A rail strike that could have crippled the U.S. auto industry has been put on hold following the intervention of President Joe Biden, who persuaded both sides to find common ground as a critical deadline loomed.

The White House said the tentative agreement would give rail workers “better pay, improved working conditions, and peace of mind around their health care costs” while allowing railway carriers “to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

The threat of a rail strike already shut down Amtrak’s long-distance trains because rail passenger services was uncertain. The company would have had crews to staff the trains to end of their journey with a Friday deadline looming.

However, the deal must still go to union members for ratification.

Rail strike would have crippled carmakers

For the auto industry, the tentative labor deal in the railroad industry eases some of the anxiety about rail logistics that have already short circuited some shipments. A strike could have halted shipments and driven up costs for carmakers, who use railcars to ship finished vehicles long distances.

“You could use trucks but that would be really expensive,” noted one executive from Toyota, which has extensive manufacturing operations in the United States.

Even without a rail strike, executives from Ford, General Motors and other companies have said they are facing sharply higher costs from logistics as the grapple with shortages of semiconductors and other key components. COVID-19 also raised costs forcing carriers of all kinds to scramble to find pilots, drivers, mechanics, warehouse workers and to fill jobs critical to the logistics.

The tentative truce in the railroad industry also pointed to other issues that have made it hard to satisfy blue collar workers. Even before inflation took a bite out family budgets, workers generally were beginning to demand a larger share of the economic pie.

Big labor issues loom 

In addition, there are many disputes surfacing now involving other issues of the day-to-day treatment of employees.

For example, members of the United Auto Workers in Kokomo, Indiana struck last weekend because Stellantis had failed to upgrade the heating and cooling system inside a 635,000 square-foot casting plant.

“Stellantis claims it has no money to meet the basic needs of UAW Local 1166 members while, at the same time, it is making record profits and investing billions in a new battery plant across the street,” the UAW noted in a statement.

Ultimately Stellantis agreed to find the money to fix the HVAC system to settle the strike.

However, workers, who are pushing their union leaders to show more resolve in confrontations with management, are also demanding more, including more dignity and respect, which are increasingly words heard in disputes cropping up in different sectors of the economy.

Disputes over what constitutes an absence from work — long a key issue in the auto industry — were an issue in rail negotiations. Meanwhile, the open conflict between the International Brotherhood of Teamsters and the management of UPS, which could come to a head next summer will likely influence contract talks in the auto industry where labor shortages are beginning to have an impact on the business.

In addition, the labor shortages have been exacerbated by COVID-19 and opioid epidemics. Covid-19 has killed more than 1 million Americans, and a substantial portion of the deaths — 260,000, by one estimate — were in the prime of their working lives. Another 500,000 to 600,000 predominately younger, blue-collars workers have died from opioid addiction in recent years.