Economy

AISI: A Nationwide Railroad Strike Would Cripple the Steel Industry

Written by David Schollaert

September 15, 2022

The American Iron and Steel Institute (AISI) called on Congress to intervene in the ongoing nationwide rail negotiations to ensure a successful resolution is reached.

AISIIn a Sept. 14 letter on behalf of the American steel producers AISI represents, Kevin Dempsey, the association’s president and CEO expressed concerns about “the state of ongoing labor negotiations in the freight rail industry and the potential for significant disruption in the critical national rail system.” A strike, he said, would have serious negative consequences for the entire US economy, including the steel industry.

The Class I railroads have been in national bargaining with multiple rail unions since November 2019, with little to no progress. And despite a Presidential Emergency Board (PEB) triggering a 30-day cooling-off period and extending negotiations, a possible service slowdown or stoppage could be a real threat as soon as this Friday, Sept. 16.

The four largest US railroads began limiting service Monday in preparation for a potential strike that stands to halt freight rail movement across the country, presenting a new supply chain-related challenge for US industry.

“Our nation’s railroads not only serve as the arteries for American commerce – they are an indispensable necessity for the health and survival of our domestic steel industry,” said Dempsey. “American steel producers rely heavily on railroads for transporting raw materials to their mills and for shipping finished steel products to the market.”

A functional freight railroad system is critical to ensuring that the American steel industry can effectively and efficiently serve its customers, he said.

“At a time when our nation’s supply chains for critical materials like steel have not yet fully recovered from the COVID-19 pandemic, it would be a tremendous setback for supply chains to suffer another blow,” added Dempsey. “A voluntary agreement among all parties to the ongoing rail negotiations is clearly the best outcome. But if negotiators fail to reach an agreement by the end of the cooling off period, we urge Congress to act to ensure that our nation’s freight rail system remains operational.”

A tentative deal between unions representing more than 50,000 engineers and conductors and management was reached early Thursday, averting a freight railroad strike that had threatened to cripple US supply chains.

The deal was announced just after 5 a.m. EST in a statement from the White House, which called it “an important win for our economy and the American people.”

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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