1/6/2017
Union labor-contract negotiations for one of Nebraska’s key industries — freight railroads — have stalled after almost two years of fruitless bargaining.
Unions representing 145,000 rail workers nationally and about 10,000 in Nebraska began negotiating in early 2015 with the seven Class I freight railroads — which include major Nebraska employers Union Pacific and BNSF Railway — to replace a contract that expired that year.
Now, lack of progress on pay and health care benefits has sent the negotiations into federal mediation. That is the process by which an impartial third party attempts to bring the sides together as mandated by the Railway Labor Act; the rail employees are continuing to work under the terms of the expired contract until a new agreement is reached.
Little is known about the negotiations, with each side releasing occasional communiques on the status. Attempts to contact national rail union leaders likely to be involved with the talks were unsuccessful. Inquiries with Omaha-based Union Pacific and Berkshire Hathaway-owned BNSF were referred to the coordinated negotiating body, called the National Railway Labor Conference.
Both railroads have placed union workers on temporary layoff or other work status after almost two years of declining freight shipments. But when the negotiations started in 2015, Union Pacific had about 6,200 union members among its 8,000 workers in Nebraska and Iowa. The majority of Texas-based BNSF’s 5,000 workers in the area were union members.
“Most rank-and-file railroaders are not clued in on exactly where we are at, because negotiations are undertaken in a semi-secret manner by the carriers and the unions,” said Ron Kaminkow, general secretary of Railway Workers United, a coalition of rail employees from many different disciplines that is not itself a collective bargaining unit. “What we do know is that the carriers organization is offering limited wage increases coupled with increased co-pays on health care that would simply offset any wage increase.”
In its latest missive last month, the National Railway Labor Conference, representing the railroads in negotiations with 13 unions, said the industry’s economic outlook “has significantly changed” from when the negotiations began.
“Shipments of coal, the largest revenue source for railroads, and other commodities, have sharply declined — a development that must be taken into consideration by the negotiators,” the group said. “Now is not the time for excessive demands.”
Railroad employees are among the most highly compensated in the nation, the group said, with “exceptional health care benefits” that are expected to cost the railroads nearly $2.3 billion in 2017. The conference says on its website that the average rail employee covered by contracts under negotiation earned about $113,000 in total annual compensation in 2015, received pay increases totaling 42 percent over the last decade, and pays $229 monthly for health care coverage, regardless of family size.
Not so fast, say the unions. Last month, the president of the Brotherhood of Locomotive Engineers and Trainmen said the railroads have not made a reasonable offer in the two years of negotiations, demanding concessions on health and welfare benefits “that were way beyond anything any of the rail unions had seen in decades,” with wage offers so low they would not offset the additional employee outlays.
“When business declined the offers went from bad to worse, and totally unacceptable demands were made to change our work rules in ways that would have our membership doing more work for less money,” wrote the union president, Dennis Pierce, in the message to his union members. “We have been crystal clear with the carriers that you would never accept or ratify their demands.”
Business has unquestionably soured for the railroads. In 2016, freight volume at the seven major rail carriers fell 5 percent, led by declines in coal, out of favor with electric utilities because of environmental concerns and cost as compared to alternative fuel natural gas. In 2015, rail-freight volumes fell 2.5 percent.
Still, they are unquestionably profitable. Union Pacific through the first nine months of 2016 had net income of $3 billion, BNSF $2.6 billion. And railroad shares, like the broader stock market, have risen since the November elections. Shares of Union Pacific have risen 30 percent in the past year, while a Dow Jones index of publicly traded railroads has bumped 33 percent. (BNSF is wholly owned by Omaha-based Berkshire Hathaway and doesn’t trade on a stock exchange.)
Likewise, the broader stock market has risen since the election, which is expected to usher in a pro-business presidential administration, a likelihood noted by labor leaders.
The Coordinated Bargaining Group, one of three separate groups negotiating on behalf of the 13 rail-labor unions, said in a statement last month that it appears the railroads “believe that the national elections in November have tipped the labor/management balance in this country heavily” in their favor.
“Our members have earned, and rightfully expect, a fair contract settlement that recognizes the fact that the industry continues to reap many billions in net profits annually,” the group said.
At stake are pay, benefits and working conditions for many different types of railroad workers, such as engineers, ironworkers, machinists and electricians. Railroads handle about 40 percent of the nation’s freight. And while the railroads describe these workers as very well paid, there are offsetting factors, the unions say.
One of the main ones is unpredictable work hours on shifts that run 12 hours at a time. So serious is the issue, the Federal Railroad Administration has sponsored a website in collaboration with Harvard Medical School called A Railroader’s Guide to Healthy Sleep, which offers tips on improving slumber and a screening tool for disorders thereof.
Another safety topic — staffing trains with only one crew member as opposed to the de facto current standard of two — is not part of the national negotiations. Rather, it is reserved for local bargaining groups to negotiate directly with the railroad in question.
As for the prospects of overall rail-freight volumes recovering in 2017, it could happen, said Daniel Sherman, a transportation industry analyst for St. Louis-based wealth adviser Edward Jones. He said coal shipments might begin to rise as inventories at utilities fall and exports rise. Also, Sherman said, natural gas prices are rising, making the fuel less competitive versus the black mineral.
“The economy was picking up steam before Trump was elected,” Sherman said. “Third-quarter gross domestic growth has been revised up to a 3.5 percent annual rate. Add in better consumer sentiment, and I think we have a good chance of seeing rail volumes increase.”
Now, it is up to the carriers and the unions to make all that translate into a new contract. While talks are described as stalled, strikes are almost out of the question in the freight-rail industry. The 1926 Railway Labor Act, a product of negotiations between the unions and carriers, seeks to replace strikes with mediation, arbitration and other dispute-resolution techniques. Dozens of steps, including cooling off periods and congressional and presidential intervention, are mandated by law.
Over the past 45 years, there have been only 10 days of rail-service disruptions arising from labor disputes, the last in 1992, according to the carriers labor-negotiating group.
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