Highlights
– Six-year contract covering 26,000 West Coast dockworkers expires
– Walkout in 2002 snarled trade and significantly damaged United States’ economy
– International Longshore and Warehouse Union’s rejection of a temporary contract suggests slowdowns are possible in the near-term
On July 1, 2008 a six-year contract between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) officially expired without an extension. The contract covered 26,000 longshore workers, marine clerks and foremen who work for 71 shipping companies at 29 West Coast ports in California, Washington and Oregon. Roughly 20,000 of the unionized workers operate at the ports of Los Angeles and Long Beach, which account for 40 percent of container imports to the United States (US).
Union officials have turned down a temporary contract extension but workers have continued to work as the two sides are negotiating the terms of a new contract. Port officials report that cargo moved without major interruption throughout the week despite the expiration. Further, the negotiations are believed to be more amicable than the contract talks in 2002 that degenerated into a 10-day walkout and jammed cargo entry ports on the West Coast. A spokesman for the union stated that an agreement is possible and there are no plans for a slowdown.
However, the two sides have been working on the contract over the past four months and do not appear to be close to agreeing on issues such as wages, pensions, safety measures and productivity issues. In previous negotiations in 2002, 1999 and 1996, the ILWU executed work slowdowns. As the ILWU rejected the temporary contract extension, the ports have no effective system in place to prevent or discipline against work disruptions. As negotiations continue, it becomes increasingly likely that the union may plan staged work slowdowns to pressure the PMA to give in to the ILWU concessions.
Crisis in 2002
In 2002, the PMA ordered a lockout of all longshoremen and accused the union of staging illegal work slowdowns as contract talks stalled over the introduction of new labor-saving technology including computer systems that allow cargo lists to flow automatically, optical scanners, and remote cameras. As the lockout entered its 11th day, President Bush intervened and successfully invoked the Taft-Hartley Act to reopen the docks and suspend the shutdown for 80 days. The Taft-Hartley Act, which was passed in 1947, gives the president the right to seek an injunction against an industrial action that “imperils the national health or safety.”
The ten-day lockout caused more than 200 ships carrying food, manufacturing equipment and retail goods to sit idle off the West Coast. Consequently, supply chains across the country slowed; economists estimate the lockout cost the US economy as much as US$15 billion.
Slowdowns Possible in the Near-term
West Coast ports currently handle more than one million tons of cargo a day. The PMA estimates that the West Coast ports have nearly a US$1.3 trillion impact on domestic business, which equates to roughly 11 percent of the total US gross domestic product (Source). Another set of planned slowdowns by the ILWU could disrupt the flow of trade and have significant large-scale economic consequences at a time when the US economy has already slowed due the credit crunch, rising energy costs and a sagging US dollar.
As negotiations continue in the coming days, ILWU members will continue to work without a contract, yet the flow of cargo could slow as seen when the previous labor pacts lapsed in 2002, 1999 and 1996. The longer the contract negotiations persist, slowdowns will increasingly become likely in the near-term as the ILWU seeks to boost its bargaining power.
