GREEN CAPITALI$M

Patagonia lobs ESG breakup calls back to the wild

Antony Currie Reuters
PUBLISHEDSEP 16, 2022


MELBOURNE (Reuters Breakingviews) - If there were more Yvon Chouinards, humans might be doing a better job of battling global warming. Such sentiments are doing the rounds on social media since the founder of Patagonia revealed https://nam02.safelinks.protection.outlook.com/

on Wednesday that he has ceded control of his outdoor clothing firm. His motive: to direct the earnings generated by what will remain a for-profit company into a charity fighting climate and environmental risks that will own virtually all Patagonia’s shares. Yet he could have built a bigger war chest more quickly by selling the company. That he didn’t is an apt riposte to breaking up ESG.

The idea of separating environmental, social and governance concerns from each other has been gaining traction https://nam02.safelinks.protection.outlook.com/?

It has some appeal: around $17 trillion in assets, per the U.S. Sustainable Investment Forum, sit in funds run by managers from BlackRock to AllianceBernstein that claim to include ESG considerations in their investment decisions. Yet often they aren’t clear about the relative importance of each of the three, creating consternation and confusion. A climate-focused ESG fund probably should own Tesla, for example, whereas one prioritising social or governance performance would have a tough time justifying the investment.

In practice, all three should form an integral part of a fund manager’s overall analysis. Not only do they interact with one another, excluding or downplaying one type of performance could result in plenty of risks and opportunities being overlooked.

Forcing companies to pick between the three concepts would also create unnecessary dilemmas. Chouinard, for example, wants to steer more money towards protecting the planet. By handing virtually all shares over to a charitable trust, though, he’s limiting his contribution to the firm’s annual earnings of some $100 million a year, per the New York Times https://nam02.safelinks.protection.outlook.com/?

But Patagonia has a strong brand and a roughly 10% profit margin that beats publicly traded apparel companies like Abercrombie & Fitch. So he ought to be able to sell it at a handy premium to the roughly 13 times trailing earnings A&F commands. At, say, a 20 times multiple, he’d have some $2 billion to deploy.

That, though, would risk selling the company to those who might not defend either the company’s environmentally friendly culture or its employees. His unusual solution is one few are likely to replicate. But behind it is a more responsible approach to managing a business than forcing ESG issues into unneeded siloes.

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CONTEXT NEWS

Yvon Chouinard has ceded control of outdoor clothing brand Patagonia, the founder disclosed in a letter on Sept. 14. As a result, all company profit will go to a non-profit entity which will spend it to fight climate change.

As part of the deal, Chouinard and his family have transferred all stock with voting rights to the Patagonia Purpose Trust. Overseen by family members and their advisers, according to the New York Times, the trust will be responsible for approving key decisions like choosing the board of directors.

All non-voting stock, which represents the vast majority of shares, has been given to the Holdfast Collective, which Chouinard calls "a nonprofit dedicated to fighting the environmental crisis and defending nature".

Patagonia has annual revenue in excess of $1 billion and profit of some $100 million, the New York Times reported on Sept. 14.

(Editing by Robyn Mak and Thomas Shum)

'Earth Is Now Our Only Shareholder': Founder Gives Away Patagonia to Save the Planet

"Hopefully this will influence a new form of capitalism that doesn't end up with a few rich people and a bunch of poor people," said Yvon Chouinard. "We are going to give away the maximum amount of money to people who are actively working on saving this planet."

"We needed to find a way to put more money into fighting the crisis while keeping the company's values intact," Patagonia founder Yvon Chouinard wrote in a letter explaining his family's ownership decision. (Photo: Patagonia/Facebook)

JESSICA CORBETT

September 14, 2022

Patagonia founder and "reluctant billionaire" Yvon Chouinard just raised the bar for corporate action on the fossil fuel-driven planetary emergency.

"Instead of 'going public,' you could say we're 'going purpose.'"

The 83-year-old, his wife Malinda, and their adult children, Fletcher and Claire, gave away the company, valued at about $3 billion. The rock climber-turned-businessman explained the decision in an interview published Wednesday by The New York Times, along with a letter on the outdoor clothing retailer's website.

"While we're doing our best to address the environmental crisis, it's not enough. We needed to find a way to put more money into fighting the crisis while keeping the company's values intact," Chouinard wrote. "One option was to sell Patagonia and donate all the money. But we couldn't be sure a new owner would maintain our values or keep our team of people around the world employed."

"Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility," he continued. "Truth be told, there were no good options available. So, we created our own."

As the Times detailed:

In August, the family irrevocably transferred all the company's voting stock, equivalent to 2% of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.

The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits. Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.

The Chouinards then donated the other 98% of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company's profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.

The newspaper noted that "Patagonia has already donated $50 million to the Holdfast Collective, and expects to contribute another $100 million this year, making the new organization a major player in climate philanthropy."

Chouinard told the Times that "I didn't know what to do with the company because I didn't ever want a company," and called the plan an "ideal solution" for his family.

"I don't respect the stock market at all," he explained. "Once you're public, you've lost control over the company, and you have to maximize profits for the shareholder, and then you become one of these irresponsible companies."

As he put it in the letter: "Instead of 'going public,' you could say we're 'going purpose.' Instead of extracting value from nature and transforming it into wealth for investors, we'll use the wealth Patagonia creates to protect the source of all wealth."

It was important to Chouinard's children "that they were not seen as the financial beneficiaries," he told the Times. "They really embody this notion that every billionaire is a policy failure."

"I was in Forbes magazine listed as a billionaire, which really, really pissed me off," he recalled. "I don't have $1 billion in the bank. I don't drive Lexuses."

The family's move was welcomed by climate action and conservation advocates.

"Wow," tweeted Fossil Free Media director Jamie Henn. "Patagonia has long been an incredible ally in the fight for climate justice—they've offered their stores, funding, and advertising for mobilizations and more—but this takes it to a whole new level. Kudos to the entire team."

"The world really can be different friends."

Marine biologist and policy expert Ayana Elizabeth Johnson said she "could not be more proud to serve on the board of directors" of Patagonia, and celebrated that "as of now, Earth is our only shareholder—ALL profits, in perpetuity, will go to our mission to 'save our home planet.'"

Chouinard suggested the innovative approach could inspire action from others in the business world.

"Hopefully this will influence a new form of capitalism that doesn't end up with a few rich people and a bunch of poor people," he said. "We are going to give away the maximum amount of money to people who are actively working on saving this planet."

Supporters agreed. Congresswoman Marie Newman (D-Ill.) simply tweeted: "More please."

As poet Amanda Gorman pointed out Wednesday, "The world really can be different friends."

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Patagonia founder gives company away to environmental trusts
By The Associated Press

 Yvon Chouinard, the founder and chairman of Ventura-based Patagonia Inc., is photographed Sept 28, 2005, in the original Chouinard Equipment blacksmith shop located in Ventura, Calif., where he once forged pitons for mountaineers. In a letter posted on the privately-held company's website on Wednesday, Sept. 14, 2022, Chouinard said the 50-year-old company would transfer 100% of the its voting stock to the Patagonia Purpose Trust and and 100% of its nonvoting stock had been given to the Holdfast Collective. (Al Seib/Los Angeles Times via AP, File)

The founder of outdoor gear company Patagonia, long known for environmental activism, says the company is transferring all of its voting shares into a trust “dedicated to fighting the environmental crisis and defending nature.”

In a letter posted on the privately-held company’s website on Wednesday night, founder Yvon Chouinard said the 50-year-old company would transfer 100% of the its voting stock to the Patagonia Purpose Trust and and 100% of its nonvoting stock had been given to the Holdfast Collective.

Each year after reinvesting profits back into the company, Chouinard said remaining funds will be distributed as a dividend to the trusts in their ongoing efforts to fight the climate crisis.

Chouinard said the other options for the Ventura, California company to dedicate itself to protecting the planet — selling the company and donating the proceeds; or taking the company public — were not viable for Patagonia’s ultimate goals.

“Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth,” Chouinard wrote.

Patagonia makes outdoor clothing, gear and accessories for everything from skiing to climbing and camping.

Chouinard said he “never wanted to be a businessman,” and started Patagonia as a craftsman, making climbing gear for himself and his friends.

Patagonia founder hands over company in bold move to fight climate change
"I am dead serious about saving this planet," he said.

"Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source," founder Yvon Choulnard said.

 File Photo by longtaildog/Shutterstock

Sept. 15 (UPI) -- The founder of popular outdoor retailer Patagonia says he's turned over total control of the company, which is worth roughly $3 billion, to two environmental non-profits for their fight against climate change.

Founder Yvon Chouinard announced the move in a letter posted to the Patagonia website late on Wednesday. Choulnard founded the outdoor gear company 50 years ago and has always been environmentally conscious.

"Earth is now our only shareholder," Chouinard said in a statement.

"It's been a half-century since we began our experiment in responsible business. If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have."

The Chouinard family has transferred the company to non-profits Patagonia Purpose Trust and the Holdfast Collective. The company said every dollar that's not reinvested will be distributed as dividends to protect the planet.

"As the business leader I never wanted to be, I am doing my part," Chouinard added. "Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.

"I am dead serious about saving this planet."

Yvon Chouinard, the 83-year-old founder of Patagonia, says he decided to hand over the outdoor retailer to help in the global climate crisis. 

Photo courtesy Campbell Brewer/Patagonia

The Patagonia Purpose Trust now owns all of Patagonia's voting stock and 2% of total shares. It was founded to create a more permanent legal structure to enshrine the company's purpose and values.

The Holdfast Collective, on the other hand, now owns all of Patagonia's non-voting stock, which amounts to 98% of all shares. It said that all revenue will go toward protecting nature and biodiversity, supporting thriving communities and fighting the climate crisis.

"Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals," Patagonia CEO Ryan Gellert said in a statement. "They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis

"We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first."

Patagonia Chair: ‘We are turning capitalism on its head by making the Earth our only shareholder’

BYCHARLES CONN
September 14, 2022 

Yvon Chouinard, Patagonia founder.
AL SEIB / GETTY IMAGES

For 50 years there has been an impassioned debate about the appropriate aims and responsibilities of companies. Some side with Milton Friedman’s influential viewpoint, asserting that the only responsibility of business is to generate profits for shareholders. Others believe companies have broader responsibilities to society and the environment. Lately, even state legislatures have weighed in, proposing to ban financial managers who take ESG criteria into account. But while the battle of words continues, investors, customers, employees, and the public have moved forward. The question now is not whether but how far the pendulum has shifted towards responsibility and purpose. Surveys show that most investors believe ESG goals should trump short-term profit, and more than ever, employees and consumers are choosing companies based on what they stand for.

Great companies are loved and respected for their values and commitments to their communities in addition to what they make, not for the creation of shareholder wealth. This year Patagonia was named in the top group of most reputable companies based on criteria such as product quality, trust, citizenship, and ethics. So was Chick-fil-A. You couldn’t find two companies with more divergent values, but both have a clear purpose that extends beyond generating profits. They stand for something that people understand. Our most loved companies are already purpose-led organizations.

As a tech entrepreneur, public company CEO, and investor, I have benefited from shareholder capitalism. It’s a system that has brought us reductions in absolute poverty, longer lives through medical innovation, and many other improvements, as well as great shareholder returns. But let’s be honest: it made its gains at an enormous cost, including increasing inequality and widescale uncompensated environmental damage. We have subsidized buoyant shareholder returns by fraying the fabric of our societies and using up the planet we live on. We all know this is happening—the world is literally on fire.

Even Big Business knows the narrow extractive model of shareholder capitalism does not serve us. Leading institutions like The Business Roundtable and the World Economic Forum have worked to re-brand shareholder capitalism as stakeholder capitalism, adding responsibilities to workers, the environment, and society. Their investors demand this shift. But while this new moniker sounds good, to date actions haven’t caught up to words. The flowery language of annual reports is simply incompatible with standard forms of incorporation that require companies to only maximize shareholder returns.

Recently, a more concrete movement around company responsibility has gained momentum, the Benefit Corporation, which is a form of incorporation that puts people, environmental, and governance aims alongside profit inside company legal charters and requires specific goals and improvement over time. Similar efforts by accounting bodies and think tanks seek to develop general accounting standards for measuring companies’ social and environmental impacts that could be required for future company reporting. These two innovations are much more substantial progress toward making companies responsible players in building sustainable, prosperous societies.

At Patagonia, we signed up as a Benefit Company early on–and it has helped us clarify our responsibilities. For us, this means constantly measuring and managing our environmental footprint, seeking to reduce our use of water, carbon, and dangerous chemicals in our clothing. We invest in regenerative organic agriculture and in the circular economy by using recycled fabrics and repairing and re-selling used clothing. We price our products to reflect their real costs. We unapologetically support climate and environmental activism. And we transparently report our progress to our communities. We have used purpose capitalism to create a successful company that is committed to minimizing environmental impact and being a positive force in society.

A few years ago, we changed our mission to something both simple and hard: We’re in business to save our home planet. This clear definition of purpose is beyond any stretch goal. It has forced us to go much deeper into what it will take to have zero negative environmental impact while still making great products for our outdoor athlete customers.

Now in our 50th year, we’re going further still. Our founder Yvon Chouinard and his family have given all their Patagonia equity to a charitable entity to fund environmental conservation. We are directing all the value created by the company to specific conservation projects and advocacy. Instead of exploiting natural resources to make shareholder returns, we are turning shareholder capitalism on its head by making the Earth our only shareholder.

As a closely held company, this huge change was easier for us than others. But the point is for companies to make transparent purpose commitments that make sense to their business, and to be held to account by their communities.

Companies have responsibilities to their workers, customers, the environment, and yes, their investors. Shareholder capitalism advocates think goals other than profit will confuse investors. Nonsense. Investors already look to many company attributes when allocating capital. Over time, the market will continue to work and responsible purpose-led companies will attract more investment, better employees, and deeper customer loyalty. This is not “woke” capitalism. It’s the future of business if we want to build a better world for our children and all other creatures.


Charles Conn is the chair of Patagonia.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.

'That's Fraud': Explosive Docs Reveal Depth of Climate Lies by Big Oil Ahead of House Hearing

"Big Oil executives are laughing at the people trying to protect our planet while they knowingly work to destroy it," said Rep. Ro Khanna.

Demonstrators protest Exxon's climate lies in New York City on February 22, 2017.

 (Photo: Spencer Platt/Getty Images)


JAKE JOHNSON

September 15, 2022


Ahead of a Thursday House Oversight Committee hearing on Big Oil's central role in driving global climate chaos, congressional Democrats unveiled internal documents spotlighting the extent to which fossil fuel giants such as Chevron, Exxon, and Shell have worked to mislead the public about their contributions to the climate crisis and efforts to mitigate environmental damage.

"The committee's investigation has shown that, rather than outright deny global warming, the fossil fuel industry has 'greenwashed' its record through deceptive advertising and climate pledges—without meaningfully reducing emissions," Reps. Carolyn Maloney (D-N.Y.) and Ro Khanna (D-Calif.) wrote in a memo released hours before Thursday's hearing, which major Big Oil PR firms have refused to attend.

Watch the hearing

As part of its yearlong probe into the industry's public relations tactics, the panel uncovered documents confirming that oil and gas giants are "devoted to a long-term fossil fuel future," despite their splashy vows to transform their businesses to meet critical climate goals.

"These revelations are the latest evidence that oil giants keep lying about their commitments to solve the climate crisis and should never be trusted."

The committee, which subpoenaed oil and gas firms for internal documents related to their marketing campaigns, said in a summary that "Big Oil relies on accounting gimmicks, tricky language, and delay tactics to claim the mantle of climate leadership while continuing to be a primary cause of an ongoing climate catastrophe."

"Despite BP previously rebranding itself as 'Beyond Petroleum,' internal documents highlighted how carbon capture and storage (CCS), one of the energy technologies touted by the company, could 'enable the full use of fossil fuels across the energy transition and beyond,'" the House panel noted. "An internal Shell email discussing carbon capture, utilization, and storage (CCUS) warned an executive, 'We want to be careful to not talk about CCUS as prolonging the life of oil, gas or fossil fuels writ large.'"

The committee obtained documents from 2019 showing that employees from Exxon and Chevron pushed to water down an oil and gas industry messaging document on the Paris climate accord, which both companies have publicly claimed to support.

"Creating a tie between our advocacy/engagements and the Paris Agreement could create a potential commitment to advocate on the Paris Agreement goals," Peter Trelenberg, Exxon's manager of environmental policy and planning, warned in a private memo to Exxon CEO Darren Woods.

Khanna, chair of the oversight panel's Subcommittee on Environment, said in a statement Wednesday that "the documents I released today as part of my investigation into Big Oil's efforts to deceive the American public about the climate crisis are explosive."

"Internal emails and messaging guidance show that Big Oil's climate pledges rely on unproven technology, accounting gimmicks, and misleading language to hide the reality," said Khanna. "The documents also show a culture of intense disrespect towards leading climate activists like Bill McKibben and influential climate groups like the Sunrise Movement."

One email obtained and released by the House Oversight Committee shows BP communications official Tom Wolf mocking an op-ed by McKibben, a renowned environmentalist and co-founder of 350.org.

"I'm sorry, I live on earth so I don't get what planet this guy lives on," Wolf wrote.

In response, Khanna said that "Big Oil executives are laughing at the people trying to protect our planet while they knowingly work to destroy it."

Richard Wiles, president of the Center for Climate Integrity, said that "these revelations are the latest evidence that oil giants keep lying about their commitments to solve the climate crisis and should never be trusted by policymakers."

"First, their own documents showed that oil and gas companies lied about their product's role in causing climate change," said Wiles. "Now, more internal documents reveal that they are lying about their commitment to solving it. If there is one thing consistent about the oil and gas majors' position on climate, it's their utter inability to tell the truth."

"As Americans pay the price for deadlier and costlier climate disasters, it's outrageous that board members from the companies fueling the climate crisis and making record profits refused to attend a hearing to answer questions from members of Congress," Wiles added. "We applaud the House Oversight Committee for its continued work to hold oil and gas corporations accountable for their climate deception."

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UPDATE

Rail Unions Stress Tentative Deal Must Still Win Approval From Rank-and-File

Early reactions suggest some rail workers are furious at the agreement, with one anonymous employee calling it "garbage" that "everyone hates" thus far.

President Joe Biden meets with the negotiators of a new tentative railway labor agreement in the Oval Office of the White House in Washington, D.C. on September 15, 2022. (Photo: Mandel Ngan/AFP via Getty Images)

JAKE JOHNSON

September 15, 2022

Two unions representing 125,000 active and retired rail employees stressed Thursday that the tentative agreement they reached with freight carriers to avert a strike still must win approval from rank-and-file members, a reminder that came as the White House hailed the deal it helped broker as a victory for workers and the economy.

"This contract will not become final until our members have an opportunity to review its terms and approve it through a ratification vote," said Jeremy Ferguson, president of SMART Transportation Division, and Dennis Pierce, head of the Brotherhood of Locomotive Engineers and Trainmen (BLET).

"It's a garbage deal. Everyone hates it so far. It does nothing for me. I'll vote no. This has been a complete waste of time."

BLET and SMART-TD represent roughly half of the railroad workers that would be covered by the new agreement.

The unions, which had been preparing to strike as soon as Friday as rail giants refused to budge on workers' basic sick leave demands, said the tentative deal includes "an immediate wage increase of 14% once compounded with an additional 4% on July 1, 2023, and 4.5% on July 1, 2024."

"In addition, wage increases of 3% effective July 1, 2020, 3.5% effective July 1, 2021, and 7% effective July 1, 2022, will be fully retroactive, for a compounded increase of 24% over the 5-year term of the agreement," Ferguson and Pierce said. "The agreement also includes annual lump-sum bonus payments totaling $5,000."

Additionally, they noted, the agreement includes provisions that "will create voluntary assigned days off for members working in thru freight service, and all members will receive one additional paid day 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," Ferguson and Pierce added, pointing to a central demand of rail workers who for years have been laboring under a scheduling system that punishes employees for taking time off to see the doctor.

The union leaders said they also succeeded in fighting off rail carriers' efforts to impose higher healthcare costs and other damaging provisions.

Overall, the union leaders said they secured a deal that "exceeded the recommendations of the Presidential Emergency Board," a body formed by President Joe Biden that suggested a compromise agreement that excluded any sick leave—angering workers and heightening the likelihood of a national strike.

A recent SMART-TD survey of its members showed that 78% opposed the emergency board's recommended agreement.

Now the key question is whether the tentative deal announced Thursday is enough of an improvement over the presidential board's proposal to win approval from the rank-and-file.

Early reactions suggest that some union members are furious with the newly released agreement and plan to oppose its ratification. The Washington Post's Lauren Kaori Gurley observed that responses from rail workers have been a mixture of "optimism and deep skepticism."

One unnamed rail worker bluntly told Jonah Furman of Labor Notes that "it's a garbage deal."

"Everyone hates it so far," the worker added. "It does nothing for me. I'll vote no. This has been a complete waste of time."

Furman also pointed to social media posts indicating worker opposition to the deal and continued support for a national rail strike:



In a speech outside the White House on Thursday, Biden touted the tentative agreement as a "great deal for both sides" that "will keep our critical rail system working."

Following the president's remarks, a reporter shouted out, "Mr. President, is it premature to celebrate before the unions vote?"

Biden didn't respond.

NBC News reported Thursday that "as part of the agreement reached last night, there will be a 'cooling off' period of several weeks to ensure that if a vote doesn't succeed for any reason, there still would not be an immediate rail shutdown."

During the coronavirus pandemic, major U.S. railroads have raked in record profits on the backs of their employees, who have been working without a contract for three years due to management's refusal to offer even minimal sick leave benefits.

On Wednesday, Republican senators attempted to pass legislation that would have forced rail workers to accept the woefully inadequate proposal put forth by the Presidential Emergency Board. Sen. Bernie Sanders (I-Vt.) blocked the bill.

"Last year, the CEO of CSX made over $20 million in total compensation, while the CEOs of Union Pacific and Norfolk Southern made over $14 million each in total compensation," Sanders said in a speech on the Senate floor. "In other words, within the rail industry corporate profits are soaring and the CEOs are making incredibly large compensation packages."

"I would also add that the parent company of BNSF, one of the largest freight rail companies in America, is Berkshire Hathaway owned by Warren Buffett," the senator continued. "Mr. Buffett is the fourth wealthiest man in America worth nearly $100 billion. During the pandemic, as rail workers risked their lives to keep the economy going, Mr. Buffett became $33 billion richer."

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Biden, Dems see both political, economic wins in rail deal

By JOSH BOAK and ZEKE MILLER

1 of 7

President Joe Biden, with Secretary of Labor Marty Walsh, left, speaks about a tentative railway labor agreement in the Rose Garden of the White House, Thursday, Sept. 15, 2022, in Washington. (AP Photo/Susan Walsh)


WASHINGTON (AP) — While President Joe Biden was quick to hail Thursday’s strike-averting rail agreement as a win for America, it was also a big win for him politically, allowing Democrats to sidestep what could have been an economic debacle before November’s midterm elections.

Pressured to choose between labor and business, the president pushed hard for them to work together.

Prodded by a strategic late-night phone call from Biden — and fortified with Italian takeout — corporate and union negotiators spent 20 hours in intense talks at the Labor Department. They reached wee-hours common ground following an appeal to act in the shared interests of the nation, avoiding a strike that would have shut down railroads across the country.

By keeping the trains running, Biden overcame a major economic threat that doubled as a political risk. His fellow Democrats already face a difficult fight to maintain their narrow hold on power in Congress amid soaring inflation. Biden’s own approval rating, though improving, is still underwater.

The tentative deal, which still requires approval from a dozen unions, would raise members’ pay 24% over five years and improve work schedules and health care in a way that Biden said recognizes “the dignity of their work.” Railroad companies could continue vital operations and avoid a costly shutdown, while being in a better place to recruit and retain employees.


“This agreement allows us to continue to rebuild a better America with an economy that truly works for working people and their families,” Biden said Thursday in celebratory remarks in the Rose Garden. “Today is a win, I mean it sincerely, a win for America.”

Members of one union, the International Association of Machinists and Aerospace Workers District 19, voted to reject the tentative agreement, but the IAM agreed to delay any strike by its members to allow more time for possible additional negotiations and for other unions to vote.

White House officials had worried that a rail shutdown, no matter how long, would have perilous economic consequences just as voters make up their minds ahead of the November elections. The settlement, instead, now provides Biden an opportunity to show his administration is delivering for voters, as dire news coverage yields to relief at the cost of only a few canceled Amtrak trains.



Through the talks, Biden managed to avoid the disruption without offending either labor or corporate constituencies. Biden, his advisers and Democrats across the country know the broadest possible coalition is needed to help candidates compete in midterms that have historically favored the party out of political power.

Biden intentionally chose not to dictate the terms of the agreement to either side, said Labor Secretary Marty Walsh.

“The president’s focus was making sure that a contract was done that is satisfactory to everybody — and also prevented a major disruption to our economy,” said Walsh, who moved the last six hours of negotiations into his office.

What initially appeared to be a worst-case scenario ultimately turned into a collective sigh of relief.

“This is the best outcome the Biden administration could have hoped for,” said Jake Rosenfeld, a sociologist at Washington University in St. Louis who has researched the labor movement. He noted that the unions’ requests for sick leave and reliable scheduling aligned with Biden’s own values.

“Unlike in past labor disputes involving the railroads, the administration never had to put real pressure on the unions, but instead could act like an honest broker looking for a compromise between management and union positions,” Rosenfeld said. “That keeps the administration in good graces with labor more broadly.”

Business interests also praised the administration’s efforts. John Drake, the U.S. Chamber of Commerce vice president of transportation policy, said Walsh came to the table with a level of expertise and the trust of stakeholders. That made it easier to finalize a deal.

“The ramifications of a rail strike were so catastrophic that we couldn’t even begin to catalog it,” Drake said. “This is 100% a win.”

Not everyone celebrated. Senate Republican Leader Mitch McConnell had proposed a measure on Wednesday that would have forced the unions to accept a contract. He criticized Senate Democrats for blocking his proposal, only to have aides stay silent on Thursday when asked whether the agreement was good for the economy.

Biden has gone out of his way to champion organized labor, often having members of local unions introduce him for speeches across the country.

UAW Local 598′s Ryan Buchalski, introduced Biden on Wednesday at the Detroit auto show as “the most union- and labor-friendly president in American history” and someone who was “kickin’ ass for the working class.” Buchalski harked back to pivotal sitdown strikes by autoworkers in the 1930s.

In the speech that followed, Biden recognized that he wouldn’t be in the White House without the support of unions such as the UAW and the IBEW electrical workers, saying that autoworkers “brung me to the dance.”

About 16% of voters in the 2020 election came from union households, which backed Biden 56% to 42% in the narrowly decided race, according to AP VoteCast.

The president’s approval took a major hit starting last year because of inflation worsened by supply chain disruptions for autos, furniture and other basic goods coming out of the pandemic recession. The problems intensified this year with a baby formula shortage and diminished supplies worldwide of food, oil and natural gas after Russia’s February invasion of Ukraine. Consumer inflation hit a 40-year high in June, only to start drifting down in the two months since.

Biden’s popularity has been regaining ground as gasoline costs have declined. A new poll by AP-NORC Center for Public Affairs Research shows his approval improving from a low of 36% in July to 45% in the most recent survey.

Estimates put the daily cost of a railroad shutdown at $2 billion. A stoppage would have left stranded raw materials for factories, fuel and even the chemicals needed to treat wastewater. That would have been a potentially debilitating blow just eight weeks before Election Day, which could determine control of the House, Senate and state governments.

AFL-CIO President Liz Shuler said the deal will ultimately have an impact on the midterm elections because workers want officials who will stand up for them. The mix of the pandemic, high prices and economic inequality has left many workers at the breaking point and they want a different social contract, she said.

“That’s what this election is all about — rewriting the rules of the economy,” Shuler said.

___

AP Writer Christopher Rugaber contributed to this report.

https://plawiuk.blogspot.com/2022/09/biden-tentative-railway-labor-deal.html

https://plawiuk.blogspot.com/2022/09/1-rail-union-rejects-deal-2-accept.html

Tentative Deal Between Unions, Rail Carriers Reportedly Includes Sick Time Win for Workers

"It's definitely premature to be hailing Biden as an economy-saving dealmaker," argued one labor reporter. "Workers haven't even been walked through the particulars yet, let alone determined whether they're willing to accept it."

Jake Johnson

September 15, 2022

This story has been updated...

The Biden White House on Thursday announced a tentative agreement between unions and rail carriers that reportedly includes a win for workers on sick leave, an issue central to the dispute that nearly resulted in a nationwide strike.

The Washington Post reported that the deal, which still must be approved by union members, would give rail workers "the ability to take days off for medical care without being subject to discipline."

The Post's Lauren Kaori Gurley noted on Twitter that "workers will receive voluntary assigned days off and a single additional paid day off. (They previously did not receive sick days.)"

"The agreement provides members with the ability to take unpaid days for medical care without being subject to attendance policies," Gurley added.

In a statement Thursday morning, President Joe Biden said the deal represents "a win for tens of thousands of rail workers who worked tirelessly through the pandemic to ensure that America's families and communities got deliveries of what have kept us going during these difficult years. "

"These rail workers will get better pay, improved working conditions, and peace of mind around their healthcare costs: all hard-earned," Biden continued. "The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come."

Sick leave was the key sticking point in the tense and consequential negotiations between hugely profitable freight rail carriers and their employees, who have been working for three years without a contract as railroads see booming profits. It's not clear whether the agreed-upon policy changes will be sufficient for union members.

"It's definitely premature to be hailing Biden as an economy-saving dealmaker," argued HuffPost labor reporter Dave Jamieson. "Workers haven't even been walked through the particulars yet, let alone determined whether they're willing to accept it."

The tentative deal includes a 24% raise for rail workers by 2024 and an immediate 13.5% raise.

A statement from the National Carriers' Conference Committee, which represents the major railroads, contained no mention of attendance policies that unions said have been ruining their members' lives.

"Our members are being terminated for getting sick or for attending routine medical visits as we crawl our way out of a worldwide pandemic," the heads of two rail unions said Sunday.

The White House announced the agreement after frenzied talks between administration officials, including Labor Secretary Marty Walsh, and representatives of the unions and rail companies over the past 24 hours—a last-ditch effort aimed at averting a strike with massive implications for the U.S. economy.

The unions, for their part, accused rail carriers of engaging in "corporate extortion" by blocking shipments and shuttering other operations before a single worker had walked off the job, a signal that companies were moving in the direction of a damaging lockout.

The White House has faced significant criticism over its role in the dispute: Last month, an emergency board formed by Biden recommended a compromise deal that excluded sick leave improvements that rail workers had been demanding and fell short in other key areas, including healthcare costs.

On Wednesday, Sen. Bernie Sanders (I-Vt.) blocked a GOP effort to force rail workers to accept the emergency board's recommended agreement.

---

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Biden: Tentative railway labor deal reached, averting strike
By JOSH BOAK and ZEKE MILLER

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A CSX freight train travels through Alexandria, Va. on Thursday, Sept. 15, 2022. President Joe Biden said Thursday that a tentative railway labor agreement has been reached, averting a strike that could have been devastating to the economy before the pivotal midterm elections. (AP Photo/Kevin Wolf)


WASHINGTON (AP) — President Joe Biden said Thursday that a tentative railway labor agreement has been reached, averting a strike that could have been devastating to the economy before the pivotal midterm elections.

Railroads and union representatives had been in negotiations for 20 hours at the Labor Department on Wednesday to hammer out a deal, as there was a risk of a strike starting on Friday that could have shut down rail lines across the country.

Biden made a key phone call to Labor Secretary Marty Walsh at 9 p.m. as the talks were ongoing after Italian dinner had been brought in, according to a White House official who spoke to The Associated Press on the condition of anonymity to discuss closed negotiations. The president told the negotiators to consider the harm to families, farmers and businesses if a shutdown occurred.

What resulted from the back and forth was a tentative agreement that will go to union members for a vote after a post-ratification cooling off period of several weeks.

“These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned,” Biden said. “The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

The strike would also have disrupted passenger traffic as well as freight rail lines, because Amtrak and many commuter railroads operate on tracks owned by the freight railroads. Amtrak had already canceled a number of its long-distance trains this week, and said the rest of its long-distance trains would stop Thursday ahead of the strike deadline.

Following the tentative agreement, Amtrak said it was “working to quickly restore canceled trains and reaching out to impacted customers to accommodate on first available departures.”

The five-year deal, retroactive to 2020, includes the 24% raises and $5,000 in bonuses that a Presidential Emergency Board recommended this summer. But railroads also agreed to ease their strict attendance policies to address some of the unions’ concerns about working conditions.

Railroad workers will now be able to take unpaid days off for doctor’s appointments without being penalized under railroad attendance rules. Previously, workers would lose points under the attendance systems that the BNSF and Union Pacific railways had adopted, and they could be disciplined if they lost all their points.

The unions that represent the conductors and engineers who drive the trains had pressed hard for changes in the attendance rules, and they said this deal sets a precedent that they will be able to negotiate over those kinds of rules in the future. But workers will still have to vote whether those changes are enough to approve the deal.

The threat of a shutdown had put Biden in a delicate spot politically. The Democratic president believes unions built the middle class, but he also knew a rail worker strike could damage the economy ahead of the midterms, when majorities in both chambers of Congress, key governorships and scores of important state offices will be up for grabs.

That left him in the awkward position on Wednesday. He flew to Detroit, a stalwart of the labor movement, to espouse the virtues of unionization, while members of his administration went all-out to keep talks going in Washington between the railroads and unionized workers.

As the administration was trying to forge peace, United Auto Workers Local 598 member Ryan Buchalski introduced Biden at the Detroit auto show as “the most union- and labor-friendly president in American history” and someone who was “kickin’ ass for the working class.” Buchalski harked back to the pivotal sit-down strikes by autoworkers in the 1930s.

In the speech that followed, Biden recognized that he wouldn’t be in the White House without the support of unions such as the UAW and the International Brotherhood of Electrical Workers, saying autoworkers “brung me to the dance.”

But without a deal among the 12 unions in talks back in Washington, Biden also knew that a stoppage could halt shipments of food and fuel at a cost of $2 billion a day.

Far more was at stake than sick leave and salary bumps for 115,000 unionized railroad workers. The ramifications could have extended to control of Congress and to the shipping network that keeps factories rolling, stocks the shelves of stores and stitches the U.S. together as an economic power.

White House press secretary Karine Jean-Pierre, speaking aboard Air Force One as it jetted to Detroit, said a rail worker strike was “an unacceptable outcome for our economy and the American people.”

Biden faced the same kind of predicament faced by Theodore Roosevelt in 1902 with coal and Harry Truman in 1952 with steel — how do you balance the needs of labor and business in doing what’s best for the nation? Railways were so important during World War I that Woodrow Wilson temporarily nationalized the industry to keep goods flowing and prevent strikes.

Union activism has surged under Biden, as seen in a 56% increase in petitions for union representation with the National Labor Relations Board so far this fiscal year.

With the economy still recovering from the supply chain disruptions of the coronavirus pandemic, the president’s goal was to keep all parties so a deal could be reached. Biden also knew a stoppage could worsen the dynamics that have contributed to soaring inflation and created a political headache for the party in power.

Eddie Vale, a Democratic political consultant and former AFL-CIO communications aide, said the White House pursued the correct approach at a perilous moment.

“No one wants a railroad strike, not the companies, not the workers, not the White House,” he said. “No one wants it this close to the election.”

Sensing political opportunity, Senate Republicans moved Wednesday to pass a law to impose contract terms on the unions and railroad companies to avoid a shutdown. Democrats, who control both chambers in Congress, blocked it.

The economic impact of a potential strike was not lost on members of the Business Roundtable, a Washington-based group that represents CEOs. It issued its quarterly outlook for the economy Wednesday.

“We’ve been experiencing a lot of headwinds from supply chain problems since the pandemic started and those problems would be geometrically magnified,” Josh Bolten, the group’s CEO, told reporters. “There are manufacturing plants around the country that likely have to shut down. ... There are critical products to keep our water clean.”

By 5:05 a.m. Thursday, it was clear that the hard work across the government, unions and railway companied had paid off as Biden announced the deal, calling it “an important win for our economy and the American people.”

___

AP writer Josh Funk contributed.

Amtrak says it’s working quickly to restore canceled trains
By The Associated Press

An Amtrak passenger train departs Chicago in the early evening headed south Wednesday, Sept. 14, 2022, in Chicago. President Joe Biden said Thursday, Sept. 15, 2022, that a tentative railway labor agreement has been reached, averting a potentially devastating strike before the pivotal midterm elections. (AP Photo/Charles Rex Arbogast, File)

Amtrak says it is working to quickly restore canceled trains after President Joe Biden announced that a tentative railway labor agreement has been reached.

Amtrak said Thursday that it is reaching out to impacted customers to accommodate on first available departures.

Amtrak had canceled a number of its long-distance trains this week as a potential strike loomed.

A strike would have disrupted passenger traffic as well as freight rail lines, because Amtrak and many commuter railroads operate on tracks owned by the freight railroads.

Railroads and union representatives had been in negotiations for 20 hours at the Labor Department on Wednesday to hammer out a deal, as there was a risk of a strike starting on Friday that could have shut down rail lines across the country.

The tentative agreement will go to union members for a vote after a post-ratification cooling off period of several weeks.

Biden announces tentative deal to avert national rail strike

The National Carriers Conference Committee represents management at over 30 railroads and the Coordinated Bargaining Coalition is made up of a dozen rail labor unions. Five of them -- smaller unions representing 21,000 workers -- had previously reached new agreements with the railroads. The others have now agreed to a new deal. 

File Photo by Jim Ruymen/UPI | License Photo

Sept. 15 (UPI) -- President Joe Biden said Thursday a new labor agreement has been reached between railroads and thousands of rail workers, averting a strike that could have halted trains nationwide and harmed the economy.

The White House announced the tentative agreement, which followed marathon negotiations on Wednesday intended to prevent rail workers from walking off the job beginning Friday.

Negotiators for both sides met for talks at the Labor Department in Washington and spent about 20 hours moving toward a new agreement for better working conditions.

The deadline to come up with an agreement between dozens of railroads and the unions that make up the Coordinated Bargaining Coalition was Friday. The coalition represents more than 100,000 rail workers and rail freight across the United States would cease if they walk.

RELATED White House gets involved in railroad-union negotiations

Biden will speak more about the agreement at the White House. He is scheduled to speak at 11 a.m. EDT.

Labor Secretary Marty Walsh has been involved in helping the negotiations along and the White House got involved in the labor dispute this week.

"It is a win for tens of thousands of rail workers who worked tirelessly through the [COVID-19] pandemic to ensure that America's families and communities got deliveries of what has kept us going during these difficult years," Biden, an avid train rider during his days as a U.S. senator, said in a statement Thursday.

RELATED Looming rail strike would cost U.S. economy $2 billion per day, industry report says

"These rail workers will get better pay, improved working conditions and peace of mind around their healthcare costs: all hard-earned. The agreement is also a victory for railway companies, who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come."

Biden had made a phone call to Walsh late on Wednesday and urged him to underscore the harm to the economy, families and businesses that a strike would bring. It was estimated previously that the strike would have cost the domestic economy $2 billion per day.

The National Carriers Conference Committee represents management at over 30 railroads and the Coordinated Bargaining Coalition is made up of a dozen rail labor unions. Five of them -- smaller unions representing 21,000 workers -- had previously reached new agreements with the railroads.

Thursday's deal came after Amtrak, the nation's largest passenger rail company, announced that it had canceled all long-distance trains nationwide due to the looming strike.

 File Photo by Kevin Dietsch/UPI

The remaining unions continued to move toward the deadline Friday without a deal. The greatest issues at the center of the dispute involved working conditions and rules that force engineers and conductors to be on call to work seven days a week. Two unions representing conductors and engineers were holding out for more paid sick time and other improved conditions.

In the end, negotiators on both sides arrived at what they felt was a fair deal.

"As a result, we will keep Americans on the job in all the industries in this country that are touched by this vital industry," Biden said.

"The hard work done to reach this tentative agreement means that our economy can avert the significant damage any shutdown would have brought. With unemployment still near record lows and signs of progress in lowering costs, tonight's agreement allows us to continue to fight for long-term economic growth that finally works for working families."

Thursday's deal came after Amtrak, the nation's largest passenger rail company, announced that it had canceled all long-distance trains nationwide due to the looming strike. The strike concerned freight rail operations, but the logistics of the U.S. rail system and the role of rail workers meant that passenger service would also be disrupted by a walkout.

One of the unions, the International Association of Machinists and Aerospace Workers District Lodge 19, had said earlier Wednesday that its members rejected a "tentative agreement" and authorized a strike. It wasn't clear Thursday if that remains to be the case, or whether the deal announced by the White House includes the support of the IAM.

BACKGROUND

Biden’s tight spot: a union backer out to avert rail strike

By JOSH BOAK and ZEKE MILLER

 Then-Democratic presidential candidate Joe Biden speaks at the Amtrak Johnstown Train Station, Sept. 30, 2020, in Johnstown, Pa. President Joe Biden believes that unions built the middle class. He also knows a rail worker strike could damage the economy ahead of midterm elections. That leaves him in the awkward position of espousing the virtues of unionization even as members of his administration work to keep talks going in Washington between the railroads and unionized workers aimed at averting a shutdown. (AP Photo/Andrew Harnik, File)


WASHINGTON (AP) — President Joe Biden believes unions built the middle class. He also knows a rail worker strike could damage the economy ahead of midterm elections.

That left him in the awkward position Wednesday of espousing the virtues of unionization in Detroit, a stalwart of the labor movement, while members of his administration went all-out to keep talks going in Washington between the railroads and unionized workers in hopes of averting a shutdown.

United Auto Workers Local 598 member Ryan Buchalski introduced Biden at the Detroit auto show as “the most union- and labor-friendly president in American history” and someone who was “kickin’ ass for the working class.” Buchalski harked back to the pivotal sitdown strikes by autoworkers in the 1930s.

In the speech that followed, Biden recognized that he wouldn’t be in the White House without the support of unions such as the UAW and the International Brotherhood of Electrical Workers, saying autoworkers “brung me to the dance.”

But back in Washington, officials in his administration were in tense negotiations to prevent a strike — one of the most powerful sources of leverage that unions have to bring about change and improve working conditions.

A stoppage could begin as early as Friday if both sides can’t agree on a deal. Out of the 12 unions involved, the International Association of Machinists and Aerospace Workers District 19 rejected a deal but agreed to prolong talks through Sept. 29. That bought a bit of time, but not necessarily any more certainty as a stoppage is still possible that could halt shipments of food and fuel at a cost of $2 billion a day.

Far more is at stake than sick leave and salary bumps for 115,000 unionized railroad workers. The ramifications could extend to control of Congress and to the shipping network that keeps factories rolling, stocks the shelves of stores and stitches the U.S. together as an economic power.

That’s why White House press secretary Karine Jean-Pierre, speaking aboard Air Force One as it jetted to Detroit, said a rail worker strike was “an unacceptable outcome for our economy and the American people.” The rail lines and their workers’ representatives “need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement,” she said.

Biden faces the same kind of predicament faced by Theodore Roosevelt in 1902 with coal and Harry Truman in 1952 with steel — how do you balance the needs of labor and business in doing what’s best for the nation? Railways were so important during World War I that Woodrow Wilson temporarily nationalized the industry to keep goods flowing and prevent strikes.

Inside the White House, aides don’t see a contradiction between Biden’s devotion to unions and his desire to avoid a strike. Union activism has surged under Biden, as seen in a 56% increase in petitions for union representation with the National Labor Relations Board so far this fiscal year.

One person familiar with the situation, who spoke on condition of anonymity to discuss White House deliberations on the matter, said Biden’s mindset in approaching the debate was that he’s the president of the entire country, not just for organized labor.

With the economy still recovering from the supply chain disruptions of the pandemic, the president’s goal is to keep all parties at the table until a deal is finalized. The person said the White House saw a commitment to keep negotiating in good faith as the best way to avoid a shutdown while exercising the principles of collective bargaining that Biden holds dear.

Biden also knows a stoppage could worsen the dynamics that have contributed to soaring inflation and created a political headache for the party in power.

Eddie Vale, a Democratic political consultant and former AFL-CIO communications aide, said the White House is pursuing the correct approach at a perilous moment.

“No one wants a railroad strike, not the companies, not the workers, not the White House,” he said. “No one wants it this close to the election.”

Vale added that the sticking point in the talks was about “respect basically — sick leave and bereavement leave,” issues Biden has supported in speeches and with his policy proposals.

Jake Rosenfeld, a sociologist at Washington University in St. Louis, noted that the sticking points in the talks involve “more schedule predictability, and the ability to take time off to deal with routine medical procedures as well as emergencies.”

On a policy front, the administration generally supports these demands, and that lessens their “willingness to really play hardball with the unions who have yet to settle,” said Rosenfeld, who wrote the book “What Unions No Longer Do.”

Sensing political opportunity, Senate Republicans moved Wednesday to pass a law to impose contract terms on the unions and railroad companies to avoid a shutdown. Democrats, who control both chambers in Congress, blocked it.

“If a strike occurs and paralyzes food, fertilizer and energy shipments nationwide, it will be because Democrats blocked this bill,” said Senate Minority Leader Mitch McConnell, R-Ky.

The economic impact of a potential strike was not lost on members of the Business Roundtable, a Washington-based group that represents CEOs. It issued its quarterly outlook for the economy Wednesday.

“We’ve been experiencing a lot of headwinds from supply chain problems since the pandemic started and those problems would be geometrically magnified,” Josh Bolten, the group’s CEO, told reporters. “There are manufacturing plants around the country that likely have to shut down. ... There are critical products to keep our water clean.”

The roundtable also had a meeting of its board of directors Wednesday. But Bolten said Lance Fritz, chair of the board’s international committee and the CEO of Union Pacific railroad, would miss it “because he’s working hard trying to bring the strike to a resolution.”

Back at the Labor Department, negotiators ordered Italian food as talks dragged into Wednesday night.

THE FIGHT FOR SICK TIME 

As Strike Looms, Sanders Blocks GOP Bill to Force Rail Workers Into Deal With No Sick Days

"Republicans are viciously against collective bargaining, but carriers are going to have to respect people's lives and there's going to have to be respect for these workers," said one labor leader.


Workers service trains in the Amtrak Car Yard on September 13, 2022 in Chicago, Illinois. Amtrak announced that it will temporarily cancel three of its long-distance, nationwide routes that run out of Chicago and rely on freight lines, citing a potential strike from railroad workers. (Photo: Scott Olson/Getty Images)


JULIA CONLEY

September 14, 2022

U.S. Sen. Bernie Sanders on Wednesday afternoon stood up against Republicans' attempt to force 115,000 railroad workers to accept a contract recommended by a presidential board last month, saying the GOP wants to hinder the workers' fight "for sick leave and better working conditions."

Before taking to the Senate floor, Sander (I-Vt.) tweeted that "I will proudly stand up to stop" the legislation proposed by Sens. Roger Wicker (R-Miss.) and Richard Burr (R-N.C.).

The Presidential Emergency Board (PEB), a nonpartisan panel appointed by President Joe Biden last month, recommended that rail carriers and union workers accept a contract with wage increases, but unions expressed outrage that the recommendations did not include a paid sick leave policy or address stringent "points-based" attendance rules which requires engineers and conductors to work many days—and sometimes consecutive weeks or months—with no time off, to make up for taking a weekend off.

Senate Minority Leader Mitch McConnell (R-Ky.) on Tuesday said the contract recommended by the PEB should be accepted and called on Biden to push for its adoption, but Democratic leaders have expressed hope that railway carriers and the workers' unions can come to an agreement before 12:01 am Eastern Time on Friday, when workers can strike.

"Democrats are not going to impose these contracts without dealing with the issue of workers' working lives," Larry Cohen, former president of the Communication Workers of America, told The Washington Post. "Republicans are viciously against collective bargaining, but carriers are going to have to respect people's lives and there's going to have to be respect for these workers. They're not getting a settlement without it."

On the Senate floor Wednesday, Sanders condemned the rail industry for trying to pressure workers into accepting working conditions which he called "absolutely unacceptable" and "almost beyond belief," noting that rail carriers have "seen huge profits in recent years."

In 2021, the Vermont Independent senator noted, carriers "made a record-breaking $20 billion in profit" while "the CEOs of many of these rail companies are enjoying huge compensation packages."

"In the midst of all of those profit increases for the industry, what's going on for the workers?" he asked, before saying railroad engineers are "entitled to a grand total of zero sick days."

Unions and carriers are under pressure to reach an agreement, as a strike would temporarily harm supply chains across the nation.

On Wednesday, Amtrak announced it would cancel long-distance trips starting Thursday in anticipation of the strike.

Labor reporter Jonah Furman argued that the current threat to railroad operations is not a potential strike over unfair working conditions, but a "lockout" controlled solely by powerful railroad companies.

"There is not a single worker on strike on the U.S. rails right now," said Furman. "There are CEOs shutting down rail lines and withholding goods to shock Congress into forcing a deal on 100,000 workers."

According to Sanders, what Congress should be doing "is telling the CEOs in the rail industry: Treat your workers with dignity and respect, not contempt."
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1 rail union rejects deal, 2 accept ahead of strike deadline

RR WORKERS GET ZERO SICK TIME


1 of 13

A worker boards a locomotive at a BNSF rail yard Wednesday, Sept. 14, 2022, in Kansas City, Kan. Business and government officials are preparing for a potential nationwide rail strike at the end of this week while talks carry on between the largest U.S. freight railroads and their unions. (AP Photo/Charlie Riedel)

OMAHA, Neb. (AP) — Members of one union rejected a tentative deal with the largest U.S. freight railroads Wednesday, while two ratified agreements and three others remained at the bargaining table just days ahead of a strike deadline, threatening to intensify snarls in the nation’s supply chain that have contributed to rising prices.

About 4,900 members of the International Association of Machinists and Aerospace Workers District 19 voted to reject the tentative agreement negotiated by IAM leadership with the railroads, the union said Wednesday. But the IAM agreed to delay any strike by its members until Sept. 29 to allow more time for negotiations and to allow other unions to vote.

Railroads are trying to reach an agreement with all their other unions to avert a strike before Friday’s deadline. The unions aren’t allowed to strike before Friday under the federal law that governs railroad contract talks, which include BNSF, Union Pacific, Norfolk Southern, CSX, Kansas City Southern and the U.S. operations of Canadian National.

Government officials and a variety of businesses are bracing for the possibility of a nationwide rail strike that would paralyze shipments of everything from crude and clothing to cars, a potential calamity for businesses that have struggled for more than two years due to COVID-19 related supply chain breakdowns.

There are 12 unions — one with two separate divisions — representing 115,000 workers that must agree to the tentative deals and then have members vote on whether to approve them. So far, nine had agreed to tentative deals and three others are still at the bargaining table.

Of the nine that agreed to the deals, two — the Transportation Communications Union and the Brotherhood of Railway Carmen unions — voted to ratify their contracts Wednesday. But IAM members voted to reject their deal. Votes by the other six unions that approved tentative deals are pending.

All the tentative deals are based closely on the recommendations of a Presidential Emergency Board Joe Biden appointed this summer that called for 24% raises and $5,000 in bonuses in a five-year deal that’s retroactive to 2020. Those recommendations also includes one additional paid leave day a year and higher health insurance costs.

The key unions that represent the conductors and engineers who drive trains are holding out in the hope that railroads will agree to go beyond those recommendations and address some of their concerns about unpredictable schedules and strict attendance policies that they say make it difficult to take any time off. They say the job cuts major railroads have made over the past six years — eliminating nearly one-third of their workers — have made a difficult job even harder although the railroads maintain their operations have just become more efficient as they rely on fewer, longer trains.

The unions want the railroads to provide unpaid leave time that workers could use to attend doctors appointments or attend to other personal business without being penalized.

Ron Kaminkow, general secretary of the Railroad Workers United labor group that includes workers from all the rail unions, said he left the freight industry for an Amtrak engineer job in Nevada years ago because of the grueling working conditions that have only gotten worse in recent years. He’s seen many other workers make that switch even though it often comes with lower pay and means giving up seniority

“Everyone knows you can get more money in the freight industry. But it’s what we would call blood money,” Kaminkow said. “It’s almost impossible to predict when you are going to be off and when you can attend to various life issues like family, like children, like an appointment.”

Contract talks continued Wednesday with Labor Secretary Marty Walsh participating again to put pressure on both sides to reach a deal before Friday’s deadline.

Transportation Secretary Pete Buttigieg told reporters at the Detroit auto show Wednesday that the Biden administration remains focused on preventing a strike. Biden himself made calls earlier this week, but the administration is preparing to respond if a walkout does happen.

“We’ve been engaging with the parties, and our message continues to be that the labor unions and railroads need to find the deal space to avoid any kind of disruption,” he said. “The most important thing is to try to prevent that from happening in the first place.”

If the two sides can’t agree, Congress could step in to block a strike and impose terms on the railroads and unions, but it wasn’t clear Wednesday how quickly they could or would act because Democrats and Republicans can’t readily agree on a solution. A number of business groups have written letters to lawmakers over the past week urging them to be prepared to step in because of their concerns that a rail strike would be what the Business Roundtable called an “economic catastrophe.”

With the midterm elections just weeks away, politics will play a role if Congress has to settle this dispute. Democrats are wary of becoming crosswise with their allies in organized labor, as unions tend to be strong supporters in elections. At the same time, Republicans see an opportunity to put pressure on Biden and his party if the railroads teeter toward a strike. But it’s entirely possible that all sides would be blamed for a rail shutdown.

The many businesses that rely on railroads to deliver their raw materials and finished products say a rail strike would cause significant problems particularly for oil refineries, chemical businesses, auto makers, retailers and agricultural groups. The Association of American Railroads trade group estimated that a strike would cost the economy more than $2 billion a day.

Businesses would likely try to turn to trucks and other modes of shipping if the railroads do shut down, but there isn’t enough trucking capacity to take up all the slack. The railroad trade group estimated that 467,000 additional trucks a day would be required to deliver everything railroads handle now.

A freight rail strike would also disrupt passenger traffic because Amtrak and many commuter railroads operate on tracks owned by the freight railroads. Amtrak has already canceled a number of its long-distance trains this week, and it said the rest of its long-distance trains would stop Thursday ahead of the strike deadline.

___

Associated Press writers Tom Krisher, Anne D’Innocenzio, Lisa Mascaro, Cathy Bussewitz, Chris Rugaber, Scott McFetridge and Matt Ott contributed to this report.

EXPLAINER: Rail strike would impact consumers, businesses

By DAVID KOENIG

yesterda

A worker rides a rail car at a BNSF rail crossing in Saginaw, Texas, Wednesday, Sept. 14, 2022. Business and government officials are preparing for a potential nationwide rail strike at the end of this week while talks carry on between the largest U.S. freight railroads and their unions.

 (AP Photo/LM Otero)

Commuters, food producers, refineries and others could all be affected if there is a nationwide rail strike at the end of this week.

Members of one union rejected a tentative agreement that their leaders had negotiated with the biggest freight railroads, and three other unions were still at the bargaining table on Wednesday. Two other rail unions ratified deals.

The Biden administration was putting pressure on railroads and unions to settle their differences and avert a strike. In case that didn’t work, the administration was also working on a plan to use trucks and planes to move goods that are normally carried by freight railroads.

Business groups told Congress to step in and block a strike.

Here are key things to know ahead of a possible strike this Friday.
___

HOW DID NEGOTIATIONS GET TO THIS DIRE POINT?

The nation’s biggest freight railroads began negotiating with a dozen different unions representing about 115,000 workers in late 2019, but talks were slowed by the pandemic, which limited face-to-face meetings.

Government mediators tried to broker agreements, but that didn’t work. President Joe Biden then appointed a presidential emergency board, which held hearings and issued recommendations last month that included 24% pay raises and thousands of dollars in bonuses.

Many of the unions have reached tentative agreements with the railroads, but two large unions representing engineers and train conductors have held out for better terms on working conditions. Workers represented by the machinists’ union rejected a deal negotiated by their leaders, although that union agreed to delay any strike until Sept. 29. Two other unions — the Transportation Communications Union and the Brotherhood of Railway Carmen — voted to ratify their contracts Wednesday.

___

WHEN CAN WORKERS STRIKE?

By federal law, the unions can’t legally strike until after Friday morning, just after midnight. That’s when a 30-day “cooling-off” period ends, under terms of a law called the Railway Labor Act, which governs contract talks in the railroad and airline industries.

___

CAN A STRIKE BE BLOCKED?

Congress could intervene and block a strike or lockout, as it has done in previous nationwide rail-labor disputes, but it’s not clear whether that would happen this time.

Lawmakers are divided over a resolution to the dispute. Republicans want to impose the presidential emergency board’s terms, while Democrats prefer to let negotiators for the railroads and the two big unions keep talking.

___

WHAT ARE THE BIG ISSUES?

Rail workers stayed on the job throughout the pandemic but have not received a raise since 2019.

The unions sought raises of 31% over the five-year term of the new contracts, while the railroads offered 17% before the emergency board’s recommendations. The largest railroads endorsed the board’s middle-ground proposals, and most of the unions have reached tentative agreements based on those details.

However, the Brotherhood of Locomotive Engineers and Trainmen, and the transportation division of the International Association of Sheet Metal, Air, Rail and Transportation Workers, which represents conductors, have held out in hopes of better terms including provisions on working conditions.

The major railroads have cut nearly one-third of their jobs in the last six years, and unions say that’s making the work of their members harder. They want railroads to ease strict attendance policies that make it difficult to take time off for things like doctor appointments.

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HOW WOULD A RAIL STRIKE AFFECT THE COUNTRY?

Railroads such as Union Pacific, BNSF, CSX and Norfolk Southern carry cars, coal, chemicals, grain, imported goods and other products and raw materials throughout the country. A shutdown — even a brief one — would delay critical shipments and ripple across the economy.

The Association of American Railroads trade group estimates that a strike would cost the economy $2 billion a day. The Business Roundtable says a strike would be an “economic catastrophe.”

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WILL IT IMPACT FUEL SUPPLIES?

About 300,000 barrels of crude oil is shipped by rail every day, and refineries might have to slow production if deliveries are delayed, according to the American Fuel & Petrochemical Manufacturers. Analysts warn there could be shortages of gasoline and diesel in some places such as the Northeast.

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WHAT ABOUT NEW CARS?

Most new vehicles are shipped from the factory or dock by rail, and analysts say there is not enough truck capacity to handle all those vehicles in case of a strike. That would mean even longer wait times for dealers and motorists to get their hands on new cars.

A strike could also interfere with production because automakers receive some parts and raw materials by rail.

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WILL SOME STORE SHELVES BE BARE?

The railroads have announced plans to stop shipping refrigerated items ahead of the strike deadline, so there could be disruptions in deliveries of produce, meat and other items.

Food producers could be affected too, leading to longer-lasting effects. Agricultural groups say that even a brief strike would interrupt shipment of feed to livestock and poultry producers.

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WILL A STRIKE AFFECT PASSENGER RAIL?

Yes. Amtrak announced that all long-distance trains have been canceled starting with Thursday’s schedule. The passenger rail service had already suspended the California Zephyr and Empire Builder lines that run from Chicago to the West Coast and announced plans to shut down several others.

Amtrak uses its own track in much of the corridor from Washington to Boston, but almost everywhere else it relies on freight track that could be closed during a strike even though Amtrak and its workers are not involved in the negotiations.

Around the country, some local commuter rail lines also depend on tracks owned by the big freight railroads. The Chicago area’s Metra commuter line said that if there is a strike it will suspend operations on four of its 11 lines on Friday.

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COULD THERE BE POLITICAL FALLOUT?

The White House is clearly worried that any disruption in supply chains just weeks before the November midterm elections could anger consumers, who are already facing the highest inflation in 40 years. That could hurt Democrats, who are trying to protect razor-thin control of the Senate and House.

Republicans will blame Democrats if there is a strike and Congress fails to stop it.

“This has been negotiated for three years. It’s time that it ends,” said Sen. Roger Wicker of Mississippi, the top Republican on the Commerce Committee.

Democrats, however, are hesitant to stand in the way of unions trying to get a better deal for their members, and they say Congress should not try to tip the scales in negotiations.

White House press secretary Karine Jean-Pierre said the administration has told the railroads and unions that American families, business and farms would suffer. She said a strike is “not acceptable.”

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Josh Funk in Omaha, Nebraska, Lisa Mascaro and Kevin Freking in Washington, Tom Krisher in Detroit and Cathy Bussewitz in New York contributed to this report.

From carmakers to refiners, industries brace for rail strike

By The Associated Press

yesterday

An Amtrak passenger train and a freight train head northbound towards downtown Chicago Wednesday, Sept. 14, 2022, in Chicago. Business and government officials are preparing for a potential nationwide rail strike at the end of this week while talks carry on between the largest U.S. freight railroads and their unions. 

(AP Photo/Charles Rex Arbogast)


Car buyers might not get the vehicle they want on time, commuter rail lines could see service disrupted, and shipments from everything from oil to livestock feed could be snarled.

Those are just a few of the wide-ranging impacts a walkout by U.S. rail workers would have on the country’s industries and economy. A strike could happen if the railroads and unions can’t settle their differences before an early Friday walkout deadline.

Here’s how some industries are gauging the potential impacts and getting ready for the possible work stoppage.

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AUTO INDUSTRY

Nearly all new vehicles that travel more than a couple hundred miles from the factory to their destination are shipped by rail because it’s more efficient, said Michael Robinet, an executive director for S&P Global Mobility. So it’s almost a certainty that new vehicles coming to the U.S. from Mexico or other countries will be delayed, he said.

“It’s not like there’s extra truck capacity to take all the vehicles that the railroads can’t carry,” Robinet said.

Automakers might be hampered in building vehicles, too, because some larger parts and raw materials are transported by rail. But Robinet said automakers will go to great lengths to get the parts to keep their factories running as much as possible.

Mike Austin, senior mobility analyst for Guidehouse Research, said the strike could make new vehicles even more scarce, driving prices up beyond current record levels. That could raise inflation “as other goods aren’t moving through the rails.”

Carlos Tavares, CEO of Stellantis, said Wednesday at the Detroit auto show that his company will wind up apologizing to customers because their orders may not arrive on time.

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COMMUTING

Metra commuter rail service, which operates in the Chicago area, said Wednesday that it would suspend operations on four of its 11 lines on Friday if a work stoppage occurs. Some disruption on those lines would begin after rush hour Thursday night. In Minnesota, the operators of a commuter rail line that carries workers along a densely populated corridor from Minneapolis to northwestern suburbs and towns warned that service could be suspended as early as Friday.

In the Puget Sound region of Washington state, any strike would cancel the rail service until employees return to work, said David Jackson, a spokesman for the regional transit agency Sound Transit. Some Caltrain riders in the San Francisco Bay Area could be impacted by a rail strike, officials said.

The Maryland Transit Administration warned this week that a strike would mean the immediate suspension of service on two of its three MARC commuter rail lines.

Amtrak, meanwhile, said that starting Thursday, all its long-distance trains are canceled to avoid possible passenger disruptions while en route.

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ENERGY

A strike could have a significant impact on the energy industry, and could hurt consumers who would likely end up paying more for gasoline, electricity and natural gas. Refineries might have to halt production if they can’t get the deliveries they need, or if they don’t have access to rail to ship gasoline.

No one wants to risk leaving flammable chemicals stranded on the railroad tracks if a strike occurs. That’s why railroads began curtailing shipments of hazardous materials on Monday to protect that dangerous cargo.

Roughly 300,000 barrels of crude oil move by rail each day, which could supply about two mid-size refineries, according to AFPM. And about 5 million barrels of propane, representing a third of U.S. consumption, are moved by rail monthly, the group said.

Roughly 70% of ethanol produced in the U.S. is shipped by rail, and ethanol accounts for about a tenth of U.S. gasoline volume, according to S&P Global Commodity Insights. Nearly 75% of the coal moved to electric utilities in the first half of 2022 was moved by rail, the group said.

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AGRICULTURE

Livestock producers could see problems almost immediately if shipments of feed abruptly ended, according to the National Grain and Feed Association.

Meat and poultry groups noted the reliance on rail for shipments of feed and called for a quick resolution of the rail dispute. Every week, the nation’s chicken industry receives about 27 million bushels of corn and 11 million bushels of soybean meal to feed chickens, said Tom Super, senior vice president of the National Chicken Council.

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RETAIL

Experts say retailers have been shipping goods earlier in the season in recent months as a way to protect themselves from potential disruptions. But this buffer will only slightly minimize the impact from a railroad strike, which is brewing during the critical holiday shipping season, said Jesse Dankert, vice president of supply chain at the Retail Industry Leaders Association, a retail trade group that counts more than 200 retailers like Best Buy as its members. She noted that retailers are already feeling the impact from the uncertainty as some freight carriers are limiting services.

Dankert noted that retailers, noticing a slowdown in shipments, are now making contingency plans like turning to trucks to pick up some of the slack and making plans to use some of the excess inventory that it has in its distribution centers.


But she noted that there are not enough trucks and drivers to meet their needs. That scarcity will only drive up costs and make inflation worse, she said.

“As we have seen in the past two and half years, if there is a breakdown anywhere along the supply chain, one link falters, you see that ripple effect pretty quickly and those effects just spread from there,” Dankert said.