Early Sept. 15 after more than 20 hours of constant negotiations, the White House announced U.S. railroads and rail unions have reached tentative agreements to avoid a strike and a network shutdown ahead of a Sept. 16 deadline. Later in the day, the National Carriers’ Conference Committee (NCCC), which represents the nation’s freight railroads, announced tentative agreements with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters; the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division; and the Brotherhood of Railroad Signalmen. Together, the three unions represent approximately 60,000 railroad employees.
“ISRI applauds the actions and negotiations that took place into the early morning hours that averted a railroad labor shutdown ahead of the Friday deadline,” ISRI President Robin Wiener says. “Rail service is vital to receiving and delivering recycled materials used in manufacturing, including the 70% of all U.S.-produced steel which is made from recycled material. Every recycled material, from steel to aluminum, paper, copper, plastics, and glass, runs on the railway system.”
ISRI advocated on behalf of the recycled materials industry in an effort to encourage action to avoid a strike. These efforts included a letter sent Sept. 14 to key congressional leaders involved in this issue. This action was crucial as railroads were already notifying customers that they would no longer accept railcars in anticipation of complete network shutdowns. With the anticipated union ratification, this economic disaster seems to be avoided.
“This was effort across the entire supply chain: from the recycled materials industry; through to the material manufacturers like steel, aluminum, and paper; all the way and including the Association of American Railroads, to the National Retail Federation, and all the Rail Customer Coalition members,” says Billy Johnson, ISRI’s chief lobbyist. “Everybody knew the ramifications if a strike were to occur.”
Twelve unions representing approximately 124,500 freight rail workers have been bargaining with Class I freight rail carriers for a new contract since 2019. Each union must negotiate their own collective bargaining agreement and then a master agreement covering any common issues across all unions.
In mid-June, the National Mediation Board (NMB) released rail carriers and unions from mediation and they entered a 30-day “cooling-off” period. In mid-July, President Joe Biden issued an executive order under the Railway Labor Act convening a Presidential Emergency Board (PEB) and triggering another 60-day cooling-off period. The PEB consisted of three experienced arbitrators who issued a report on Aug. 16.
The PEB issued detailed recommendations on the two main cross-union issues of wage increases and health care benefit costs. The PEB’s recommendations would increase wages by 24% through 2024, with a 14.1% increase to be effective immediately. The recommendations also include $1,000 annual lump-sum payments, adjustments to health care premiums, health benefit enhancements, and limited changes to work rules. A portion of the wage increases and lump sum payments would be retroactive, resulting in more than $11,000 on average in immediate payouts to employees.
“I think [railroads are] going to [pass on] those costs as much as possible as soon as possible,” says Joe Pickard, ISRI’s chief economist and director of commodities. “Certainly [recyclers are] price takers when it comes to paying freight costs. We’re also price takers when it comes to selling our materials to the end-market consumers. So, in some ways, I think you could reasonably expect that rising rail costs at the same time that we’re seeing downward pressure on commodity prices could potentially put further margin compression on recycling profits.”
More than 40 million tons of U.S. recycled materials originate on Class I railroads annually, Pickard notes. Rail service is extremely important to receiving and delivering recycled materials used in manufacturing, including the up to 70% of all U.S. recycled steel that goes into domestic steel production.
The other key issue the PEB report addressed was paid sick time, scheduling, and attendance policy changes. On these issues the PEB agreed with the rail carriers’ proposal for another personal day and declined to adopt the unions’ proposal for a cross-union paid sick-day policy of 15 days and 3 holidays.
Freight rail carriers have accepted the PEB recommendations and have held the position that the new contracts should be based on the board’s report. If any union refuses to accept the tentative deal, the other unions are expected to strike in solidarity with that union.
Legally the president cannot prevent a strike. Some members of Congress have worked on a resolution to require the parties to reach an agreement in line with the PEB recommendations. A resolution was introduced Sept. 14 in the House, and in the Senate, Sen. Bernie Sanders, I-Vt., blocked a Republican-backed version. “We’re in the cross-our-fingers, hold-our-breath mode,” Johnson says. “Every missed [shipment] sends a ripple through somebody’s supply chain.”
This is a developing story. ISRI will continue to track the developments closely and work for our members on this issue.
Photo courtesy of Storyblocks.