September 12, 2011

Letter from Jack Koraleski

To our customers:

You may have read recent press coverage of the current status of the rail industry's ongoing contract negotiations with our labor unions. I wanted to give you an update and provide some perspective on the next steps in the process.

Union Pacific, along with the rest of the nation's largest freight railroads, has been in national (multi-employer) bargaining with the rail unions since January 2010. In the past few weeks, the railroads secured a ratified agreement with the largest union, the United Transportation Union, which represents about a third of the employees covered by this bargaining. This agreement should have served as the pattern for settlements with the remaining eleven rail industry unions, however, the remaining unions rejected it as a framework for voluntary agreements.

Next Steps Under the Railway Labor Act
Labor negotiations in the rail industry are governed by the Railway Labor Act (RLA), which bars strikes or other self-help until completion of a prescribed set of mandatory procedures.

  • Under the auspices of the National Mediation Board, the railroads were in mediation with two bargaining coalitions representing the other rail unions. Earlier this week, the Board released the parties from mediation.
  • The release from mediation triggered a 30-day cooling off period that will end on October 7, 2011. During this time, the parties cannot engage in self-help, such as a strike or lockout.
  • The cooling off period will be extended if President Obama appoints a Presidential Emergency Board (PEB) to investigate the dispute and recommend solutions. Given the significant impact railroads have on the economy, PEBs have almost always been appointed if the parties have not reached agreement during the 30-day period.
  • The PEB's appointment will extend the cooling off period for another 60 days. If agreements are not reached by that time, the RLA permits self-help by the parties.
Congressional Action
Most national rail negotiations are resolved with voluntary settlements. When RLA procedures fail to produce agreement, Congress has stepped in to prevent or terminate crippling strikes. A strike last arose from national bargaining in 1992 and Congress acted immediately to end it. At that time, the U.S. Department of Transportation estimated that a nationwide rail strike would cost the U.S. economy at least $1.2 billion per day, a figure that nearly 20 years later would, of course, be significantly higher.

How Customers Can Help
Customers can urge the President to appoint a Presidential Emergency Board (PEB) in this dispute and to select fair individuals as its members, enhancing the likelihood of settlements without service disruptions.

More Information
If you'd like additional information about the status of the union negotiation process, I'd encourage you to visit This site is sponsored by the National Railway Labor Conference and provides an overview of the current round of negotiations, as well as a detailed outline of the Railway Labor Act negotiation process.

Union Pacific, along with the rest of the rail industry, is disappointed in the decision by the remaining unions to reject the National Mediation Board's offer of binding arbitration, which the rail carriers accepted. We will continue to work in good faith as we move into the next stage of the negotiation process. It is in the best interest of us all - the rail industry, our employees, and most importantly, our customers - that a successful resolution is reached to avoid any service disruption that would impact the rail industry's vital role in transporting the materials and products that drive economic growth.

We appreciate your business and your continued support. We'll keep you updated on the status of the negotiations process as we move forward.


Union Pacific
Executive Vice President, Marketing & Sales