Labor Dispute Threatens Businesses

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A labor dispute is threatening to shut down ports and bring the already faltering West Coast shipping industry to a standstill, according to James McKenna, Chief Operating Officer of Pacific Maritime Association. In all, 29 ports from San Diego to Seattle could close in as little as 5 to 10 days if an agreement isn’t reached and the Maritime Association makes good on its threat to shut down operations and effectively lock workers out.

The dock workers, represented by the International Longshore and Warehouse Union, have been working without a contract since July, and negotiations have grown increasingly contentious since last fall. A federal mediator began working with negotiators January 6th.

In his first statement to the press since negotiations began last May, McKenna announced details of the shippers’ latest offer, which includes 3 percent annual raises over five years, employer-paid health care, and a pension increase of 11 percent, last week.  The union has yet to accept the offer, however, prompting the threat of a shut down. “We’re not considering a lockout,” McKenna said in a statement to the press. “What I’m really saying is that this system will bring it to a stop. Once that happens, we really don’t have a choice.”

The average dockworker now makes about $147,000 a year plus benefits, McKenna claims. But union spokesperson Craig Merrilees said that figure is grossly inflated, stating that most dock workers don’t work full time, and those that do make $26 to $36 per hour, or about $100,000 a year. Further, the union has stated consistently that working conditions, not wages, are the negotiation’s major sticking points.

U.S. Businesses Hurt by Dispute

While both sides of the labor dispute blame the other for the ongoing slowdown, U.S. businesses are feeling the pinch. Thousands of pounds of agricultural products are being left to rot on the docks, and imports are being diverted from the most impacted shipyards to others hundreds of miles away, forcing businesses to transport them by truck at substantially greater cost. Last week, 10 container ships were lined up outside the shared port of Los Angeles and Long Beach, California, up from an average of five in December of last year. labor dispute hurting businesses

All of this translates into real heartache for hundreds of U.S. businesses large and small. One Oregon company, Mastercraft Furniture, furloughed 180 employees last month because a shipment of much-needed fire retardant material arrived two weeks late. And in California, delays cost David Naghi, owner of MOBI Technologies Inc., his end-of-year profits when a shipment of digital thermometers, wireless audio-visual monitors and other products from China arrived too late to reach the store shelves before the holidays.

On a larger scale, the slowdown in U.S. exports to Asia has tarnished the reputation of U.S. businesses and given “overseas competitiors” the upper hand, according to a letter to negotiators from a coalition of 174 trade associations dated January 16th. Further, a complete shutdown on the West Coast shipyards, which handle nearly 45 percent of all cargo entering or leaving the United States annually, would cost the American economy an estimated $2 billion a day.

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RESOURCES:

The Oregonian

Bloomberg News

 

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