Second week of port closures to strike economy harder

By Simon Avery
Monday October 07, 2002


LOS ANGELES – The second week in the West Coast ports shutdown will cause a noticeable increase in plant closings, job losses and financial market turmoil, said analysts and businesses increasingly skeptical of an immediate resolution. 

Businesses that anticipated disruption and padded their operations with extra inventory are rapidly depleting supplies, while exporters of perishables have stretched their storage facilities to the limit. 

“It’s like draining a swamp. You start seeing all kinds of ugly creatures,” said Steven Cohen, a University of California, Berkeley professor of regional planning. 

In less than two weeks from now, manufacturing plants will be grinding to a halt all over the country, farmers will be up in arms, and Asian equity and currency markets could face a full blown crisis, he said. 

Already, storage facilities at beef, pork and poultry processing facilities across the country are full, crammed with produce that cannot be exported. With nowhere to move their product, plant operators will begin shutting down Monday and layoffs will follow almost immediately, said Mary Kay Thatcher, public policy director of the American Farm Bureau Federation in Washington, D.C. 

Between 20 percent and 30 percent of all U.S. agriculture products are exported, and a third of it goes to the Pacific rim, according to the Federation. 

Negotiators for the Pacific Maritime Association, which represents shipping lines and terminal operators, and the International Longshore and Warehouse Union entered a fourth day of talks Sunday. 

They were meeting in separate rooms in a hotel in San Francisco’s Chinatown, with a federal mediator shuttling between them. 

“I think this will be a very long day, and a significant day,” said PMA spokesman Steve Sugerman. 

He said the PMA would keep pushing for an extension of the old contract, which specifically forbids the kind of work slowdowns the PMA said prompted its lockout. The union has refused, holding out for a new three-year contract that would give them control over any jobs that come with new technology. 

Implementing labor-saving technology like electronic tracking devices puts only a small number of jobs at risk in the short term, but future jobs are at stake, as well as control of the flow of information at the ports. 

The PMA has always given the ILWU jurisdiction over new technology in the past, union negotiator Joseph Wenzl said Sunday. 

“The union feels we have offered a proposal that meets the employer in the middle,” he said. 

Both sides have agreed to resume shipping essential items to Alaska and Hawaii. They have also moved some cargo for the U.S. military, but there will be no more exceptions to the shutdown, Sugerman said. 

Shipping companies and terminal operators locked out 10,500 dockworkers Sept. 29. The number of cargo vessels stranded at the docks or backing up at anchor points has risen to about 200, with dozens more still en route from Asian ports. 

A growing number of industry groups are calling for White House intervention to reopen the ports, including the enactment of the Taft-Hartley Act, which would force an 80-day cooling off period. 

Wenzl said the PMA is behind efforts to bring the White House into the talks, a strategy that has made the negotiations more difficult. 

“Their plan has been to use their contacts in Washington, D.C., to put pressure on the union. That’s not collective bargaining.” 

President Bush has withheld direct comment on the situation. He had no plans to intervene on Sunday, said a U.S. Labor Department official, speaking on condition of anonymity. 

For Steve Dunn, founder and president of Munchkin Inc., an importer of infant goods, an end to the port shutdown can’t come soon enough. 

Dunn already sent home nearly a fourth of his staff and expects to close down entirely in two weeks if the ports aren’t reopened. 

The Van Nuys, Calif.-based company imports 95 percent of its goods from China, including infant utensils, spill-proof cups and rubber ducks. One-third of its current inventory is stranded on the Pacific. 

Munchkin will use air freight this week to avoid short-shipping key customers, but this costs too much to continue for more than a few days, Dunn said. 

Like many observers, he expects President Bush to refrain from ordering an end to the lockout until the crises worsens. “If there’s more of a crisis, then he’s more of a savior,” Dunn said. 

Dockworkers and their employers, meanwhile, have the financial resources to continue their five-month labor dispute, said Cohen, who studied the economic impact of a port closure for the shippers’ association. 

“Both sides can sit there absorbing punishments,” he said. “They can easily take a month before they die. We can’t.”