The nation's largest retailers today urged President Obama to become directly involved in the stalled contract talks between ship management and striking clerical workers at the Ports of Los Angeles and Long Beach. The stalled negotiations have triggered a work stoppage that has shut a large segment of the nation's two largest ports.
In a letter to the president, Matthew Shay, president and CEO of the National Retail Federation (NRF), said, "A prolonged strike at the nation's largest ports would have a devastating impact on the U.S. economy." Shay urged President Obama to "use all means necessary" to get both sides back to bargaining.
The strike by an 800-member clerical local of the International Longshore and Warehouse Union (ILWU) is now in its third day. The walkout initially hit the APM Terminal, the largest at the Port of Los Angeles. In support of the clerical workers, dockworkers at the terminal honored the picket line, shutting down operations there.
The clerical strike, and the action by dockworkers in sympathy with the strikers, widened yesterday to include seven of the eight other facilities at Los Angeles and three of the six terminals at adjacent Long Beach. The two ports combined handle approximately 40 percent of seagoing Asian imports entering the United States.
Shay said that because of the current fragile state of the U.S. economy, an extended strike could be worse than the October 2002 management lockout at West Coast ports, which shut down the waterfront from Seattle to San Diego for 10 days and cost the U.S. economy an estimated $1 billion a day.
Unlike in 2002, when some amount of pre-holiday peak season cargo was stranded on the water, most of this season's holiday traffic has entered U.S. commerce by now. Still, any surge in demand close to Christmas Day—especially with many reports showing an uptick in consumer spending—may force retailers to opt for more expensive airfreight to get goods into the U.S.
That scenario, in turn, is expected to dramatically tighten airfreight capacity, meaning that some retailers may not have access to any form of transportation should they need it.
It is believed retailers have less than one week to make contingency plans should it become apparent that the strike will not be settled quickly. "If [a strike] lasts into next week, it will get very serious," said Charles W. Clowdis Jr., head of supply chain advisory services, for consultancy IHS Global Insight.
Members of the ILWU's Local 63 Office Clerical Unit (OCU) do clerical work for shipping agencies and terminals and are employed by 14 terminal companies and 14 steamship lines. The unit has been working without a contract since the last contract expired in June 2010. Talks aimed at reaching a new agreement broke off last month.
DISPUTE OVER OUTSOURCING
The unit struck in protest over the Los Angeles/Long Beach Harbor Employers Association's (HEA) alleged attempt to outsource clerical jobs. The unit claimed that management has eliminated 51 permanent clerical jobs in the past five years and that an additional 76 jobs are poised to be sent overseas.
The HEA, however, dismissed the unit's claim, saying the individuals were those who had retired with full benefits, quit, or died during the past three years. "Not one of the 51 job positions they identify has been given to a nonunion employee or subcontracted away," HEA said in a statement. "There simply has not been a business need for replacing these workers."
According to the association, management has guaranteed that no unit member will be laid off during the life of the contract. The group said employers have no incentive to outsource work since they are "obligated to pay...employees whether there is work to do or not."
The management group maintains that the unit wants to restore the practice of "featherbedding," defined in labor-management lingo as hiring more workers than are needed to perform a given job, or to adopt complex and unnecessary procedures just to employ additional workers. As part of its strategy, the clerical unit insists on having control over staff levels, management said.
The unit's members are already the country's highest paid clerical workers, according to management. HEA said the latest proposal would bring workers' wages up to near $90,000 a year and annual pensions up to nearly $75,000.
Gartner, Inc.