.
On the patterns of opposition to and support of the companies’ proposed merger. Both Republicans and Democrats are on the record in support and in favor, as are shippers. All of its competitors have lined up against it, warning it consolidates too much of the freight rail industry in the hands of one company.
Vena: You have to always go back to what’s driving people’s decisions. And if you go back to that, you can understand why people are saying some of the things they’re saying, and where they fall into it.
The combination is really good for America. You’re going to be able to move products faster, give a better price, be able to have better service and let them compete against the world.
The constituents look at it sometimes from their own personal view.
So you get people that look at it, whether it’s the (other) railroads that are worried about how they’re going to compete against us. We have some politicians (in places) that we don’t even operate in that came out and asked the STB to go through the process.
So I think if you look at where they’re coming from, politically or commercially or competition-wise, you can truly understand where the positives and negatives are on this thing.
The positives are, customers that see it, our employees that see it, the country sees it, politicians that aren’t tied directly with being elected again in November and going through an election that see it.
George: At the end of the day, you have a variety of constituents who view things through slightly different lenses.
Some of those lenses are colored by misinformation that’s being put out there and propagated by the opposition. So you have some people with already a bias against mergers ideologically: ‘All mergers are bad.’
Well, most mergers are usually overlapping to some degree, and it’s all usually a cost play, and sometimes you consolidate market share and power and this and that, and that’s what informs their inherent biases. And then you have our opponents that are saying, ‘You see, this is one of those cases.’
When, in fact, it’s not. This is an end-to-end linkage. It’s very, very different, and it’s better for the customers and it’s better for competition, because … if they choose not to get together to do a competing merger, then they’re going to have to compete with price. Golly, that sounds like enhanced competition to me.
But they’re fearful. There’s a lot of misinformation that’s being put out there that’s fueling the fire of people who have a predisposition to be against mergers.
Vena: Without doing any homework, you would say when we combine, we’ll have more (control of the industry). But if you actually look at the customer base, you actually look at the facts underneath, that’s not the conclusion.
The conclusion is that we are still a small piece of the bigger pie. We’ll still have two railroads in the east. People forget this. It might be Union Pacific, but CSX is still there competing against us. And when you come to the West, we’re actually competing against a huge company. It’s not Burlington Northern Santa Fe (BNSF) we’re competing against, it’s the (parent company), which is publicly traded, which is Berkshire.
So think about that for a minute. Little Union Pacific, worth $145 billion in the stock market today, running against a trillion dollar behemoth called Berkshire. If anybody thinks that that’s not competition, you’re missing the point.
When was the last time you’ve spoken to the White House about the proposal? (President Donald Trump told reporters last fall he had spoken to Vena and thought it “sounds good.”)
Vena: I never talk to anybody about who I talk to in the administration.
I would have never put the picture out if the president hadn’t mentioned my name. I think it’s unfair to the White House, and it’s unfair to everybody, because people run to conclusions.
But we do meet, and we do go to Washington, D.C., we have for years before we even talked merger. It’s part of what we need to do.
We meet with regulators, we meet with all sorts of people in Washington, D.C., the (Federal Railroad Administration) which is our safety oversight regulator. We don’t meet with the STB very often anymore, because they’re going through a process right now.
George: But I’ll tell you, when we meet with senators, more often than not, they say, ‘Oh, your competitor was in a couple of days ago.’ So, we all do it, because we’re trying to make our points.
About the Author
As a business reporter, Emma Hurt leads coverage of the Atlanta airport, Delta Air Lines, UPS, Norfolk Southern and other travel and logistics companies. Prior to the Atlanta Journal-Constitution she worked as an editor and Atlanta reporter for Axios, a politics reporter for WABE News and a business reporter for the Arkansas Democrat-Gazette.
