Norfolk Southern NSC, in partnership with BNSF Railway, inked provisional, five-year collective bargaining agreements with multiple labor unions.
The tentative deals with the Brotherhood of Railway Carmen Division/TCU, the International Association of Sheet Metal, Air, Rail and Transportation Workers - Mechanical Department and the Transportation Communications Union/IAM have been inked four months prior to the commencement of the next collective bargaining round. NSC has also inked tentative agreements with multiple general committees of the transportation division of SMART.
Now, the provisional deal will be voted upon by concerned workers (about 30% of NSC’s unionized workforce). This deal will materialize only if the voting outcome is favorable. The agreements, on materialization, would make them eligible for a 3.5% annual wage increase in the next five years on average. Other benefits include provision for more vacation and enhanced healthcare benefits.
NSC‘s Price Performance
Mainly due to weak freight revenues led by demand erosion, shares of NSC have declined 5.4% in the past six months compared with its industry’s reduction of 6.4%.
Six-Month Price Performance
Image Source: Zacks Investment Research
The above tentative labor deals inked by NSC, currently carrying a Zacks Rank #3 (Hold), no doubt reflect a positive development as these highlight the railroad operator’s labor-friendly approach. Successful materialization of the deals is likely to boost the stock price going forward. Moreover, satisfied labor groups generally lead to greater operational efficiency. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Labor-Friendly U.S. Railroads
With Canadian railroads, Canadian National Railway Company CNI and Canadian Pacific Kansas City CP grappling with labor issues that have required ministerial intervention, the companies’ U.S. counterparts have of late demonstrated a more labor-friendly approach.
Apart from the above deals inked by NSC, CSX Corporation CSX has been in the news recently due to labor deals. Last week, CSX inked tentative agreements on new five-year collective bargaining contracts with various labor unions. On ratification, the concerned employees of CSX would be eligible for an annual 3.5% wage increase in five years, apart from improvements in paid vacation and health care. In the weekend, CSX inked similar tentative deals with additional unions.
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