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Behind the West Coast port lockout

The bitter dispute between West Coast shippers and 10,500 unionized dockworkers is focused on technology, not wages and benefits. By Martin Wolk.
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President Bush asked a federal court Tuesday to order West Coast port operators to end a 10-day lockout of unionized workers, using a rarely used power to prevent further economic damage from the labor dispute. It was the first time the 1947 Taft-Hartley Act was invoked to end a lockout rather than a strike. Here is a quick look at some of the key questions raised by the latest developments.

How does the Taft-Hartley Act Work?
Under the law, the president must appoint a board of inquiry to determine whether a work stoppage poses a national emergency. President Bush took this step Monday, and on Tuesday the three-member board reported it had no confidence the two sides would resolve their dispute “within a reasonable time.”

Administration lawyers then filed documents in U.S. District Court in San Francisco requesting a court order ending the work stoppage for an 80-day “cooling off” period. Judge William Alsup issued a temporary restraining order that expires Oct. 16, when both sides will return to court to discuss whether Alsup should impose an 80-day cooling-off period as mandated by Taft-Hartley. Over the past 55 years courts have granted such injunctions in 29 of 31 cases, according to the Labor Department.

What happens next?
Union vice president Bob McEllrath said he expects dockworkers to return to their jobs Wednesday evening, ending — at least for now — the port shutdown. But workers may need as long as 10 weeks to clear the backlog of goods caused by the port shutdown. Ships carrying food and other perishables will be unloaded first when dockworkers return.

Next week, both sides will return to court to argue for and against the 80-day cooling-off period. If the judge grants it, both sides are required to continue working for 80 days. If, after the first 60 days, there is still no agreement, the act requires a secret ballot vote by workers on the employers’ final offer. If management’s final offer is rejected, the lockout could resume, or the dockworkers could go on strike.

About 70 percent of previous disputes have been settled during the 80-day period, according to the U.S. Chamber of Congress.

Could this step have been avoided?
Just before Bush’s announcement, the International Longshore & Warehouse Union offered to return to work under a temporary, 30-day contract extension in a bid to avoid court action. The Pacific Maritime Association, representing the shippers, declined the offer, essentially saying the union missed its last chance over the weekend, when it rejected both a comprehensive contract offer and a proposed 90-day contract extension.

What are the political implications?
Bush was under heavy pressure from business interests to invoke the act and get cargo moving again before the crucial Christmas shopping season. The National Retail Federation, for example, welcomed Bush’s decision. “Taft-Hartley is not the best option, but it appears to be the only option at this point,” said Tracy Mullin, president of the trade association.

Unions, however, expressed outrage over the intervention, saying it would tilt the balance toward management in collective bargaining negotiations. “If every employer thinks the federal government will step in, why should they negotiate and let the natural bargaining process play out?” asked Richard Trumka, secretary-treasurer of the AFL-CIO.

While unions typically are aligned with the Democratic Party, members of Congress have not come down on the issue strictly along part lines. Sen. Dianne Feinstein, D-Calif., was among those urging President Bush to act, citing economic damage and a threat to national security in a time of war.

Why did the shippers close the port?
The Pacific Maritime Association, which represents shippers, says it was forced to halt operations after a work slowdown they described as the equivalent of a “strike with pay.” Officials of the International Longshore & Warehouse Union have acknowledged slowing operations by refusing to work overtime and adhering to contractual restrictions in a “work-to-rule” job action.

Union officials also say they have put a premium on safety after five workers were killed on the job over the past seven months in what a spokesman called “the biggest speedup in the history of West Coast ports.”

What is the dispute all about?
The central issue in the negotiations is management’s desire to make use of new technology, including computerized information systems to track cargo. Longshoremen, who can make upwards of $100,000 a year, want to ensure that any new technology-related jobs are unionized.

The two sides also are at odds over pensions, but technology is the major sticking point.

Do workers really make $100,000 a year?
Many do. Longshoremen made an average of $83,000 last year, but more than half worked enough hours to make more than $100,000, according to the PMA. Unionized clerks made an average of $119,000 last year, while so-called walking bosses made an average of $157,000. About three-quarters of the 10,500 union workers are at the lowest-level, longshoremen, and union officials point out that many of them work only part-time or “casually.” Still, union leaders say wages and benefits are not an issue in the dispute.

“Dockworkers make a good salary,” said Trumka. “The issue is whether these jobs will continue to be good jobs into the future.”

Isn't technology an arcane issue for a labor dispute?
The contract language at issue is “very arcane” but also very important, says Jason Greenwald, a spokesman for the maritime association. “What we’re talking about for the most part is the ability to implement technology and have a process in place to have technology brought in.”

Union officials say the technology issue is a fig leaf for the shippers to outsource new work to non-union workers. “This is not about technology - this is about busting the union,” said Steve Stallone, a spokesman for the union.

The shippers have guaranteed that every current union member will have a job for life. But the union is fighting for more: to preserve future jobs and to retain significant control over the supply of labor on the docks.

Is technology a new issue for docworkers?
Not at all. The two sides have recognized the impact of technology since the 1950s, when increased mechanization allowed bulk items like grain to be loaded directly out of storage silos rather than by hand. In the early 1960s a landmark agreement on “mechanization and modernization” was signed that helped pave the way for along period of relative labor peace.

In the most recent contracts, signed in 1996 and 1999, the two sides agreed to work together on new technology and “there has been significant introduction of automation on the waterfront,” said David Olson, a professor of political science at the University of Washington.

But with trans-Pacific trade expected to double over the next 10 years, and most West Coast ports unable to expand physically, more automation will be needed so ships can minimize the amount of time spent in port.

What is the economic impact of the shutdown?
A study commissioned by the maritime association put the impact at $934 million a day at the beginning, although the costs rise quickly. As the port shutdown goes on it will begin to have ripple effects on factories and other “just-in-time” facilities that are unable to obtain needed parts and supplies. Within 10 days, a work stoppage could cost the economy more than $19 billion, and after 20 days the costs rises to $48.6 million according to the study by Martin Associates, a maritime consulting firm.

“Those figures may be a bit high,” said Keitaro Matsuda, senior economist at Union Bank of California. But he agrees that a long shutdown could have a serious impact, particularly on holiday retail sales.

“Consumer spending has been the only thing keeping our economy growing, so if that weakens for any reason that would be a negative for the whole economy,” he said.

The work stoppage also could have a “serious backwards ripple effect on the Asian economy,” said John Martin, president of the consulting firm.

What industries are most affected?

Manufacturing, retailing and agriculture. Already an auto manufacturing plant in Fremont, Calif., has shut down production, potentially idling 5,000 workers. The so-called NUMMI plant, a joint venture of General Motors and Toyota, makes the Chevrolet Prizm, Toyota Corolla and Toyota Tacoma pickup trucks.

Even though businesses had at least three months to prepare for the shutdown, the fragile economic environment may have made some retailers unable or unwilling to accumulate heavy inventories. In addition, much of the affected cargo is seasonal, and some is perishable.

Reuters contributed to this story.