West Coast Ports Brace for a Storm of Labor Negotiations

West Coast dockworkers and shipping lines are gearing up for a nasty contract fight that could disrupt international trade and drain millions of dollars from the U.S. economy.

The talks pit one of the nation’s strongest labor organizations, the International Longshore and Warehouse Union, against the Pacific Maritime Assn., a powerful group of shipping carriers and cargo distributors that appears determined to extract concessions from the union.

Backed by a $200-million line of credit, the group of 100 businesses has threatened a lockout if the union stages a work slowdown, as shippers claim happened in each of the last two contract negotiations.

A shutdown of the major West Coast ports--Los Angeles and Long Beach; Oakland; Portland, Ore.; and Seattle and Tacoma, Wash.--could be devastating, economists say. The ports support nearly 4 million jobs in the U.S., generating $723 billion in 2000.

Negotiations are set to begin May 13 in San Francisco, home to both organizations. The current three-year contract, which covers 10,500 union members, expires June 30.

“It’s getting pretty tense. A strike, or lockout, is definitely on people’s radar screens right now,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

The Pacific Maritime Assn. says the union must accept new equipment and work rules that will make the ports more efficient. “The only thing we are interested in is introducing technology with [the union’s] support,” said Joe Miniace, the association’s president.

The PMA seeks to implement several money-saving changes, including new communications systems that could minimize gate check-in times for truckers; electronic cargo-tracking systems; and automated union dispatch halls.

It also wants to implement new security measures at the ports, including identification systems that the union fears could lead to invasions of worker privacy.

With trade between the U.S. and Asia expected to double within 10 years, productivity at the ports is a pressing concern. Inefficiencies cost the maritime industry as much as $1 billion annually, said Michael Nacht of the Goldman School of Public Policy at UC Berkeley.

“Without the introduction of available technological advances, congestion, environmental degradation and supply-chain disruptions will result in increased costs and diversion of cargo away from U.S. ports,” Nacht said in a report.

Union officials said they are open to new technology and work rules, as long as members perform the work, the changes do not make jobs more onerous and members share in the wealth created by productivity gains. “What we’re saying is let’s negotiate how it’s done according to those three principles,” said ILWU spokesman Steve Stallone.

The ILWU says the shippers want to severely weaken the union, which boasts some of the best wages and benefits in U.S. organized labor. Average wages last year, including premiums and overtime, were $80,000 for longshore workers and $158,000 for foremen, according to the PMA.

In the event of a strike or lockout, the Bush administration could declare the action a “peril to national health or safety” and order workers back to the docks for an 80-day cooling-off period. However, it could not force a settlement in the contract dispute.

There has been only one strike in the union’s 68-year history, and that was an unsanctioned walkout in 1971 sparked by stalled contract negotiations. Otherwise, the ILWU has been known as a relatively cooperative labor organization, working with management as the ports modernized and shifted to the use of containers.

But since the mid-1990s, when the PMA’s new leadership began pushing for greater flexibility in technology and work rules, management-labor relations have grown increasingly tense. The last several years have been marked by unsuccessful lawsuits against the union and complaints against the PMA filed by the union with the National Labor Relations Board.

In a message to members in February, ILWU President James Spinosa indicated he was preparing for the worst in the upcoming round of talks. He said he has received pledges of solidarity from other unions, including international maritime unions. He also urged members to stay united and “get your individual financial house in order.”

The ILWU recently signed an alliance with the International Longshoremen’s Assn., representing dockworkers on the East Coast, and the International Brotherhood of Teamsters, which represents many truckers who carry containers from the port.

“We’re working very closely together,” said Ron Carver, national campaign coordinator for the Teamsters’ port division. “We’re committed to assisting and aiding them in any way we can.”

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Importers May Seek Alternate Routes

Anticipating disruptions, some nervous importers are accelerating shipments to arrive before early July, the start of the Christmas shipping season. “I’m watching the contract talks very carefully, and I see things getting a little bit nasty,” said Charlie Woo, president of Megatoys, a Los Angeles-based toy importer. “So I’m making sure we don’t have products arriving during the first few weeks of July.”

Others are scrambling to line up alternate shipping routes that would bypass West Coast ports, including the 15,000-acre Los Angeles-Long Beach harbor complex--the nation’s busiest.

But there are few options: The Panama Canal cannot accommodate many of the massive container ships calling on mega-ports such as Los Angeles-Long Beach, nor can ports in Mexico. And although covered by a different contract, dockworkers in Vancouver, Canada, also are ILWU members and probably would be sympathetic to any job action.

Such limitations have long worked in the ILWU’s favor, giving it a strength far beyond its size. With only 60,000 members, including those in industries as far afield as health care and retail sales, the union wields considerable political and economic clout.

When the previous contract expired three years ago, work slowdowns spread along the West Coast and reduced the flow of cargo by at least half, according to the PMA. A contract was settled two weeks later, but the association failed to gain many of the concessions it sought.

“Work stoppages in a just-in-time-delivery environment can be devastating,” said Jon Gold, director of international trade policy for the International Mass Retail Assn. But he added, “Our folks are supporting PMA. They intend to stand firm this time around.”

Industry officials say they have no choice. “We are telling PMA to stand tough,” said Robin Lanier, executive director of the West Coast Waterfront Coalition, which represents major importers and exporters. “In the past we said, ‘Avoid a strike at any cost.’ This time, we’re saying ‘We don’t want a strike but we don’t want to avoid one at any cost.’”

“We believe the long-term costs will be enormous if we can’t bring in the latest information technology to deal with congestion and work rules dating back to the 1940s,” she said. “The fact that PMA plans to play harder ball than in the past, from our perspective, is not a bad thing.”

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Lockout Could Threaten International Markets

Stallone, the ILWU spokesman, said the preservation of well-paying union jobs--not technology or work practices--is what is really at stake. “What we have already seen is employers using the introduction of technology to take work that is contractually the work of ILWU members and have others do it.”

Miniace said the PMA is “not interested in busting the union or weakening it.” But he added that he would not hesitate to lock out union members if he detects a work slowdown during the talks. “We actually lose more money during a work slowdown than during a strike, so we’d be better off just shutting down,” he said.

Such an action could pose “an instantaneous threat to insecure international financial markets,” said Stephen S. Cohen, a professor of regional planning at UC Berkeley. He said struggling Asian economies are more dependent than ever on massive volumes of exports to the U.S. Giant American retailers such as Wal-Mart Stores Inc. and Target Corp. rely on imported merchandise. And financial markets are extremely sensitive to disruptions of those flows.

He estimated a five-day shutdown would cost the national economy about $4.7 billion, and federal, state and local tax receipts would be reduced by nearly $115million. A stoppage of 20 days, he said, would cost the national economy $48.6 billion and vaporize $1.8 billion of federal, state and local tax revenues.

“A shutdown should, therefore, be treated not only as a labor relations problem with serious and rapidly cumulating impacts on the economy,” he said, “but as a threat to ... international financial markets.”

Union officials dismissed talk of a lockout as posturing. To move cargo, Stallone said, shippers would have to turn to hundreds of nonunion workers who may not have the training required to operated sophisticated and dangerous equipment. And once unloaded, the cargo would have to be moved by truck or rail, which could be problematic given the ILWU’s agreements with the Teamsters and other unions.