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Large railroad labor unions say they’ll strike if standard of living isn’t addressed in new contract

Exclusive: A potential railroad worker strike could cost the U.S. economy $2 billion everyday

Two of the biggest railroad unions in negotiations with railroad carriers have drawn a line in the sand: They’re demanding more quality-of-life provisions be placed in to the contract, covering attendance policies, vacation and sick days, or they’ll strike.

The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division represent 1 / 2 of railroad union workers.

Eight from the 12 unions reach tentative agreements with the railroad carriers, based on the National Carriers’ Conference Committee. They didn’t negotiate the quality-of-life provisions, sources acquainted with the negotiations tell CNBC. The unions have what exactly are called “Me Too” agreements, this means whatever benefits the BLET and the SMART unions consent to within their contracts with the carriers, other unions’ members receive.

“If this contract is presented to your members in its current form, you won’t pass,” said a labor spokesperson to CNBC. “The workers are angry. They need movement on attendance policies rather than hesitate to have a sick day or vacation day minus the concern with termination. You will see no ratification unless that is addressed.”

A railroad spokesperson told CNBC they might not touch upon ongoing negotiations, but stressed, “The railroads stay in active discussions with the unions which have not yet reached tentative agreements and can continue making every effort to attain agreements in line with the PEB recommendations.”

In July, President Joe Biden appointed a Presidential Emergency Board hoping of averting a strike and making recommendations that railroads and labor unions could acknowledge.

Attendance policies and staffing have already been a spot of contention during the last two years of the negotiation. A lot more than 700 union workers quit after BNSF, a wholly owned subsidiary of Berkshire Hathaway, instituted a points-based attendance system in February. The machine was revised in-may but union workers say the modifications didn’t fix the safety issues calling it “brutal.” Labor sources tell CNBC employees will be penalized when planning on taking each day off to visit their parent’s funeral.

The railroad has contended that the brand new policy is crucial to making certain it has enough workers designed for its trains. Rails have faced scrutiny for worsening service from unions, shippers and regulators.

A maintenance-of-way worker walks alongside a segment of newly laid railroad track on the Burlington Northern Santa Fe (BNSF) Railway Co. Southern Transcontinental line in Alva, Oklahoma, U.S., on Wednesday, Aug. 19, 2015.

Bloomberg | Bloomberg | Getty Images

“The railroad has taken its labor woes on itself,” said a labor insider with understanding of the negotiations. “They will have made steep staffing cuts to appease shareholders and enhance their important thing. Workers are burned out. You have heard from the railroads they’re hiring however they aren’t retaining talent due to the point system what your location is on demand 12 hours each day and you need to be one hour or less from your job. They’re being held hostage.”

While rails say they are hiring aggressively amid the supply chain struggles, the U.S. Surface Transportation Board has reported the biggest freight railroads in the U.S. have reduced their workforce by 29% within the last six years.

Around 40% of the country’s long-distance trade is moved by rail, a lot more than any other type of transportation. If the unions strike, a lot more than 7,000 trains will be idled and the rail industry has estimated it could cost the economy around $2 billion each day.

The American Trucking Associations wrote a letter to Congress urging action as have other industry groups representing sectors including retail and agriculture and noting a current trucker shortage helps it be difficult for the to take care of more freight.

“Idling all 7,000 long-distance daily freight trains in the U.S. would require a lot more than 460,000 additional long-haul trucks each day, which is extremely hard predicated on equipment availability and a preexisting shortage of 80,000 drivers,” said ATA President and CEO Chris Spear in the letter. “Therefore, any rail service disruption will generate havoc in the supply chain and fuel inflationary pressures over the board.”

Railroads begin emergency freight measures

Starting Monday, the railroads are securing and managing security-sensitive freight and hazmat cargo such as for example chlorine utilized by public water departments to purify normal water and chemicals found in fertilizers in case of a strike. Norfolk Southern issued an alert to customers on the measures.

“We’ve communicated to your customers that people will temporarily halt certain forms of shipments beginning September 12. Furthermore, to safely ramp down our network and enable us to create service back quickly, certain some other clients will see an initial curtailment of service before September 16.”

The Association of American Railroads says the carriers are following federal regulations.

“Operational changes necessary to plan a safe, orderly suspension were delayed so long as possible,” a railroad industry spokesman wrote within an email to CNBC. “With under a week from a potential service interruption, carriers are obligated to take appropriate actions to get ready, such as making plans for handling HAZMAT shipments, along with other freight which may be impacted if service should be reduced or stopped. Notification to customers can be an essential section of that contingency planning.”

The spokesman added that railroads usually do not believe a national service interruption is inevitable, “however the time is here when certain customers will quickly be impacted if agreements aren’t reached.”

A rail labor union spokesperson told CNBC: “The railroads cannot legally lock us out so that they are resorting to the extortion of the shippers. Impacting the supply chain therefore the shippers will head to Congress demanding intervention. Congress should never cave.”

Will Congress intervene?

The final time Congress intervened was in 1992 following the machinists union struck CSX in a dispute over a fresh labor contract.Then U.S. President George H.W. Bush called on Congress to do something quickly. Bush signed the return-to-work bill following the two-day strike turn off nationwide railroad freight service.

“These self-appointed titans of industry complain constantly about government regulation and interference except now with regards to breaking the backs of these employees,” the BLET, that is associated with the Teamsters, and the SMART Transportation Division said in a statement. “It’s time for the government to inform the CEOs that are running the country’s railroads in to the ground that enough will do. Congress should stay from the rail dispute and tell the railroads to accomplish how many other business leaders do sit back and bargain a contract your employees encourage.”

CNBC was told by both railroads and labor unions negotiations will continue Monday. The unions can strike on Friday.

Correction: Eight from the 12 unions reach tentative agreements with the railroad carriers, based on the National Carriers’ Conference Committee. A youthful version misstated a figure.

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