The railway strike and the economic damage it would cause draw nearer |  CNN Business

The railway strike and the economic damage it would cause draw nearer | CNN Business

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CNN Business

A freight rail strike, and the economic upheaval it could cause, is getting closer and closer to reality.

While two other railway unions reached tentative agreements with railway management on new contracts on Tuesday, the two largest unions – representing engineers and conductors who make up the two-person crews of each train – remain at loggerheads in the negotiations. If they don’t resolve their differences, the first national railroad strike in 30 years could begin early Friday.

These unions of engineers and conductors represent about half of the more than 100,000 unionized workers on the nation’s major freight railways. Without them on the job, these trains won’t run, nor will many of the commuter and Amtrak trains that run on freight rail lines. Indeed, Amtrak has already suspended some of its routes.

Unable to reach an agreement on Tuesday, the leaders of the two unions and negotiators from the railroad negotiating team are due to meet with Labor Secretary Martin Walsh in Washington early Wednesday, according to officials from each union and a spokesperson. of the Ministry of Labour.

Administration officials have grown increasingly concerned about the possibility of a strike in recent days. President Joe Biden personally called on unions and railroad companies on Monday during a visit to Boston to try to avoid a railroad closure, White House press secretary Karine Jean told reporters. -Rock.

CNN reported earlier Tuesday that the White House is urgently discussing contingency plans, with federal government agencies working on how they could potentially use federal authority to keep critical supply chains operational as labor negotiations continue to be at an impasse.

“The White House is working with other modes of transportation (including shippers, truckers, air freight) to see how they can respond and keep goods moving, in the event of a rail shutdown,” it said Tuesday. a White House official told CNN.

But there is no alternative to moving freight transported by rail. The American Trucking Associations issued a statement indicating that more than 460,000 additional long-haul trucks would be needed each day, which it said “is not possible due to the availability of equipment and an existing shortage of 80,000 drivers”. He called on Congress to act to keep railroad workers on the job, saying the trucking system itself depends on sharing shipments with the railroads.

The railroads operate under a unique labor law that allows the federal government to intervene to keep workers on the job, rather than freely allowing a strike or lockout of workers by management.

President Biden blocked a strike through executive action in July, delaying the possibility of a strike for 60 days. He also appointed a panel, known as the Presidential Emergency Council, which made recommendations for a deal that was accepted by most unions.

But not engineers and conductors, who say scheduling rules that keep them ‘on call’ virtually every day they’re off work, along with a shortage of staff, are making their working lives intolerable. . These rules were not addressed by the emergency board. Without changes to these rules, engineers and conductors say they will go on strike. The 60-day cooling-off period is due to expire at 12:01 a.m. ET on Friday, so the threat of a strike looms.

Unless the two parties reach an agreement, only congressional action can prevent or end a strike. Richard Durbin, the second-highest-ranking member of the Democratic leadership in the Senate, told CNN that Democrats are not keen on taking action before the deadline to prevent a strike.

“I don’t think it’s likely we’ll step in,” Durbin said. Avoiding a strike “depends on the parties to the negotiations mobilizing”.

Railroad management and numerous trade groups, including the American Chamber of Commerce and the National Retail Federation, are calling on Congress to act to prevent a strike.

A strike would be a crippling blow to the US economy, which is still struggling with supply chain issues. About 30% of the country’s freight is transported by rail. Among the problems could be:

  • Gasoline: Without freight railways, oil refineries would struggle to produce their current volumes of gasoline, which could push up gasoline prices, ending a three-month streak of falling prices at the pump.
  • Food: This could disrupt the country’s food supply, preventing recently harvested crops from reaching food processors and disrupting the supply of fertilizer needed for future plantings.
  • Consumer Goods: According to the National Retail Federation, any railroad strikes could have lasting negative effects on the import of goods for the holiday season, causing shortages and higher prices.
  • Cars and trucks: Car prices have already reached record highs this year due to the limited supply of new vehicles caused by a shortage of computer chips and other parts. A railroad strike would further stifle supply, cutting off the delivery of auto parts to auto assembly plants, which could force temporary shutdowns at some plants. It would also disrupt the flow of new completed cars and trucks, 75% of which are transported by rail.

The full economic impact would not be immediate, said Patrick Anderson of the Anderson Economic Group, which estimates the economic impact of work stoppages, although it would likely cost the economy tens of millions of dollars a day. at first.

“The longer the strike lasts, the more the costs will increase geometrically,” he said. “After a week you would see real damage to the US economy.”

He said an estimate of $2 billion a day in economic damage caused by the railroad’s own business group is a “gross exaggeration”, but significant costs will ripple throughout the economy. “If we achieve a week-long strike, we are in uncharted territory,” he added.

The emergency board has recommended an immediate 14 per cent raise for union members, including a backlog for part of that raise dating back to 2020. Workers would also receive a 24 per cent raise over the five-year term of the contract and annual cash bonuses of $1,000.

But engineers and drivers say the strike isn’t about wages; working conditions and schedules cause their members to quit their jobs, leaving the railways with a staff shortage that makes conditions for the remaining workers intolerable. The unions that agreed to the deal don’t have the scheduling issues that engineers and conductors face.

The railways say their average employee compensation is $122,000 a year, including salary and benefits. But the railroads themselves have also been very profitable, with several of them – Union Pacific (UNP), Norfolk Southern (NSC) and Berkshire Hathaway’s Burlington Northern Santa Fe (BRKA) – posting record profits.

Some Republicans in Congress say they are preparing legislation that would contract unions of engineers and conductors to force them to stay on the job.

“A railroad workers’ strike would be catastrophic for America’s transportation system and our already stressed supply chain,” said Sen. Richard Burr, a Republican from North Carolina and one of two senators planning to introduce the legislation. (The other is Republican Roger Wicker of Mississippi.)

Burr said the PEB’s recommendations, which form the basis of the contract its legislation would impose, “are a fair and appropriate resolution to a years-long bargaining process, but the unions continue to hold the entire rail system hostage.” countries as they demand more.”

Through its trade group, the Association of American Railroads, the railroads say requests from engineers’ and conductors’ unions to change scheduling rules “should be handled locally” and not by through national negotiations. He pointed out that the unions’ request “to have the change as part of the national contract was ‘expressly rejected’ by the PEB.

For their part, leaders of the engineers’ and conductors’ unions have said their members will not ratify any agreement that does not include changes to work rules. Both unions say they have already reduced what they are asking for in order to get the deal done.

Unions also say a strike is the best way to secure a deal that will win the support of their members and improve the quality of rail service across the country. They argue that the railroads are counting on congressional intervention, which would eliminate for now the hiring of additional staff that union leaders say is needed.

– CNN’s Ali Zaslav and Maegan Vazquez contributed to this report

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