The surprise rejection of a labor contract by a clerical workers union at L.A.’s ports is leading companies and industry groups to consider contingency plans in case of another strike.
The International Longshore and Warehouse Union Local 63 Office Clerical Unit voted down a contract agreement Feb. 6 that appeared to resolve the dispute that caused an eight-day strike that shut down 10 out of 14 container terminals late last year.
Industry leaders say the possibility of another strike at the ports of Los Angeles and Long Beach is already a concern for businesses that rely on imports and exports that pass through the ports.
Continued uncertainty could force businesses to move their goods to other ports, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, a lobbying group for the retail industry in Washington.
“Labor stability is a big selling point for them as they’re choosing what ports they use,” Gold said. “If there are continuing labor disputes, they’re going to look at other ports.”
The proposed contract with the Harbor Employers Association, which represents shipping companies and terminal operators, had seemed destined for ratification by union members. Union officials and the employers association have not said why the contract was rejected. The clerks’ unit has been without a contract for two years. Representatives from the union did not respond to calls requesting comment and representatives from the employers association declined to comment.
With 800 members, the clerks’ union is small compared with other port labor groups such as ILWU Local 13, which represents 7,800 local longshore workers. Still, the clerks play a crucial role in port traffic, handling bills of lading and other paperwork for millions of shipping containers that move through the ports each year. The union has said clerical workers at the ports are under threat from automation and offshoring of labor.
Starting in November, clerical workers picketed 10 of 14 port cargo terminals. Operations were halted when longshoremen honored the picket. Groups representing retailers, shipping companies and farmers demanded the employers and the clerical workers resolve the dispute. In an unusual step, the retail federation wrote to President Obama’s administration asking for federal mediators to intervene.
With mediators on the way, the two sides reached an agreement in a meeting with Mayor Antonio Villaraigosa on Dec. 4. The deal would have let terminal operators reduce the number of employees through attrition but the clerical workers got total job security and a significant raise.
Now that deal is dead, and businesses want to know what to do next.
Robert Krieger, president of Carson freight forwarder and customs broker Norman Krieger Inc., said his clients need labor stability in order to effectively plan the logistics of shipping their goods. If another strike seems likely, he will have one-on-one meetings with clients to come up with alternatives for shipping goods, such as using air freight.
“How can you plan your inventory and seasons with any accuracy not knowing if there’s going to be disruption of services?” said Krieger, who has 60 employees and hundreds of clients that import and export goods including apparel, machinery and high tech.
The last strike came ahead of the holiday season. It forced several ships bound for Los Angeles and Long Beach to sail instead to Oakland or Ensenada, Mexico, to unload cargo bound for Southern California.
A strike wouldn’t be as problematic if it occurred in the next few months. But it would still disrupt port business by causing delays in the shipment of Easter seasonal goods and summer back-to-school merchandise.
With the rejection of the contract, negotiations must begin anew. A labor dispute could drag on for more than a year, according to Wally Baker, president of the Jobs 1st Alliance, a coalition of business, labor and government groups, and a former executive at the Los Angeles County Economic Development Corp.
He said the back and forth might not result in a resolution until 2014, when the negotiations for the wider port worker union contracts with the Pacific Maritime Association take place. If that were the case, clerical worker negotiations would be wrapped into those larger talks.
“I would not be surprised if it didn’t go anywhere until the big negotiations start,” he said.
James Fawcett, a USC adjunct professor of public policy who follows port labor issues, agreed. He said the union leaders had nailed down what they considered to be a favorable deal in December. The rejection by rank-and-file members leaves the union’s negotiators with less bargaining power.
“This should give the union leadership some pause,” he said.
Gold at the Retail Federation said lingering labor unrest would be unacceptable for companies that rely on port business.
“There is great concern with this going through this year and into 2014,” he said. “We can’t afford to have a contract not ratified.”
He said the federation will call on mediators to step in immediately if there is a strike.
However, Fawcett believes it’s unlikely that the shipping companies would divert much cargo if labor disputes continue. The ports of Los Angeles and Long Beach have a significant competitive advantage over other ports, and the companies don’t have many other viable options for getting their goods to the West Coast, he said.
Labor disputes at trade hubs in the Northeast continue to limit alternatives.
Robert Millman, an attorney with Littler Mendelson PC in Century City who represents companies trying to remain union free, believes the contract issue will be resolved before the big labor talks.
The unions have their leverage now when they have the ability to shut down the port, he said. The clerk union’s control over port operations gives them unusually strong bargaining power.
“You’re playing someone who’s holding all the aces, kings and jacks,” said Millman. “They’re hanging on desperately for what they want.”
The next step for port customers will depend on the demands made by the unions, Gold said.
“It’s the not knowing that’s causing a lot of concern,” he said.
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