Michigan business hopeful as Congress poised to end rail strike threat

• Prodded by President Biden, Democrats joined Republican leaders in saying they would seek to pass legislation to avert a rail strike 
• If passed, the vote would force approval of a tentative labor contract with U.S. rail workers
• Michigan businesses had feared supply slowdowns even before the latest strike deadline of Dec. 9

A potential national rail strike continues to threaten Michigan’s industries that depend on trains for essential products, even as top federal leaders say avoiding a shutdown is an urgent priority.

Congress plans to initiate votes this week to prevent a strike, with leaders of both parties in the House and Senate responding to President Joe Biden’s call late Monday “to avert a potentially crippling national rail shutdown” by adopting the tentative agreement reached in September during a similar strike threat.

The tentative agreement — which called for a 24-percent pay raise and improved health care for an estimated 125,000 workers — had appeared likely to pass, but two of the 12 unions last week failed to ratify it, forcing negotiations to continue. At the same time, a strike deadline of December 9 looms unless there’s a resolution, with mandatory “cooling off” periods in place from December 4-8. 

Related: 

• Michigan businesses brace again for possible U.S. rail strike
• U.S. railroad shutdown would leave 20 percent of Michigan freight stranded

Democratic Rep. Nancy Pelosi, speaker of the U.S. House of Representatives, said Tuesday the House will vote to block a potential strike on Wednesday. If passed, it would next move to the Senate, where Labor Secretary Marty Walsh reportedly will address lawmakers on Thursday. 

While both Democrat and Republican leadership says a vote is urgent, Politico reports that senators from both parties appear to be divided over the issue, which would need to pass with a 60-vote majority.

The timing of the expected votes is a concern in Michigan. Impact from the lack of a contract and potential strike could be felt here by Sunday, said John Dulmes, executive director of the Michigan Chemistry Council, because rail companies will have to act to secure hazardous cargo, slowing or halting shipments to prevent them from sitting unattended mid-shipment if there is a strike.

Concerns also are mounting in Michigan’s agriculture sector, where an estimated $100 billion in economic activity could be disrupted by a strike, Chuck Lippstreu, president of the Michigan Agri-Business Association, told reporters on Tuesday.

Agriculture across the state “is heavily reliant on rail,” Lippstreu said. “A national rail shutdown would be absolutely catastrophic for Michigan agriculture and for our state's towns.”

Both fertilizer and grain shipments are top concerns in the state’s agriculture industry, Lippstreu said. 

Michigan businesses across other sectors also would feel effects of a strike, Dulmes added, including manufacturing, steel and semiconductors. Chemicals, he said, “are near the beginning of nearly all manufacturing supply chains.”  

“About 75 percent of all finished automobiles are moved by rail, so the automobile plants, even if they can continue production, will not have anywhere to go with vehicles once they're made,” Dulmes said.

Beyond industry, disruptions in rail transport would also slow retail sales during the holiday season and passenger travel, including commuter trains. And business leaders warn that alternatives to rail transportation  — such as trucks — won’t be an option, with ongoing national driver shortages and lingering effects of the pandemic freight slowdowns.

Michigan business groups, including the Michigan Retailers Association, the chemistry council and the agri-business association, joined the U.S. Chamber of Commerce this week to send a letter to Congress, urging a resolution before workers can strike.

“A potential rail strike only adds to the headwinds facing the U.S. economy. A rail stoppage would immediately lead to supply shortages and higher prices,” the letter said. 

Among rail workers, votes against the contract resulted in narrow defeat for the tentative agreement, and labor unions on Tuesday started to express disappointment about Biden — who typically is pro-labor — urging Congress to resolve the contract and end their bargaining.

A remaining issue is paid sick days, which workers have said became crucial during the pandemic as the short-handed industry worked them longer hours with mandatory overtime. 

“It is not enough to ‘share workers’ concerns,’” according to a statement Tuesday by The Brotherhood of Maintenance of Way Employes Division of the International Brotherhood of Teamsters. “A call to Congress to act immediately to pass legislation that adopts tentative agreements that exclude paid sick leave ignores the Railroad Workers’ concerns. It both denies Railroad Workers their right to strike while also denying them of the benefit they would likely otherwise obtain if they were not denied their right to strike.”

Meanwhile, Anderson Economic Group, based in East Lansing, said the first-day impact of a strike across the U.S. would total about $60 million, including $30.9 million for lost freight, $3.8 million for long-term passenger rail disruption and $25 million in lost railroad industry wages. The estimates are based on losses that directly impact the industry. 

Second and third-day losses would increase to $91 million per day due to a $61.9 million per day increase in the spoilage of food & agricultural goods, the forecast said.

Overall economic impact could reach $2 billion per day, according to estimates from the Association of American Railroads.