Guernsey braces for layoffs as coal’s decline quiets the rails

The railroad runs within blocks of the town’s main street businesses, including Ben’s Bar, which has served railroaders and residents for 103 years, owners Wayne and Johnny K. Perkins say. The sound of trains rolling in and out of town, along with the clanging and banging in the switchyard and repair yards, provide the soundtrack to Guernsey life.

Today there are fewer trains, a decline townspeople say is notable.

“We noticed it with the coal [downturn],” Johnny Perkins said. “There’s just lots of less sound,” she said.

Last week, BNSF Railway told local and state officials the company would eliminate 87 jobs here through the closure of a mechanical shop in July.

“It’s about to become real quiet,” said Kellie Augustyn, a city council member, railroader and union official.

Geographically, Guernsey is not located in the Powder River Basin, the largest coal producing region in the country. The town is around a three-hour drive from the city at the heart of PRB coal country — Gillette. But Guernsey is tied to the coal industry by the long trains — 120 cars long — that come south into town laden with coal and pass back north empty.

Guernsey’s woes and BNSF’s announcement is indicative of coal’s decline hitting home not just in Gillette, where coal mine layoffs are accelerating, but down the economic food chain. BNSF is closing another facility and eliminating more jobs near Rozet, the Casper Star-Tribune reported last week. In the letter to local officials, obtained by WyoFile, the company blamed coal’s “structural decline” for the losses in Guernsey.

“We closely monitor changes in the markets we serve, and we continue to see a persistent structural decline in the demand for coal,” BNSF Assistant Vice President [for] State Government Affairs Juan Acosta wrote. “Unfortunately, this is a long-term structural market shift that will have a lasting impact on BNSF and the rail industry.”

The impact also will be lasting for Guernsey. Some in the town work in the coal-fired Laramie River Station in Wheatland. Ben’s Bar owner Wayne Perkins worked there for 35 years, he said. His wife worked in a local gravel quarry. Much of the gravel goes to railroad beds, Johnny said. Workers from the power plant, railroad and gravel quarry are all tied to one industry, she said: coal.

“And they all like to drink beer,” Wayne Perkins said.

The couple took over the bar and restaurant four years ago. It was a retirement plan that has kept them busy, they said. Perhaps 35% of the bar’s patrons are railroad workers, they said, whether Guernsey residents or those who come in on trains from Casper, Gillette and Torrington or Nebraska’s Alliance and Scott’s Bluff. Workers spend the night in town, eating and drinking and spending money, the Perkinses said.

“We worry about our business,” Wayne Perkins said, but mostly, “we worry about our friends and families. Are they going to stay or leave?”

“Is this going to become a retirement town?” Johnny Perkins asked.

“It’s always been a railroad town,” Wayne said. “It’s a good place for kids to grow up and you hate to see that go.”

Electricians, machinists, carmen, sheet metal workers and laborers are among the workers who will lose jobs, BNSF said in its letter.

John Wells, a 15-year veteran of the railroad, is a Guernsey native and one of the impacted. He started working on the railroad after graduating high school in 1997, he said.

Wells’s seniority in the union gives him the option of working at a maintenance shop in Alliance, Nebraska, a two-hour drive east from Guernsey. He intends to make the move, he said, but his wife and family will stay in Guernsey. So at age 41, Wells will begin living away from his family during the workweek, and commuting home on his days off.

The arrangement could last “maybe for the next 19 years of my career,” Wells said. “That’s a change.”

Wells knows of younger workers, with less seniority, who are in tougher positions, he said. One coworker just bought a $200,000 house, and Wells said his junior level will make it difficult for him to find a new railroad salary.

A banker agreed. “These aren’t average-paying jobs for our area, these are very good, high paying jobs,” Dan Sisson, the president of the local branch of First State Bank, said. “Even if you find another job, finding a job that’s going to replace that income that you had is going to be very difficult.”

Guernsey does have other assets. There is Camp Guernsey, a National Guard training base that recently expanded. There is tourist traffic to Guernsey State Park and its popular reservoir and also to Oregon Trail historical sites.

Town leaders, however, are worried.

The school district, which has around 250 students, could lose up to 30 of them if the July layoffs are followed by families leaving town, Platte County School District #2 Superintendent Mike Beard said.

The closure of the mechanical shop is likely to be followed by more railroad job losses, Augustyn said. The train department — operators, engineers and other jobs — he works in might lose anywhere from 20-25 jobs, he said.

The town has used the railroad hub to lure other businesses, said Sisson, who serves on the local economic development committee. A company that sells pipeline parts located in Guernsey because the town used state economic development money to build a rail spur to its facility, allowing for easy freight access. The company is planning an expansion, Sisson said.

Now BNSF isn’t certain workers will be around to serve that company’s needs, Augustyn said.

Compared to the often-sudden mine layoffs in the coal basin, BNSF gave two months of warning to workers and officials. The company hopes to relocate many of the impacted workers, BNSF wrote in the letter. In the hierarchical union labor force, opportunities elsewhere are closely tied to seniority, railroad workers say. Those workers with fewer than 10 years will have more trouble finding jobs or will have to head to larger cities like Denver to do so, Augustyn said.

The advance warning has other effects too — generating both doubt and hope as still-busy railroad workers eye July.

Augustyn called the company’s decision “baffling.” The mechanical shop in Guernsey is one of the region’s busiest and most productive, he said, and BNSF will find itself ill-prepared to deal with an increase in train loads if coal picks back up.

“Somebody higher up is not seeing the writing on the wall,” he said. “This place is a hell of an outfit. It does a lot for the railroad. I never would have thought it would happen here because it’s such a great terminal.”

BNSF did not respond to a voicemail and emailed request for comment.

The writing on the wall for coal is increasingly dire, economists say. COVID-19’s economic impacts have piled onto a slow decline in demand because of low natural gas prices and increasing renewable energy sources. Peabody Energy, a Powder River Basin staple, and Navajo Transitional Energy Company, a newcomer, eliminated a combined 300 jobs in April.

Even before COVID-19, Wyoming’s coal industry faced an estimated production decline of more than 15% compared to 2019, which was one of the state’s lowest coal production years in decades. Mining companies have yet to shutter or idle any coal mines in the Powder River Basin as demand plummets, making the industry increasingly cutthroat and leading to layoffs as companies try to trim costs.

Some in Guernsey see BNSF as doing the same thing. Asked if he had a message for state leaders who are preparing to gather for a special session of the Wyoming Legislature, Wayne Perkins did not. “The railroad, I’d like to send them a message, but they don’t listen anyways,” he said.

The layoffs hurt Guernsey but save profits for famed-investor Warren Buffett and his shareholders, Perkins said. Buffett’s investment giant, Berkshire Hathaway, bought the railroad in 2010.

Augustyn is holding out for an upswing. One could happen if pandemic concerns recede and the economy ramps back up, he said, or as the country enters the high electricity demands of air-conditioner season.

“Come on hot weather,” Augustyn said. “And people getting back to work.”

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