And what we want to be is just nimble and quick and change with the market so that we can get that margin and price improvement as we move along.
Jonathan Chappell: Thanks, Ken.
Jim Vena: Great. Thanks for the question.
Operator: Thank you. Our next question is from the line of Bascome Majors with Susquehanna. Please proceed with your question.
Bascome Majors: Jim, you said you had about 500 locomotives parked. I was curious just high level, how do you think about the locomotive strategy at UP versus what you inherited? I know you’ve got a big order for refurbishment that will go out several years. But just strategically, longer term, how are refurbished locomotives performing? Where do you see your CapEx going over the next three, five, seven years to satisfy both the service needs you have and the emissions targets you put out there? Thank you.
Jim Vena: Okay. So we’ll continue to invest in our locomotives. And Bascome, we’ll always make sure that we have the right locomotive and make them as fuel efficient as possible so that we can save fuel when we’re operating. No advantage or buts that’s what we’ll continue to do. And as far as where the CapEx, we’re not ready now, but I’m pretty sure that you’ll see our CapEx be in at a different starting point next year than where we were this year. And that’s how I view it and stay tuned. And when we get into January, we’ll give you the numbers of what our plan is for next year. Thanks, Bascome.
Operator: Thank you. Our next question is from the line of Jeff Kauffman with Vertical Research Partners. Please proceed with your question.
Jeffrey Kauffman: Thank you very much, Jim, welcome back and congratulations. You’ve answered this a couple of different ways, but let me come at this in terms of what’s different from 2019 since you came back. I think you talked a little bit about what’s different at the railroad, but maybe talk about in terms of the customer expectations in the market or kind of where volume is, where business is and how the railroad in your view, needs to adapt?
Jim Vena: Well, I think railroading, the basic foundation of railroad hasn’t changed from 2019. How we look at the business at Union Pacific, how fast we are making decisions needs the change. When I showed up, I asked Kenny to give me a number of customers that I could talk to at a high level and talk about what our services, what our plan was. And one of them said to me that they wanted to invest a lot of money to be able to build out because there was expansions going on in the soda patch — soda ash patch. So at the end of it, it was taking us over a year to give them a decision on whether we could do that. We need to change that. And if we change that and we were able to make the decision in four days, I got it. We can’t make decisions in four days all the time, but we sure can make them in a few weeks instead of months.
That’s really important. That’s a change in the way we want to do business. And the customers, the feedback was, there’s opportunity for them to win in their marketplace, the customers that we have. So we need to build on that. And that’s really important. The foundation is the same. We’re going to operate a very efficient railroad, having a buffer, the fundamentals — the five key fundamentals of how you operate the railroad, I’m not changing from. It’s true, it’s tested, it wins, it puts us in the right place. I’m not changing. And — but we need to be consistent with our customers, work better for them to grow, and we win. So I’m looking forward to the challenge. One big difference between 2019 and now, my wife is still mad at me that I went back to work, okay?
But other than that, everything else is good.
Jeffrey Kauffman: Awesome. Well best of luck to you. Thank you.
Jim Vena: Thank you.
Operator: Our next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question.
Ravi Shanker: Thanks. Hello, everybody. Just a follow-up on the Mexico and Falcon service commentary. Jim or Kenny, when you talk to customers kind of who are looking to potentially convert from truck or can convert from another railroad. How important is speed in their equation relative to an overall value proposition? I mean you said that you’re at a bit of a structural disadvantage kind of given the interchange versus your peer, but what can you do from an overall value prop to kind of be competitive and kind of work against that structure? Does it [indiscernible] if you will.
Jim Vena: Yes. Listen, I probably wasn’t clear. I don’t think structurally we have any issue with any competitor. I just wanted to give due to CP/KC, if you’re an origination railroad just like us, if we originate in Salt Lake and we’re going to Boise, Idaho, it’s pretty hard for somebody to compete against us, another railroad. That’s all I was saying. At the end of the day, I think we compete against anybody because of the network we have, the speed we have and what we’re capable to open up for markets. Kenny?
Kenny Rocker: So first of all, we know our customers. We know that automotive OEM with auto part for production is different than, say, an FAK business of — contain our pillars. They are different. What differentiates us in that sense, I talked about the revised service product that is going to help us with customers that are speed sensitive. The fact that we have every day per week service, that’s going to help us because that matters also. The fact that we have a group of private asset owners, and we also have our own containers to go into Mexico, that makes a difference. So again, we know our customers and those are the things that we talk to our customers about as we’re winning business over the road.
Ravi Shanker: Great. Thank you.
Jim Vena: Thanks for the question.
Operator: Thank you. Our final question is from the line of Justin Long from Stephens. Please proceed with your question.
Justin Long: Thanks. Good morning. Jennifer, you talked about comp per employee being up about 3% this year, but I wasn’t sure if that included the impact of the abnormal labor costs from last year. So how do you expect comp per employee to trend sequentially into the fourth quarter? And as we move into 2024, do you think this is an area where the productivity opportunity has potential to fully offset the inflation headwinds we’re seeing?
Jennifer Hamann: So thanks for the question, Justin. In terms of your first question, when we talk about comp per employee, we do try to make it apples-to-apples. So we take out any of the one-timers. In terms of looking at it sequentially, as we go into the fourth quarter, there’s probably a couple of things going on there to think about and consider. One is, as we’re continuing to take people out of training classes, put them into full-time positions on the railroad. There’s a little bit higher costs associated with that. And then just some of the OE capital mix that you get in the fourth quarter as you wind down some of the capital programs that can put a little pressure on there as well. Looking long-term, again, productivity and being able to offset cost inflation with productivity is always one of our objectives.
