The American rail strike was averted;  Biden calls the deal a ‘win for America’

The American rail strike was averted; Biden calls the deal a ‘win for America’

By Trevor Honeycutt and Steve Holland

WASHINGTON (Reuters) – Major U.S. rail companies and unions reached a tentative agreement on Thursday after 20 hours of intense talks brokered by the administration of President Joe Biden to avert a rail shutdown that could damage food and fuel supplies across the country and beyond.

Biden called the deal a “big win for America” ​​and for tens of thousands of rail workers. The Democratic president thanked business and labor, and promised more labor-companies agreements in the future.

“I’m optimistic that we can do this in other areas as well,” Biden said.

“Unions and administration can work together for the benefit of all,” Biden added.

Union leaders said that if they agreed to the deal, which was announced around 5 am (0900 GMT), workers whose salaries had been frozen would win double increases and be allowed to seek certain types of medical care without fear of retribution. The railways said the agreement includes an immediate 14.1% increase in wages.

The unions, whose members bitterly rejected earlier proposals, will now vote on the agreement. Even if those votes failed, a person familiar with the negotiations said, a rail strike that could have occurred as soon as a minute past midnight Friday was averted for several weeks due to the standard language involved in such a deal.

Biden Labor Secretary Marty Walsh hosted the contract talks in Washington that lasted 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific (NYSE:), BNSF, CSX (NASDAQ :), Southern Norfolk (NYSE:) and Kansas City Southern (NYSE:).

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Officials are expected to host a press briefing later on Thursday.

Failure to reach an agreement before the deadline was clearing the way for workers to strike legally.

The rail shutdown could have frozen nearly 30% of US cargo shipments by weight, fueled inflation, cost the US economy up to $2 billion a day, and unleashed a series of transportation problems affecting the energy, agriculture, manufacturing, and healthcare sectors. and retail in the United States. .

Railroad stocks pared their initial gains ahead of the market after mixed economic data, with Union Pacific up 2.2% in mid-day trading and CSX down 2.0%.

The US is down about 9% after rising 10% in the previous session. Oil futures fell about 4% to their lowest level in one week. Diesel and gasoline futures also fell. Investors expected that the rail strike would have threatened coal supplies to power plants and boosted demand for competing energy sources.

Amtrak, which operates a passenger railroad, said it would resume normal service on Friday after canceling long-distance trains in anticipation of a strike.

The impact of the shutdown could have extended beyond the US borders because trains connect the US with Canada and Mexico and provide vital links to the huge ships carrying goods from around the world.

Negotiations between companies and dozens of unions spanned more than two years, prompting Biden to appoint an emergency board in July to help break the deadlock. Biden personally called Balch and negotiators Wednesday night to urge them to reach an agreement, telling them to “again acknowledge the damage” the shutdown could do to families, farmers and businesses, according to a person familiar with the negotiations.

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National Retail Federation CEO Matthew Shay thanked the Biden administration for stepping in, adding in a statement that his group was “relaxed and cautiously optimistic.” Emily Schorr, chief executive of biofuel trading group Growth Energy, also praised the deal and noted that much of the country’s ethanol travels by rail.

Freight rail has stopped transporting dangerous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transportation. Their goal was to prevent shipments from getting stranded in unsafe locations.

job cuts

The railroad industry has reduced nearly 30% of its workforce over the past six years, cutting wages and other costs as it increased profits, share buybacks, and dividends to investors. Billionaire Warren Buffett’s earnings of Berkshire Hathaway (NYSE:), which owns BNSF, rose 9.2% last quarter to $1.7 billion.

The number of railroad workers in the United States has fallen from more than 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, Technology Needs and Cost Reduction. The result is that many workers in the industry are on standby at all times, awaiting a response in short order to work for days at a time.

The latest agreement comes on the heels of some previous recommendations of the president’s emergency mediators. It includes a 24% wage increase over five years from 2020 to 2024 plus payments for a total of $1,000 every five years.

Biden, who described himself as the friendliest president in history and attacked companies for “excessive” profits, praised the deal, which he said would give workers “better salaries, better working conditions, and peace of mind about their health care costs.”

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The president is not yet out of the woods when it comes to labor issues in the supply chain. About 22,000 union workers at 29 West Coast ports that handle roughly 40% of US imports are also in high-risk job contract negotiations.

Administration officials wanted to resolve differences before the November midterm elections that will determine whether Biden’s Democratic colleagues retain control of Congress.

Senior congressional leaders have threatened to pass legislation imposing a resolution on railroads and unions if negotiations do not succeed. US House Speaker Nancy Pelosi praised the initial agreement and said Congress was “ready to act” but “fortunately this action may not be necessary.”

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