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Jamcos with US operations mixed on looming rail strike

Published:Friday | November 25, 2022 | 12:11 AMKarena Bennett - Staff Reporter

Two large Jamaican companies operating businesses in the United States have given mixed reactions to the looming rail strike planned for early next month that’s expected to sap US$2 billion per day from the American economy if it’s not averted....

Two large Jamaican companies operating businesses in the United States have given mixed reactions to the looming rail strike planned for early next month that’s expected to sap US$2 billion per day from the American economy if it’s not averted.

GraceKennedy, which distributes food products in that country and owns assets there under GK Foods USA, said it’s not overly concerned by the development, but poultry producer, Jamaica Broilers Group, expects it could impact efforts to move its products from its processing plants to market.

The southern US is said to be heavily dependent on rail to transport poultry.

The SMART Transportation Division, or SMART-TD, which represents about 28,000 conductors, on Monday rejected a deal brokered by the White House, joining three other unions that have failed to approve contracts over concerns about demanding schedules and the lack of pay for sick days.

A nationwide strike is expected on December 5, unless the contract is ratified by each of the 11 rail unions. 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. The tentative contract included a 24-per-cent compounded wage increase and US$5,000 in lump-sum payments, the National Carriers’ Conference Committee (NCCC), the group representing the freight railroad companies said last month.

Companies have been warned that the risk of a nationwide strike during the festive season will require them to start taking steps to prepare for the disruption. Around 40 per cent of America’s long-haul freight is transported by rail.

Food and financial services group GraceKennedy Limited told the Financial Gleaner on Wednesday rail transportation plays a “very minimal role” in its logistics supply chain, and as such it expects no significant impact.

But poultry producer Jamaica Broilers Group, which operates US subsidiary The Best Dressed Chicken USA , sees it as a threat to the health of chickens and pigs, which depend on trains to deliver their feed, and potentially contributing to higher meat prices.

On Thursday, JBG’s president of the US Operations, Stephen Levy, told the Financial Gleaner that the potential strike action is of “major concern” to the company, and that it is hopeful that the parties will come to some sort of agreement.

“While we have the ability to cover our supplies from local origin and have already made contingencies, this would be at a significant cost given the high demand and pressure on over the road trucks,” Levy said.

The US continues to be a fast-growing market for JBG, contributing 44 per cent of group revenue and 33 per cent of operating profit.

The American operations racked up $33 billion in sales for the year just ended, and followed with more than $10 billion in revenue in the first quarter ended July.

The Best Dressed Chicken line is available in over 20 states across the US and is sold in trays and semi-bulk packs.

karena.bennett@gleanerjm.com