UNP
#<UNK>, you probably could write my answer here and what I'm going to say.
Without giving precise guidance, because in terms of what we're going to buy back because we don't do that.
We certainly value and understand the value of a continued buyback program, and we have walked our talk there.
And as we've always said, we will be opportunistic in the marketplace based on factors like the price of the stock.
So all those are factors in terms of how it will look as we play out into the next several quarters.
We're going to continue to take the same mindset, if you will, in terms of how we approach the opportunity and approach how many shares we actually do buyback.
<UNK>, this is <UNK>.
It varies.
I would say the vast majority of the decline is in some way or the other attributable to natural gas prices.
As you know, there are different ISO regions that we operate in, and the impact of natural gas is different in those regions.
But I would say the vast majority is attributable at the end of the day to the competitiveness of coal with natural gas with one other factor.
And that is being our export coal market just the worldwide export coal prices, that's also a factor.
<UNK>, as I mentioned earlier, one of the other factors that is a factor is the current level of coal inventories that at the end of the third quarter, they're 30 days higher than where they were last year.
And 20 days higher than average a five-year average.
I would say it's a fair expectation to assume utilities would work those down.
Not only maybe even to the averages, or below the averages if they are trying to be in an inventory management mode.
That's an excellent question, <UNK>.
One that we're constantly working on.
Our primary focus, first and foremost, is a robust, reliable, excellent service product.
And in that context, it's making that service product better than the alternatives.
That puts us in a position to be able to secure a price premium.
And that represents the value of that service product.
So long as we're in that position, then we can handle the rest of the pressure points appropriately.
When it comes to regulation, our best defense in a regulatory environment is happy customers, and customers that are getting an excellent service product.
That won't stop the conflict around the pricing discussions that we have.
It won't stop regulators from wanting to find ways to regulate us.
But it will stop some of the pressure, and that's our biggest defense.
It's the one we focus on most.
We are keenly focused on making sure we generate a really attractive return on our invested capital.
Embedded in that is trying to make sure we continue to improve our margins.
I think we've outlined today that there are ample opportunities to continue to make that happen.
One of them is price, but it's only one of the mechanisms.
And that's what we are focused on.
We've actually only mentioned it this quarter, and a little bit last quarter.
It really depends on the consumer.
Consumer confidence does appear to be strong.
There does appear to be a trend where consumers are paying down debt and spending on non-product things like data, internet, healthcare services, et cetera.
I do think if you talk to a lot of the BCO's and the retailers, they do have an expectation that with consumer confidence remaining strong, there should be a pickup during the holiday season of sales.
But time will determine whether or not that happens.
<UNK>, this is <UNK>.
Yes, we make good progress on that.
And remember that marker that I was sharing with you in the first and second quarter was against the previous year.
And we feel very good about, as Cam walked through, we feel very good about the third-quarter progress we made in better aligning our resources.
Having said that, we're not done.
Last year was not the end of the game.
So we still see opportunities for us to continue to squeeze out productivity initiatives on multiple fronts, and we're going to continue to do that.
But in answer to your direct question of compared to what I showed you last quarter on the year over year.
We made very good progress in taking out those inefficiencies that we showed you in the second quarter.
<UNK>, I think it's a great question.
Certainly, as you mentioned, the SAR's rate is at barn-burner rate.
The amount of debt associated with auto loans is at a, I think a historic high rate.
I think the auto manufacturers would still be pretty bullish because of the features that they think they're providing to the consumer and the average age of automobiles out there.
But the sales rate is at a high number, and so that by definition, would indicate a little caution and concern.
We don't have too much concern about model changeovers.
There is always model changeovers.
We see that year in, year out.
We have the benefit of a very broad, diverse autos franchise, and somewhere, there's always that happening.
So we don't see that as too big an issue, but certainly the sales rate, the amount of debt associated with sales, you could say is something to watch out for.
<UNK>, regardless of what SAR is, what we really are pleased with is the UP automotive franchise.
It's outstanding, it gives us great access to Mexico with products produced in Mexico.
It gives us great access to the ports of products produced overseas and imported.
And we have an excellent distribution system for finished vehicles in the Western United States.
We're in a very good place when it comes to the automotive franchise.
This probably won't shock you, but we look at it every day, and feel very comfortable that what we have done to date works for us.
And we're not changing our approach or how we look at it, but I understand the point of your question.
But rest assured, we look at what's the right way to deal with this, and we're confident that we're doing the right thing.
<UNK>, this is <UNK>.
I don't see any ---+ I'm not calling out that there would be any change in terms of the direction we've been.
We have not changed our approach.
So I don't anticipate there being any big swing in that.
<UNK>, this is <UNK>.
We look at that in depth continuously as part of our strategic and tactical analysis of our markets.
I would say that at a high level, coal continues to represent on going forward probably a necessary minimum third of electrical generation in the US.
Short of some new technology, I'll call it Star Trek technology, just for shorthand purposes.
Coal of necessity is going to be a part of the electrical generation of this country for the foreseeable future.
And so I think you could perhaps see coal get to a minimum of, call it, a 30% market share.
But short of some really new generational technology, I think it will right now for the foreseeable future that's probably the minimum that it will be.
<UNK>, this is <UNK>.
So I want to provide a little editorial comment as well.
I think the United States is blessed with the coal reserves that we are, and our ability to generate electricity with coal relatively cleanly.
And it's never been as clean as it is today.
It would be a mistake from the US economy perspective, our competitiveness globally, to continue to regulate that out artificially.
I think we have to work on continuous improvement with the emissions from coal-fueled generation, but it would be a mistake to artificially retard that too much.
<UNK>, the numbers that you see in Autos and Intermodal from an arc yield standpoint is really hindered by the fuel [first] surcharge reduction.
That's more than 100% of that impact.
And her second question was Mexico versus international on Intermodal.
<UNK>, this is <UNK>.
Let me take that first question.
I would caution you not to just use a straight line numbers on there.
Because I think the piece to answer your question, what are you missing, I think what you're missing in that analysis is mix.
Mix has an impact within each of the commodity groups in terms of what ends up being reported as average revenue per car.
On top of each of their individual impacts from the fuel surcharge.
So I would just caution you that there are differences within each commodity group.
And as you know, we're not going to give guidance in terms of pricing in the future.
We do think that the domestic Intermodal market should continue to have strong pricing opportunities in two thousand ---+ as we go into the future.
There's a lot of input, a lot of ins and outs that happen.
There are a lot of dynamics, as you know, going on in the international Intermodal market.
That are dynamically driven by other countries and steamship liner carriers.
We feel good about our value proposition.
We feel very good about our domestic Intermodal franchise, and our ability to get price in that.
<UNK>, we have historically said and I don't think it's changed much, to maintain what we've currently got is about a $2 billion plus/minus number.
And after that, it's things like technology, PTC, capacity additions, commercial facilities, new equipment, et cetera.
As we're making our capital plans next year, we're constantly evaluating both capital productivity in terms of dollar per unit that we put in the ground or buy, and where exactly we're putting it.
So I won't make any commentary on exactly what those plans look like.
You're exactly right, <UNK>.
That the levers as you've heard us talk and as you fully understand, the levers that drove us from were we once were to where we are today are productivity, which is driven by the service.
That service also enables us to get the right price in the marketplace, and volume is always our friend in that calculus.
We're going to control those that we can best control.
So I would say, frankly, the biggest risk I see at this point is that which we have less control on and that is the economy.
And what that then gives us in terms of volume to play with.
But as I've said many times, and you've heard us say, we're not going to use the lack thereof of volume to slow us down on our initiatives to continue to make progress on that which we can control.
But that's what we're going to continue to do, as we have over the last decade.
I think as we've been saying throughout the call, there is uncertainty about the going-forward outlook in all of those.
And I'm not sure our prediction ---+ ability to predict is any better than anyone else.
Certainly, the strong dollar is impacting our metals steel business, our domestic metal steel business.
Oil prices will be a direct factor in terms of the amount of drilling, the amount of crude-by-rail, and the natural gas will be a direct driver in terms of the amount of coal.
So at those points, an ability to predict those items, I'm not sure I have any better ability than anybody else in the marketplace to do that.
<UNK>, this is <UNK>.
I don't think we said we're not going after fixed cost.
We focused the commentary on some of the variable costs.
But where we have opportunity to, for instance, reduce our CapEx, or for instance reduce the physical footprint of shops that maintain locomotives or other areas like that, we're going to take advantage of those as well.
I think what we were trying to impart is that our coal network is not isolated and independent from our overall network.
And so it would be very hard to tease out individual physical assets, hard assets, that are completely dedicated to coal and isolated on their own.
<UNK>.
<UNK>, you may have stumped me in terms of the actual numbers that you just worked through, because I frankly was not following you.
But I would say that mix is clearly a factor in that.
So be careful in your analysis to factor that in.
And again, all I would say about the pricing is we're going to continue to focus on driving value to our customers, continue to drive productivity, and continue to drive price where we can in the marketplace.
We know that the underlying value of our service product to our customers is a key component of that, and it all hangs together there.
So we're going to continue to focus on driving as much as we can on it.
So even with the best service available, are you going to be able to go to customers whose volumes are down in the high single-digit, low double-digit range, and ask for and receive better than 3% pricing.
<UNK>, this is <UNK>.
There is never a conversation that our commercial team enters into with a customer on price, that is easy.
It doesn't matter if their volume is up or their volume is down.
Clearly, <UNK> and his team and in the environment that we're in right now have secured what in the third quarter a 3.5% core price.
And in the previous quarters, as much as 4% core price.
None of that came easy or was a lay up, and I expect them to continue that good hard work into next year, securing an appropriate price for the value that we represent to our customers.
Thank you very much, <UNK>, and thank you all for your questions and interest in Union Pacific this morning.
We look forward to talking with you again in January.
