Railroad Unions Split Over Labor Contract

Date: Tuesday, November 22, 2022
Source: Wall Street Journal

One of the country’s largest railroad unions said Monday that its members voted to reject a new wage deal brokered by the White House, splitting with another large union and moving closer to a labor strike as soon as early December.

Union leaders said Monday they believed that a compromise could still be reached to avoid a work stoppage that could disrupt the flow of goods around the U.S. Four out of 12 unions have now rejected the proposed contract, while the other eight have ratified the deal. Both sides have agreed to a cooling-off period until early December.

Members of the SMART Transportation Division, which represents about 36,000 rail workers, narrowly rejected the contract proposal, while the Brotherhood of Locomotive Engineers and Trainmen, which has 24,000 members, narrowly ratified it. The groups were the final two unions reporting the ratification of votes in the protracted labor dispute.

Leaders of SMART-TD said they would head back to the negotiating table with the railroads for a revised deal with a Dec. 8 deadline. Without another agreement, workers will be allowed to strike on Dec. 9.

“SMART-TD members with their votes have spoken, it’s now back to the bargaining table,” said SMART-TD President Jeremy Ferguson. “This can all be settled through negotiations and without a strike.”

The National Carriers’ Conference Committee, which is negotiating on behalf of the railroads, said that some unions are now demanding terms that exceed the recommendations of the White House-appointed panel and terms that have been accepted by other unions. The group said it remains willing to enter agreements based on the panel’s framework.

The companies said the threat of a strike would require freight and passenger railroads to soon take steps to secure their networks ahead of any deadline. In September, Amtrak canceled some long-distance routes and railroads stopped accepting some cargo in the days before an earlier strike deadline.

Freight railroads move about 40% of U.S. long-distance cargo and deliver freight such as feedstock, coal, lumber, construction material and automotive parts. Even a short strike could lead to diversions and cascade to delays and congestion, pushing back recovery in some supply chains.

Congress, given its power under the Railway Labor Act, might intervene to impose a settlement on the two sides to prevent or shorten any work stoppage. The last national rail strike, in 1991, lasted about 24 hours before Congress passed and President George H.W. Bush signed legislation ordering the workers back to their jobs.

“As the President has said from the beginning, a shutdown is unacceptable because of the harm it would inflict on jobs, families, farms, businesses and communities across the country,” said White House press secretary Karine Jean-Pierre, who added that President Biden is being briefed on the matter. “A majority of unions have voted to ratify the tentative agreement, and the best option is still for the parties to resolve this themselves.”

SMART-TD said that 50.87% of train and engine service members voted to reject the agreement. Most railroad workers represented by SMART-TD are conductors, and it also represents other groups such as brakemen and yardmasters. The groups vote for their contracts separately, and SMART-TD said 62% of yardmasters voted to ratify the agreement.

Since the contract for conductors failed to be ratified, the contract for all railroad workers in SMART-TD’s coverage failed. SMART-TD said there was a turnout of more than 28,000 out of around 36,000 members covered in the current negotiations.

The BLET union said 54% of members who participated in the vote chose to accept the five-year contract. The BLET represents about 24,000 locomotive engineers and other rail workers covered by the agreement.

The unions have agreed to continue working under a status-quo period to give time for more discussions. If one union ultimately goes on strike, leaders of the other unions have said their members won’t cross picket lines.

The largest freight railroads, Union Pacific Corp., CSX Corp., BNSF Railway and Norfolk Southern Corp., have been struggling with delays and service issues for more than a year. They said hiring and retention of workers are priorities to fix service disruptions.

Railroad workers said they are overworked amid a labor shortage, and they feel resentful that company executives and shareholders don’t adequately value their contributions. Some conductors said they remain concerned about their job security in discussions over crew size, which is excluded from the current collective bargaining agreements.

“The men and women that move goods for our customers from point A to point B are the ones that create value at CSX and that every employee should feel valued and respected,” said CSX spokeswoman Cindy Schild.

The White House appointed a mediation panel over the summer to help broker a compromise and avert any work stoppage. The five-year agreement, which replaces a contract that lapsed, offers railroad workers a 24% increase in wages from 2020 through 2024. It allows for one additional paid day off, on top of existing vacation and paid time off. Union leaders at BLET and SMART-TD said they managed to get changes to attendance policies included in addition to the recommendations of the White House-appointed panel.

Tony Hatch, a railroad analyst with ABH Consulting, said it is unlikely the standoff between the unions and railroad companies would result in a strike. Even if unions call a strike, Mr. Hatch expects Congress to move rapidly to get workers back to work as it has in the past. Industries that rely heavily on railroads, such as automobiles, steel, paper products or chemicals, are also heavily unionized, which means a rail strike would harm other union members, Mr. Hatch said.

An extended rail strike could have a large impact on the coal industry, said Jason Miller, a professor of supply-chain management at Michigan State University. Railways move roughly 78% of all coal moved by ton-mile—a ton of weight carried per mile, he said. The automobile industry could also be affected significantly because manufacturers use trains to receive parts and ship vehicles, he said.

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