Bloomberg News

Railroads Avert U.S. Holiday-Season Strike on Union Accords

December 07, 2011

(Updates index change in fifth paragraph.)

Dec. 2 (Bloomberg) -- Freight railroads won new labor agreements with two unions, averting a strike in the holiday shipping season, after U.S. lawmakers said they were prepared to intervene in the dispute.

The Brotherhood of Locomotive Engineers and Trainmen and the American Train Dispatchers Association, representing 26,500 workers, reached tentative accords, the National Railway Labor Conference, a Washington-based group that bargains on behalf of railroads, said in an e-mailed statement last night.

Winning the contract agreements ended the threat of a walkout that could have occurred as soon as Dec. 6, the Association of American Railroads trade group said in a statement. Another union, the Brotherhood of Maintenance of Way Employes, extended a “cooling-off” period to Feb. 8.

“While the railroads only agreed upon an extension with BMWE, we are hard pressed to envision a situation where BMWE would not eventually work out a deal,” Jason Seidl, a Dahlman Rose & Co. analyst in New York, said today in a note to clients.

The Standard & Poor’s 500 Railroads Index fell 0.1 percent today. The gauge consists of the three largest publicly traded U.S. railroads: Union Pacific Corp., CSX Corp. and Norfolk Southern Corp.

$2 Billion

A freight-rail work stoppage would have cost the U.S. economy about $2 billion a day, the Washington-based AAR said. The House was ready to vote on legislation to prevent a “job- crushing railway labor strike,” House Speaker John Boehner, an Ohio Republican, said yesterday before the union accords.

The agreements call for raises of more than 20 percent over six years, A. Kenneth Gradia, a labor conference official, said in the group’s statement.

Ten unions have tentative deals and two have ratified agreements. The maintenance-employees group said this week it plans to bargain into February. It speaks for 25,100 workers who build and maintain tracks, according to the labor conference.

Talks among 30 freight railroads, including Union Pacific and Warren Buffett’s Burlington Northern Santa Fe, and unions representing 132,000 workers broke down in September after almost two years, triggering a 90-day strike ban under U.S. law.

Railroads carry 43 percent of the freight volume moved between cities, according to the railroad association.

Congressional Action

House transportation committee Chairman John Mica, a Florida Republican, and Senator Mike Enzi, a Wyoming Republican, on Nov. 30 proposed adopting the recommendations of a board President Barack Obama appointed in October to resolve the dispute.

Senate Majority Leader Harry Reid, a Nevada Democrat, made a similar proposal and added one to extend the Dec. 6 bargaining deadline until Feb. 8.

U.S. business groups urged Congress to prevent a strike if the companies and unions didn’t resolve the dispute.

“We are not thrilled with Congress getting involved in settling labor disputes,” Alex Herrgott, director of transportation and infrastructure for the U.S. Chamber of Commerce, said in an interview. “But we’re more concerned about losing $2 billion a day without intervention.”

One-third of U.S. exports and 70 percent of coal shipments travel by rail, Herrgott said in an e-mail.

--With assistance from Mary Jane Credeur in Atlanta and Heather Perlberg in New York. Editors: Andrea Snyder, Bernard Kohn

To contact the reporter on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net


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