Labor Strife That Could Dock U.S. Economy - Pacific Standard

Labor Strife That Could Dock U.S. Economy

International trade bottlenecks at ports, and the specter of a strike sends shivers through the nation's body economic.
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In 2001, market manipulation by electricity traders provoked a California fiscal crisis. This March, risk taking by mortgage-backed securities investors threatened the U.S. financial system.

Now, a University of California, Berkeley economist adds to the list of faceless functionaries with their hands on levers that, if pulled in the right combination, can bring down the economy. Would you believe ... blue-collar dock workers?

Members of the International Longshore and Warehouse Union, began negotiations for a new six-year unified West Coast contract with shippers in March. If talks stutter, a ports shutdown could threaten the economy, said Stephen Cohen, co-director of the Berkeley Roundtable on the International Economy.

A stoppage "carries the very real risk of triggering a sudden crisis in international financial markets," Cohen wrote in a paper published in 2002. That summer, talks dissolved into a 10-day lockout that Cohen said panicked White House
economic advisers.

In 2008, "I don't think the significance is any different," Cohen said. "At some point you start running out of parts, and the factory stops, and the factory that relies on that factory for components stops, and you have a chain reaction that's really rather a nightmare.

"This is not just another industry like aluminum or tires, or even automobiles. It's more like utilities. This affects the whole economy very broadly and very quickly."

The ILWU, which represents 25,000 dockworkers at 29 Pacific coast ports, is simultaneously the most politically radical, materially comfortable and economically significant group of U.S. workers. Full-time portside equipment operators can earn salaries into six figures, and union-hall conversation can drift into splitting hairs over early-20th-century Russian history. Most significantly, their ability to stop goods from entering or leaving the country through the Pacific makes them the blue-collar equivalent of Tom Wolfe's masters of the universe.

The union's industrial might has its roots in a 1930s San Francisco general strike that created one of the most politically radical, democratically run and impenetrably unified American labor syndicates.

Representatives of both the ILWU and the Pacific Maritime Association, a negotiating entity representing shipping companies, said in interviews that talks to renew the contract that expires July 1 will be more amicable than they were in 2002.

But outward signs point toward the potential for a conflict that could add to the woes of a U.S. economy suffering from a weak dollar and imploded mortgage markets.

The union and shippers are already butting heads over ILWU plans to shut down all West Coast ports May 1 in protest against the wars in Iraq and Afghanistan. The idea was to exploit a work rule allowing the union to request a day off for a local shop meeting, by requesting simultaneous days off at every port. The shippers refused. And now the ILWU is poised to conduct the equivalent of a one-day walkout.

"For us, folks aren't going to be working on May 1. Everybody here's clear about that," said ILWU Communications Director Craig Merrilees.

The significance of the May Day antiwar stoppage is small when compared to the threat of a longer shutdown. But this spring's wrangling, which pits union jobs against shippers' profits, might portend the sort of confrontation Cohen fears.

Shippers wish to streamline operations — possibly threatening jobs. Shippers have also shown interest in bypassing the ILWU by moving port-related facilities inland, where cargo might be unloaded and routed with cheaper non-union labor.

Though the West Coast is the American way station for high-tech goods to and from Asia, the ports themselves are relatively backward from a technical standpoint. The shipping newspaper Lloyds List reports that West Coast dockside productivity is dismal compared to the rest of the world; moves per crane average less than 30 per hour in Los Angeles and
Long Beach, compared with more than 40 at more automated facilities.

"We're looking for an agreement that allows us to manage record cargo volumes as efficiently as possible so that we can get the goods where they need to be as quickly as possible at the lowest cost to customers," PMA spokesman Steve Getzug told Miller-McCune.com.

In a possible echo of the 2002 talk's head butting over the use of technology, workers in Vancouver, Canada's independent ILWU affiliate this February stopped work during two shifts as a show of strength during negotiations over a three-year labor agreement. At issue, according to the Journal of Commerce: whether companies could dispatch work assignments
over the Internet rather than at union hiring halls.

"The hiring hall is an important institution that provides a center and focus for the union that is part of the culture and tradition members fought and died for, and it's one of the few democratic and fair mechanisms workers have to allocate work on an equal basis," said Merrilees, referring to the Vancouver stoppage.

At least as important as technology is an ongoing turf battle between the union and shippers. Employers have shown an interest in moving work away from the docks, which the ILWU dominates. The union, meanwhile, would benefit by
expanding into areas of the supply chain currently controlled by employers.

The modern, just-in-time global economy is often analyzed as a threat to workers because fluid international markets mean that jobs can be outsourced anywhere. Overlooked is the fact that when companies depend upon international logistics,
they are at the mercy of workers who run the cargo network.

"It's someplace you have great power," notes Ken Jacobs, chair of the UC Berkeley Labor Center.

So negotiators for both sides will be mindful of how far the union might extend its influence into companies' distribution networks. Extended far enough, this logic includes the idea of inking high-wage-and-benefit contracts for the workers stocking shelves at non-union Wal-Mart.

"I think the real challenge for the ILWU is following the work," Jacobs said. "Unions such as the ILWU and the Teamsters really are looking at the supply chain in terms of organizing."

Shippers, manufacturers and retailers, meanwhile, are motivated to push in the opposite direction, moving work away from jobsites the union already controls.

ILWU organizing director Peter Olney, who previously served as associate director of UC Berkeley's Institute for Labor & Employment, said talks will focus in part on moves by shipping and other companies to move cargo operations away
from the docks.

Olney describes proposals on the drawing board for a Southern California Logistics Airport in Victorville, Calif., which would place air, rail and other unloading facilities 99 miles from the Port of Los Angeles. Such a facility threatens to
move work such as freight container dispatching and cross-country train loading away from the docks, and out of ILWU's grasp.

"There's knowledge-based technology work, but there's also good old-fashioned muscling and hustling of cargo," Olney said.

The last time West Coast shippers and workers faced off over issues as weighty as these, the showdown gave economists nightmares.

In 2002, when the PMA attempted to break the union with a lockout, "they kept asking, ‘How much is it costing the economy per day?'" Cohen recalled. "The first day doesn't cost much. Neither does the third or fourth. But the 30th day: My God! It's a grand snowball, and at some point, the snowball becomes an avalanche."

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