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December 26, 2012
Dockworkers Strike Threatens to Close East Coast Ports
By STEVEN GREENHOUSE
Anyone who has seen “On the Waterfront” knows East Coast longshoremen can be a tough bunch.
The dockworkers are flexing their muscles again, threatening a strike beginning Sunday that would shut seaports from Massachusetts to Texas. It would be the first such coastwide strike since a two-month walkout in 1977 paralyzed the flow of tens of billions of dollars of imports — and the nation’s retailers and other businesses fear a painful replay if the 14,500 dockworkers make good on their threats.
“Unless something miraculous happens, I think we’re looking at a strike,” said Kevin M. Burke, president of the American Apparel and Footwear Association, which represents an industry that imports $72 billion in dresses, shoes and other goods each year through the East Coast and Gulf Coast ports facing a possible shutdown.
“Our companies are preparing for the worst,” Mr. Burke said, “but hoping for the best.”
The strike threat has so alarmed corporate America that more than 100 business groups wrote to President Obama last week to urge him to intervene to push the two sides to settle — and, if need be, to invoke his emergency powers under the 1947 Taft-Hartley Act to bar a strike. President George W. Bush invoked the act in 2002 to end a lockout at ports on the West Coast, where a different union represents dockworkers.
Despite their small numbers, the East Coast dockworkers have outsize influence. Many of them, like the crane operators who transfer containers from ships to the docks, are highly skilled and cannot be easily replaced. And because they control the loading and unloading of goods in most of the nation’s ports, a strike could cause extensive economic damage at a time when the economy is already weak.
“They’re in a crucial place in the flow of goods,” said Richard W. Hurd, an industrial relations professor at Cornell University.
The Port Authority of New York and New Jersey estimates that a strike would cost the region $136 million a week in personal income and $110 million in economic output.
The dockworkers union, the International Longshoremen’s Association, opposes presidential intervention, and labor specialists say Mr. Obama, like previous union-friendly Democrats, may be reluctant to enjoin a strike. On the other hand, the economy already faces a potential blow from tax increases and federal budget cuts scheduled to begin on Jan. 1, and a strike would cause further damage.
“The last thing the nation needs right now is a strike that would shut down the East Coast and Gulf Coast ports,” said Jonathan Gold, the National Retail Federation’s vice president for supply chain policy. “This will have a huge ripple effect throughout the economy.”
The 14 ports threatened with a strike — including Boston; New York-New Jersey; Baltimore; Charleston, S.C.; Savannah, Ga.; Miami; and Houston — handled 110 million tons of cargo last year.
The contract negotiations, which have continued fitfully for nine months, broke off on Dec. 18. At the behest of a federal mediator, the two sides are planning to resume talks this week to try to reach a deal before the deadline of 12:01 a.m. Sunday.
Although several issues need to be resolved, the two sides are deadlocked over one point in particular. The United States Maritime Alliance, an association of shipping companies and terminal owners, is demanding concessions on “container royalty payments,” which the companies share with union members for each ton of cargo handled. The companies want to freeze those payments for current longshoremen and eliminate them for future hires.
The maritime alliance, known as USMX, says it paid $211 million in container royalties to the longshoremen last year, averaging $15,500 per eligible worker. James A. Capo, the alliance’s chairman, said that came to $10 an hour, on top of what he said were already generous wages.
“This issue seems to have dwarfed anything else,” Mr. Capo said. “All it does is make the union more uncompetitive than it already is.”
The alliance says that, including the royalties, the longshoremen earn $124,000 a year on average in wages and benefits. Union officials say those figures are misleading and put average annual wages at $75,000 before benefits — still far more than most union members earn.
The container payments were created in the 1960s to compensate the longshoremen as ports embraced automation and the use of standardized, 40-foot-long containers to ship goods. That caused a big decrease in jobs and working hours. Employment of longshoremen in the Port of New York and New Jersey has dropped to 3,500 from 35,000 in the 1960s.
The shipping companies see the royalty payments as a relic of decades past, while the union still sees them as a core part of wages and as an important way to share productivity gains with members.
The dockworkers union is digging in on the issue.
“We have repeatedly asked them to leave this item alone,” said Harold J. Daggett, the union’s president.
Last week, a federal mediator asked the two sides to extend their contract until Feb. 1. But Mr. Daggett ruled out an extension unless USMX dropped its demands on the royalty payments.
The union has also complained about other demands the alliance is making for a proposed six-year contract, including delayed contributions to the union’s health care fund and annual raises that are below inflation.
Notwithstanding its historical reputation, Mr. Daggett’s union has grown tamer since its 1977 walkout. Federal prosecutors have cleaned out much of the organized crime influence in a union long considered one of the most mob-infested. But after decades of labor peace, the elements for a huge confrontation are in place. Mr. Daggett vowed to stand up to employers when he took the union’s helm last year.
At the same time, the maritime alliance is taking its toughest bargaining stance in years. It sees an important opportunity for increased business in East Coast ports now that the Panama Canal is being widened. The alliance says high labor costs will hurt East Coast ports when Asian companies like Toyota and Samsung are deciding which coast to use for deliveries.
Mr. Capo also voiced fears of losing business to less expensive East Coast ports like Jacksonville, Fla.
“The I.L.A. faces some tremendous nonunion, non-I.L.A. competition, particularly in the South and the gulf,” he said. “With these kinds of wages, they can’t survive in an open market.”
Dorothy Sue Cobble, a labor relations professor at Rutgers, said the maritime alliance’s push to cut labor costs was an example of increased assertiveness among employers at a time when unemployment remains high and many unions are struggling.
“A lot of employers feel it’s a good time to demand and receive givebacks,” she said.
East Coast and West Coast dockworkers have separate unions. The West Coast association, the International Longshore and Warehouse Union, is known for being leftist and active in politics. It supported the Occupy Wall Street movement, and on Nov. 27, the union’s clerical workers, worried that some jobs were being outsourced, began an eight-day strike that crippled the nation’s two busiest ports, Los Angeles and Long Beach, Calif.
Business groups said the 11-day lockout that closed 29 West Coast ports in 2002 cost the nation’s economy $1 billion a day until President Bush invoked the Taft-Hartley Act and ordered the ports reopened.