Biggest rail union rejects contract, raising possibility of nationwide strike during holidays

The nation's largest rail union on Monday voted down a tentative contract brokered by the White House, raising the possibility of a nationwide strike next month that could cripple the U.S. economy.

The SMART Transportation Division, or SMART-TD, which represents about 28,000 conductors, rejected the contract in a vote that garnered record turnout, the union said Monday. The contract was nixed by a slim margin, as just 50.8% of workers voted against it.

The second-largest rail union, made up of engineers, voted in favor of the contract on Monday, splitting the top rail unions, which represent roughly half of the industry's workers.

The results arrive roughly a month after the nation's third-largest rail union rejected the White House-brokered contract.

A nationwide strike is expected next month unless the contract is ratified by each of the 11 rail unions, since all of the unions have vowed not to cross the picket line in the event of a work stoppage. So far, four unions have ratified the agreement.

"SMART-TD members with their votes have spoken, it's now back to the bargaining table for our operating craft members," SMART-TD President Jeremy Ferguson said in a statement.

"This can all be settled through negotiations and without a strike. A settlement would be in the best interests of the workers, the railroads, shippers and the American people," he added.

In a statement, SMART-TD did not provide the reason behind the members' disapproval. Previously, unions have rejected the tentative contract due to frustration with compensation and working conditions, particularly a lack of paid sick days.

The National Carriers' Conference Committee, or NCCC, the group representing the freight railroad companies, said in a statement that the risk of a nationwide strike next month will require the companies to start taking steps to prepare for the disruption.

"A national rail strike would severely impact the economy and the public," the NCCC said. "Now, the continued, near-term threat of one will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline."

The tentative contract included a 24% compounded wage increase and $5,000 in lump-sum payments, the NCCC said last month.

American railway companies and unions reached a tentative labor agreement in September amid the threat of strikes. That agreement came after 20 consecutive hours of negotiations led by U.S. Secretary of Labor Marty Walsh at his office in Washington, D.C., Walsh said.

The agreement improved the time-off policies at the rail companies, which made up a key sticking point in the negotiations, BLET and SMART-TD said in a statement in September.

A potential strike could lead to $2 billion a day in lost economic output, according to the Association of American Railroads, which lobbies on behalf of railway companies.

Rail is critical to the entire goods side of the economy, including agriculture, manufacturing, retail and warehousing. Freight railroads are responsible for transporting 40% of the nation's long-haul freight and a work stoppage could endanger those shipments.