CSX CEO Joe Hinrichs: Tentative labor agreements are a sign of progress (updated)

JACKSONVILLE, Fla. – CSX CEO Joe Hinrichs says the tentative agreements the railroad and five labor unions reached this week were the result of a mutual desire to avoid a replay of the contentious and prolonged round of national bargaining that began in 2019 and concluded with a contract Congress imposed in December 2022.

Since becoming CEO in September 2022, Hinrichs has met with thousands of employees across the railroad. One of their clear and consistent messages: They don’t want the uncertainty and delayed wage increases that come from contract talks that drag on for three years.

“Other than safety, which is always the most important topic, the other topic that was always on their minds was, ‘Hey, we don’t want to go through what happened last time. That left a bad taste in our mouth.’ Nobody was happy,” Hinrichs said in an interview with Trains today.

Congress wasn’t pleased, either, since it had to intervene to prevent a strike after railroads and unions couldn’t reach a deal on their own. And in a rare show of bipartisanship, both Democrats and Republicans were upset with the railroads. “They were not going to be forgiving if we had to do this again,” Hinrichs says.

So when Hinrichs met with labor leaders in February, they discussed the lessons learned from the last round of national negotiations. Transportation Communications Union National President Artie Maratea asked if CSX was willing to start discussions early. “I said, ‘yes, we’re willing to do that and we’d look forward to it.’ So that’s how it came about,” Hinrichs says.

The tentative agreements announced yesterday and today – and reached more than four months before national contracts could be amended – cover more than a quarter of CSX’s workforce. The unions include the TCU, the Brotherhood of Railway Carmen, the American Trains Dispatchers Association, SMART-TD and the SMART Mechanical Division. The SMART-TD contract proposal covers conductors working in former Conrail, Baltimore & Ohio, and Pan Am Railways territory.

The five-year deals, which still must be ratified by the rank and file, include average wage increases of 3.5% per year as well as improvements in paid vacation and health care. If ratified, the agreements will provide certainty for the railroad and its workers. They also include the protection of so-called “me too” provisions that would allow the railroad and unions to revisit the agreements if national contracts differ significantly.

Hinrichs says he’s encouraged by the number of unions involved in early contract talks this year. “It’s not just a one-off,” he says, noting that talks are ongoing and that agreements with additional unions may be announced soon.

While an executive at Ford Motor Co., Hinrichs was deeply involved in negotiations with the United Auto Workers – and once even spent 72 straight in labor talks without sleeping a wink. At CSX, talks with labor unions in this round of negotiations have included Hinrichs, Chief Operating Officer Mike Cory, and Jeffrey Wall, the railroad’s vice president of labor relations.

“If you don’t have a very active leadership involvement, you don’t get things done quickly and you don’t get things done early,” Hinrichs says.

Hinrichs has made improving the railroad’s relationships with employees and labor leaders a cornerstone of the One CSX strategy. “I believe very strongly that in order for us to achieve what we’re capable of, we need a better relationship with our employees and we need our employees to feel part of the team and to feel appreciated and valued,” he says.

Hinrichs says improved employee morale can be a competitive advantage, and at CSX it’s starting to translate into tangible results, like more efficient operations and better customer service.

“Companies that have their employees engaged and appreciated and motivated perform better than those that don’t. And that’s the environment we’re continuing to try to achieve here,” Hinrichs says.

“We’ve moved the needle further, but there’s still a long way to go,” Hinrichs says, noting he joined the railroad after a tumultuous period that included the shift to a Precision Scheduled Railroading operating model in 2017 and the contract talks that came to a head in 2022. “But we’re making tremendous progress. I mean, we get just wonderful feedback for the things we’ve been doing, like the family days, like the truck giveaways for positive attendance.”

This week’s tentative agreements – along with CSX being the first railroad to reach paid sick time deals and change its attendance policy based on employee feedback – are another sign of progress, Hinrichs says. “At CSX, our relationships have improved dramatically,” he says. “I’m never going to say we’re there because in every relationship there’s opportunity to get better.”

Union leaders praised the talks that produced the tentative agreements.

“I cannot recall a time in my entire career when there has been a new contract in place before the expiration of the current contract with any of the freight Carriers,” TCU’s Maratea said in a statement.

“CSX CEO Joe Hinrichs promised he would do everything possible to reach a fair and timely agreement. He kept his word and I appreciate that,” Maratea said. “The other Carriers should take note and can be assured we are expecting timely agreements from every one of them as well.”

Rick Lee, SMART-TD’s general chairperson for the Northern Mid-Atlantic District on CSX, said the union wanted to avoid a “potential circus” of national contract talks next year.

“It’s refreshing to see that we are finally advancing in transparency and fruitful negotiations with CSX to address the issues at hand. Class I rail carriers traditionally stick together, play games with us, and basically try to wait us out,” Lee said in a statement.

He adds: “We were pleased to find that CSX CEO Joe Hinrichs and his team at CSX were willing to step up to the plate and not play games.”

National negotiations, conducted through the National Carriers Conference Committee, sometimes make it more difficult to reach contract deals, Hinrichs says. Issues like work rules that are unique to each railroad as well as railroads having their own competing priorities can stand in the way of consensus, he explains.

But national contract talks are not a bad thing and are certainly not dead, and it’s possible that CSX may wind up negotiating with one or more unions as part of national negotiations. “I just think we have a very unique situation right now, driven largely by what happened last time,” he says.

CSX’s talks with SMART-TD did not include a controversial topic that was a stumbling block to the last round of national negotiations: Shifting conductors to ground-based positions and adopting engineer-only operation in certain situations.

“It wasn’t on the agenda. It’s not something we’ve been pursuing. And I think we need more advancement in technology and in other areas before we have that conversation,” Hinrichs says.

The Federal Railroad Administration this year adopted a rule that would require two people in the cab of freight trains, but the Association of American Railroads is challenging the rule in federal court.

The tentative agreements and demise of the one-person crew issue should help CSX attract new employees in hard-to-hire locations. “One of the obstacles we were seeing in ‘21 and ‘22 in hiring was the uncertainty around the contract and importantly, the overhang of this single-person crew debate because you hire conductors mostly, and they were the ones that were being discussed,” Hinrichs says. “So getting that noise out of the way and over with is very helpful.”

Note: Updated at 9:12 p.m. Central to reflect tentative agreements reached today with two additional labor unions.