Labor setback – any ramifications?? (Tony Hatch - ABH Consulting)

20161212 Tonyhatch (Cropped)

So this will be short of mea culpa, but I didn’t expect this (did anyone?) - while all eyes were metaphorically on the T&E trades, the MoW workers voted against the national agreements (and their union leadership). The vote split was 57%/43% - but the biggest winner was the 9,000 members who didn’t vote! That split was 30% of the eligible (impacted) members voted “no,” 22% voted “yes,” and the rest ... watched football? Again – a strike potential, while increasing the odds, remains a remote possibility and still not an investable event! The PRB guidelines remain the framework for whatever happens. Yes, this increases the odds – slightly – of a work stoppage (and all unions will respect the picket line). But the odds, even if increased, remain very, very low; if the underdog bet comes in a winner, the strike will be measured in hours if not minutes. Some open questions:

  • Will this substantially change the rail inflation figure?   -No.
  • Is this unprecedented?  -No. Remember the IAM (Machinists) rejected their deal, only to agree later with a modified version.
  • Is this a sign of rail labor overplaying its very good hand?  -Not ... yet.
  • How will this impact the two T&E trades, whose ratification results are due sometime between November 16-17?  -THAT is the major question, for the short term. Again, PEB will prevail in basic format.
  • On a related note, rail shipper Cleveland Cliffs signed a 4-year pact with the United Steelworkers giving a 20% increase over 4 years (and that is in an industry with more uncertain prospects!)