Rail strike averted after Biden announces tentative deal | CNN Business (2024)

There will be no freight railroad strike early Friday. But the threat of a strike has not gone away entirely.

The tentative dealreached after amarathon 20-hour bargaining sessionbetween the railroads and the leaders of the engineers and conductors union still needs to be ratified by rank-and-file union members for it to go into effect.

The details of the ratification vote have yet to be set, but it is likely weeks away. Although the unions’ leadership described the agreement as a negotiating win, a successful ratification vote is not yet assured. And some union members appeared to criticize the deal on social media.

A trend of rejecting deals: Rank-and-file union members working in other industries have recently balked at approving their deals, even when recommended by their unions’ leadership. While most union contracts are ratified, there have been some very high-profile examples of angry union members voting no:

A smaller railroad union has already voted to reject the tentative agreement – the unit of the Machinists union that has 5,000 members working as mechanics for locomotive and track equipment and facility maintenance personnel. But that union is not preparing to go on strike immediately and instead will try to seek a new deal by the end of the month. The deal reached with the engineers and conductors could affect those negotiations.

President Biden underscored how the tentative deal is beneficial for Americans, saying it averted “a significant damage that anyshutdown would have brought.”

“Our nation’s rail system is thebackbone of our supply chain,” he said. “It’s hard to realize this but everything from clean water to food to gas … every good that you need seemsto end on a rail gettingdelivered to where it needs to go.”

Biden said the agreement will allow “us tocontinue to rebuild a better Americawith an economy that truly worksfor working people and theirfamilies.”

In remarks about the tentative deal between unions and rail companies to avert a freight rail strike, President Biden said the rail system was the “backbone of the economy.”

“These companies also played acritical role in keeping Americamoving during the pandemic.And that is not hyperbole; it’sa fact.With this agreement, railroadcompanies would be able to retain andrecruit workers. They’ll be able to continue to operateeffectively as a vital piece ofour economy,” Biden said from the White House.

He thanked unions and the rail companies for negotiatingfor about 20 hours to reach an agreement.

“This agreement is validation, validation to what I’ve alwaysbelieved: unions and management can worktogether — can work together — for thebenefit of everyone,” the President said.

In remarks from the Rose Garden, President Biden said the tentative deal reached betweenunions and management “is a big winfor America.”

Biden acknowledged the contribution of the workers during the pandemic.

“During these early dark,uncertain days of the pandemic,they showed up so every Americancould keep going.They worked tirelessly throughthe pandemic to make sure thatfamilies and communities got thedelivers they needed,” he said.

The tentative agreement will give workers “better pay,” Biden added, pointing to the 24% wageincrease over the next five years, improved working conditions, and access to better health care.

The White House has officially advised a 10:45 a.m. ET Oval Office spray with rail negotiators followed by remarks at 11 a.m. ET in the Rose Garden.

Two heads of the unions are heading to the White House now to meet with President Biden, according to two union officials.

Freight rail is involved in several areas of American life — from the energy needed to power homes to the food in grocery stores.

“Freight rail is a crucial part of an integrated network of trains, trucks and barges that ships around 61 tons of goods per American every year,” the Association of American Railroads, an industry group, says on its website.

These are all of the industries that are supported by freight rail, according to the AAR:

With the midterm elections looming and President Joe Biden’s pledge to be the most pro-union president in US history, the negotiations between the rail industry and union representatives was an acute political landmine that increasingly unsettled Democrats torn between close union allies and the fear of major economic disruption.

White House officials had been engaged in a two-pronged sprint to encourage negotiations while also trying to secure contingency options for a worst-case scenario.

This is how the Biden administration averted the crisis:

Negotiations:

Biden had been closely watching the talks and had received regular updates through the last several days.

Senior White House staff, Cabinet officials and Biden himself had worked the phones for days to try and break the impasse. But they had also made clear in those discussions with industry and union representatives that their role is as a neutral arbiter, people familiar with the conversations said.

Labor Sec. Marty Walsh had been at the center of the ongoing talks. But despite two years of talks, an increasingly heated dispute over engineer and conductor attendance policies had left talks at a virtual standstill between the two largest of 12 unions involved in the talks.

Over the course of 20 hours on Wednesday, Walsh huddled with union and freight rail company representatives in an effort to break the logjam.

At this critical point of negotiations, a flood of statements went out throughout Wednesday from industry groups across nearly every critical US economic sector detailing the potential for devastating consequences of a shutdown.

“This is how any high-stakes negotiation goes,” the source familiar with the White House approach said. “All parties are always seeking leverage.”

As the marathon meeting between parties neared its 12th hour, Biden called in and underscored the stakes.

His message was consistent with the one he’d delivered in private calls over the course of the last several weeks, sources said, but an urgency framed around just how devastating a rail shutdown would be for the country was palpable.

“Failure wasn’t an option here,” one source with direct knowledge of the call said. “Everyone knew the stakes, but the President really hammered home how deep and catastrophic leaving without an agreement would be for the entire country.”

Eight hours later, Biden announced that a tentative deal had been reached.

Securing a contingency plan

The White House had been engaged in intensive discussions with key players in shipping, trucking and air freight to gauge the capacity to backfill freight rail disruptions if the strike did happen.

Officials stressed in those conversations they were ready to deploy any tool at their disposal that would help.

Biden named retired Gen. Stephen Lyons, the former head of US Transportation Command, as his port and supply chain envoy in June. He was tasked with establishing lines of communication between ocean liners and rail participants, officials said — something that deepened his relationships inside the industry, but also underscored the necessity of cooperation across supply chain components that are nearly entirely private-sector operated.

More than a year of outreach to key industry groups across the supply chain have created the administration’s own clear lines of communication, which one official views as exceedingly critical in a worst-case scenario.

Read the full report here.

New details of the tentative agreement between labor unions and rail lines address a key attendance policy that was holding up the deal.

The tentative agreement will exempt “time off for certain medical events from carrier attendance policies,” according to ajoint statementfrom the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART).

The union said if this issue was not addressed in the new contract, they would strike at 12:01 a.m. ET Friday morning. A points-based attendance policy made it hard for workers to take time off for sick leave because members would lose points – and the only way to get them back was to work more – or face penalty, according to the union.

Members will get one additional paid day off as well as voluntary assigned days off.

“Most importantly, for the first time ever, the agreement provides our members with the ability to take time away from work to attend to routine and preventive medical care, as well as exemptions from attendance policies for hospitalizations and surgical procedures,” the statement read.

The agreement also gives union members an immediate 14% raise with back pay dating to 2020 and raises totaling 24% during the five-year life of the contract, which runs from 2020 through 2024. It also gives them cash bonuses of $1,000 a year for five-year life of the contract.

There will be no copay or deductible increases or changes to health care. Monthly health care costs will freeze at the end of the five-year agreement, according to the statement.

There will be no increases to copays or deductibles and there are no disruptions to the existing health care networks.

What’s next: The agreement will now go to members for a vote for ratification.

The National Retail Federation on Thursday expressed relief following the White House announcement of a tentative agreement between thefreight railroads and rail labor organizations.

“We are relieved and cautiously optimistic that this devastating nationwide railstrikehas been averted,” President and CEO Matthew Shay said in a statement.

Shay went on to say that the NRF hopes the railway workers will accept the new terms of the contract and that the “railway system can continue to operate on behalf of the millions of hardworking Americans who rely on it for their jobs and the economic security of our country.”

Amtrak said it “is working quickly to restore canceled trains” following the announcement of a tentative deal avoiding a freight rail workerstrike.

The railroad had planned to cancel all long-distance trains as well as some state-sponsored trains on 10 other lines.It had already canceled some of its long distance runs.

“Amtrak is working to quickly restore canceled trains and reaching out to impacted customers to accommodateon first available departures,” the railroad said in a statement. “Will provide update soon as information becomes available.”

President Biden announced early Thursday morning that the unions and rail companies have reached a tentative agreement to avert astrikeahead of a critical deadline

Biden called it “a win for tens of thousands of rail workers who worked tirelessly through the pandemic” as well as for “the railway companies who will be able to retain and recruit more workers.”

A Department of Labor spokesperson added:

“Moments ago, following 20 consecutive hours of negotiations at the Department of Labor, rail companies and union negotiators came to a tentative agreement that balances the needs of workers, businesses, and our nation’s economy. Secretary Walsh and the Biden Administration applaud all parties for reaching this hard-fought, mutually beneficial deal.Our rail system is integral to our supply chain, and a disruption would have had catastrophic impacts on industries, travelers and families across the country.”

What we know: Negotiations to avert the railwaystrikewent on for 20 hours, with a deal reached around 5 a.m. ET, according to a source familiar with the matter.

Officials are calling this “tentative agreement” only because the agreement now goes back to the unions for a vote and as part of the tentative agreement, both parties agree to a “post-ratification cooling off period” of several weeks.

The source also said Biden “made a crucial call” to Labor Secretary Marty Walsh and negotiators at 9 p.m. last night.