WASHINGTON, Sept 15 (Reuters) – Major U.S. railroads and unions reached a tentative deal on Thursday after 20 hours of intense negotiations by President Joe Biden’s administration to avert a rail shutdown that could affect food and fuel supplies across the country.
Biden called the deal a “big win for America” and tens of thousands of railroad workers. Thanking business and labor, the Democratic leader promised more labor-company deals in the future.
“I’m confident that this can be done in other areas as well,” Biden said.
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“Unions and management can work together for everyone’s benefit,” Biden added.
If they accept the deal announced at 5 a.m. (0900 GMT), union leaders said the workers whose pay had been frozen would win a double-digit raise and be allowed to receive some forms of medical care without fear of punishment. The deal includes an immediate 14.1% wage hike, the Railways said.
Unions, whose members strongly rejected previous proposals, will now vote on the deal. Even if those votes failed, a train strike that could have happened at one minute past midnight on Friday was avoided for weeks because of the standard language in such a deal, a person familiar with the negotiations said.
Biden’s Labor Secretary Marty Walsh led contract talks in Washington that lasted 20 consecutive hours between unions representing 115,000 workers and railroads, including Union Pacific. (UNP.N)BNSF, CSX (CSX.O)Norfolk South (NSC.N) and Kansas City South.
Officials are expected to hold a news conference on Thursday.
Failure to reach an agreement before the deadline would have cleared the way for workers to legally strike.
A rail shutdown could cripple nearly 30% of U.S. freight shipments by weight, fuel inflation, cost the U.S. economy $2 billion a day and unleash a cascade of transportation woes affecting the U.S. energy, agriculture, manufacturing, healthcare and retail sectors. .
Railroad stocks pared early premarket gains after mixed economic data, with Union Pacific down 2.2% and CSX down 2.0% in mid-day trading. read more
US natural gas futures fell about 9% after rising 10% in the previous session; Oil futures fell about 4% to their lowest in a week. Diesel and petrol futures also fell. , read more Investors expected a rail strike to threaten coal supplies to power plants and increase demand for competing energy sources. read more
Commuter rail operator Amtrak said it would resume regular service on Friday after canceling long-distance trains in anticipation of the strike. read more
The impact of the shutdown will extend beyond US borders, as trains connect the US to Canada and Mexico and provide vital links for massive ships carrying goods from around the world.
Negotiations between the companies and a dozen unions dragged on for more than two years, leading Biden to appoint an emergency board in July to break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to push them for a deal, telling them to “recognize once again the harm” a shutdown would do to families, farmers and businesses, according to a person familiar with the negotiations.
National Retail Federation CEO Matthew Shay thanked Biden’s administration for the intervention and said in a statement that his team was “relieved and cautiously optimistic.” Emily Schor, CEO of biofuels trade group Growth Energy, also praised the deal.
Freight railroads stopped transporting hazardous materials, including chlorine for water treatment and ammonia for fertilizer, as well as refrigerated food and other goods that used rail and at least one other mode of transportation. Their aim was to prevent storage of goods in unsafe places.
The railroad industry has cut nearly 30% of its workforce over the past six years, cutting wages and other costs as it ramps up profits, stock buybacks and dividends for investors. Profits in billionaire Warren Buffett’s Berkshire Hathaway, (BRKa.N) Owned by BNSF, it rose 9.2% to $1.7 billion in the most recent quarter.
According to the Bureau of Labor Statistics, Technology and Cost Reduction, the number of U.S. railroad workers has declined from more than 600,000 in 1970 to 150,000 in 2022. As a result, many industrial workers are on call at all times, waiting to respond at short notice to work one at a time.
The latest agreement follows some earlier recommendations by the president’s emergency mediators. It provides a 24% pay increase over the five-year period from 2020 to 2024 and a lump sum payment of $1,000 every five years.
Biden, calling himself the most union-friendly president in history, attacked companies for making “higher” profits, hailing a deal he said would give workers “better wages, better working conditions and peace of mind around their health care costs.” .”
The president is not out of the woods yet when it comes to supply chain labor issues. About 22,000 unionized workers at 29 West Coast ports that handle nearly 40% of U.S. imports are also engaged in high-stakes labor contract negotiations.
Administration officials wanted the disputes resolved before November’s midterm elections, which will determine whether Biden’s fellow Democrats retain control of Congress.
Senior Congress leaders have threatened to enact legislation to impose a resolution on the railways and unions if talks fail. US House Speaker Nancy Pelosi praised the tentative deal, saying Congress was “ready to act” but “fortunately this action may not be necessary.”
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Reporting by Trevor Hunnicutt in Washington; Additional reporting by Lisa Birdlin, Steve Holland, David Shepherdson in Los Angeles and Susan Hevey in Washington, Stephanie Kelly, Jahnavi Nidumolu, Aishwarya Nair, Bansari Mayur Kamdar and Kannagi Deka in Bengaluru in New York; Editing by Heather Timmons and Catherine Evans
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