As deadline looms, railroads say strike would cost $2 billion a day

OMAHA, Neb. (AP) — Major railroads, in an effort to pressure unions and Congress, say a strike that could take place after a key deadline next week would cost the economy more than $2 billion a day and will disrupt deliveries of all kinds of freight and passenger traffic nationwide.

The trade group Association of American Railroads issued a report Thursday that estimates the dire consequences of a strike. Their report came a day after Labor Secretary Marty Walsh joined talks in an effort to reach a deal.

A strike or lockout will not be allowed until next Friday at the earliest under federal law governing railroad bargaining.

Five of the 12 unions involved that together represent about 115,000 workers have announced temporary agreements covering more than 21,000 workers based on a series of recommendations made last month by a special committee appointed by President Joe Biden. But many key unions are holding out in the hope that the railroads will agree to go beyond those recommendations and address some of their concerns about working conditions.

The President’s Emergency Council recommended a five-year deal, retroactive to 2020, that includes 24 percent raises and a $5,000 bonus. But he wants the unions to take their concerns about attendance policies, paid leave and expenses to arbitration or negotiate separately with the railroads. Unions say their workload has become unbearable after the railroads eliminated nearly a third of their workforce over the past six years.

The rail trade organization said a strike would ground about 7,000 freight trains a day operated by CSX, Union Pacific, BNSF, Norfolk Southern, Kansas City Southern and other railroads and disrupt passenger service nationwide because Amtrak and half of all commuter rail systems are at least partially based on lines owned by freight rail lines.

The AAR also said it would be impossible for trucks to pick up the slack if the railroads were to close because about 467,000 extra trucks a day would be needed to handle all freight rail lines and there is already a shortage of trucks and drivers.

AAR CEO Ian Jefferies said unions should accept the President’s Emergency Council’s recommendations because they would offer the biggest raises in nearly 50 years and represent a compromise.

“Should negotiations fail and result in a work stoppage, Congress must act to implement the PEB’s recommendations,” Jefferies said.

A Labor Department spokesman confirmed that Walsh was participating in the talks on Wednesday. If this contract dispute is turned over to Congress for resolution, lawmakers may be forced to make some tough decisions in an election year.

A coalition of 31 major farm groups sent a letter to Congress on Thursday urging lawmakers to be ready to step in and block the strike if the two sides fail to reach an agreement before next Friday’s deadline. They say they are already facing delayed deliveries because the railroads are upset and problems would get much worse in a strike, even if it was short.

“Most freight railroads currently do not have additional capacity to make up for the downtime,” the farming groups said in their letter. “Thus, a significant portion of cargoes delayed due to disruption can never be covered leading to less output from rail trades. businesses to the detriment of producers and consumers”.

Edward Jones analyst Jeff Windau said lawmakers’ decisions will be put under a magnifying glass with midterm elections looming, but “they’ll definitely want to keep the economy running smoothly” if they have to resolve the contract dispute. But Windau said he was optimistic the two sides would reach an agreement next week.

Independent railroad analyst Anthony Hatch said unions are trying to take advantage of the current environment with Democrats in control of the White House and Congress and a tight labor market, but ultimately he doesn’t think a strike will happen.

“It makes sense for them to hold out until the last minute and try to get the best deal they can. For railroads, it makes perfect sense to say that a disruption would be disruptive,” Hatch said.

Even if a strike did happen, Hatch predicted it would “not last weeks, not days, not hours but minutes” because Congress would intervene. And the long-term cost of these deals can have a bigger impact on railroads than the short-term crisis of a strike.

Ultimately, ongoing local negotiations over the railroad’s proposals to reduce the number of crews from the current two to one may prove more important to the industry than these wage deals because they will affect how railroads can remain competitive against trucks as autonomous trucks are developed. he said.

That issue has been pushed from ongoing national wage negotiations to talks at each individual railroad, though a proposed Federal Railroad Administration rule that would require two-person crews in most cases would make it harder for railroads to cut crews. Unions have also strongly opposed reducing crew numbers due to safety and labor concerns.

The leaders of the two largest railroad unions — the Sheet Metal, Airplane, Rail and Transportation Workers — the Transportation Department, which represents conductors, and the Brotherhood of Locomotive Engineers and Trainmen, which represents engineers — said in a joint statement last week that Congress should stay on the sidelines because that would put more pressure on the railroads and help them reach an agreement that workers would approve.

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