Freight railroad union rejects contract, renewing possibility of a strike
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There is once again a real possibility of a strike among freight railroad employees. Workers at the third-largest railroad union, the Brotherhood of Maintenance of Way, have rejected a tentative five-year contract with a committee representing major railroads.
The companies have placed a 24% raise on the table, but working conditions remain the big sticking point, specifically, what union members consider to be draconian schedules stemming from years of changes in the business.
The term “precision railroading” was pioneered by executive Hunter Harrison three decades ago.
The idea was to make the rails more efficient and cut costs, but implementation of what he called “the recipe” was a bit mushier.
“If you take and season that recipe with a little integrity and a lot of passion, you know what we’re about,” he said. “That’s precision railroading.”
And shareholders loved it.
Harrison has since died. But the legacy of precision railroading includes steep job cuts — almost 30% over the last six years, said Sandra Dearden, CEO of Highroad Consulting, which specializes in transportation and logistics.
When pandemic lockdowns ended, railroads tried to call back employees they’d furloughed.
“And about half of them said they didn’t want to come back because of the hours, work rules, and so forth,” Dearden said.
Dearden said those rules let companies penalize workers for taking off time when they are sick.
The Association of American Railroads said those concerns are partially addressed in a tentative agreement reached last month.
Fully addressing scheduling concerns could be tricky given the 24% salary hike offered by the railroad companies, said Veronique De Rugy, senior research fellow at the Mercatus Center at George Mason University.
“It would be great if no tradeoff existed, but it’s not really the way it works,” she said.
By industry estimates, overall costs of a strike could reach $2 billion a day.
Costs could be higher, exposing the coal, chemical and auto industries most, said Jason Miller, interim chairperson at the Department of Supply Chain Management at Michigan State’s Broad College of Business.
“Those three sectors of the economy right away are going to essentially be crippled,” he said.
And he anticipates some companies could halt operations if there’s no deal by next month.
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