ILA readiness to strike highest since 2012

Unstoppable force meets immovable object

The 2012 contract negotiations between the ILA and the United States Maritime Alliance (USMX), the largest association of employers at East and Gulf Coast ports, had a contentious start.

Ahead of the Oct. 1 expiration date, talks between the ILA and USMX began in late August for what was to be a three-day meeting. But less than 30 minutes into the session, the first round of negotiations came to an abrupt end.

Then-ILA President of the Atlantic Coast District, Dennis A. Daggett, cited USMX’s “take it or leave it” attitude in the negotiations as the cause for the ILA’s sudden departure. James Capo, USMX’s chairman and CEO, was quick to point fingers in the other direction, stating that the USMX was “disappointed with the uncompromising stand the ILA leadership is taking in the negotiations.”

In addition to the perennial problem of wages, at issue in this year’s negotiations were overtime payments, container royalties and — once again — the creeping threat of automation.

Container royalties came about in the 1960s as a means to compensate dockworkers for the loss of man-hours caused by containerization. Royalty funds are maintained by shipping lines and are port-specific: The amount of funding is determined by that port’s yearly growth in container tonnage.

Container royalties can subsidize ILA members’ benefits like the guaranteed annual income (GAI), but they also function like year-end bonuses — though the ILA resents this comparison. Workers can get a check worth anywhere from a couple thousand to tens of thousands of dollars, depending on the growth in containerized volume and the number of union workers at the port. 

The USMX was reeling from the growth in royalty costs since the last master contract from 2009, in which caps on container royalty contributions were removed entirely. With no upper limit on how much carriers were obligated to pay, and considering the growth in containerized volume over that three-year period, it is little wonder that the USMX wanted to freeze those royalties at current levels and terminate them for future hires.

Capo also took issue with what he saw as the ILA’s abuse of the existing overtime system, which resulted in “millions of dollars being paid for time not worked.” This issue, coupled with other “inefficiencies” stemming from the ILA’s “archaic work rules and manning practices,” was viewed as having driven up prices at USMX ports. The worry was therefore that shippers would direct their freight to other, less costly ports.

After negotiations broke down in August, the ILA appeared poised to strike once the deadline was reached. ILA President Harold J. Daggett, father of now-ILA Executive Vice President Dennis A. Daggett, remarked that “it looks like we’re going to have a strike” come Oct. 1. Despite the ILA’s walking away from the table, Harold Daggett requested that the USMX provide a final offer, which he could take to the ILA’s 200-member wage scale committee. But, he said, “I expect they’ll reject it and vote to go on strike.”

Of course, such a strike would have caused shippers to reroute their volumes to the West Coast as quickly as they could. The solidarity of labor unions, however, made this alternative unlikely.

The pincer movement

The ILWU maintains a master contract with the Pacific Maritime Association (PMA), which represents employers at West Coast ports. By the time trouble was brewing with the ILA, ILWU members had been working without a contract for over two years.

For the ILWU to work without a valid master contract in place is unusual but not unprecedented. In 2022, when its contract with the PMA last expired, the ILWU continued working for over a year before a new contract was signed. This strategy is double-edged: It gives unions the flexibility to strike without warning, thus giving them leverage in the negotiation process.

But it casts an aura of uncertainty for shippers, who are justifiably spooked by the potential for an unforeseen labor stoppage. Shippers generally elect to divert their cargo to other ports, costing both the unions and employers market share — at which point it becomes a matter of who will cry uncle first.

In 2012, it was not the union’s dockworkers but clerical workers who were the main focus of negotiations. ILWU clerical workers voiced concerns about their jobs going to outsourced rather than union labor upon their retirement, fears which the PMA dismissed. The situation came to a head in late November, when roughly 70 ILWU clerical workers went on strike at the ports of Los Angeles and Long Beach. 

Although the dockworkers negotiate their contracts separately from the clerical workers, they nevertheless honored the latter’s picket lines. The strike lasted eight days, shutting down half of the terminals at the Port of Long Beach and six out of seven at the Port of Los Angeles. A liberal estimate of the losses incurred by the strike was set at $8 billion, or $1 billion per day — given that the two ports account for nearly half of the U.S.’s total imports, this figure is not as absurd as it might seem.

Despite the strike ending on Dec. 4, a new contract between the ILWU and PMA was not signed until late February 2013; the matter was still a live wire earlier that month, when ILWU clerical workers rejected the tentative contract put before them.

With the threat of a second strike looming over West Coast ports, East Coast shippers had virtually no recourse to escape potential actions by the ILA.

Here, however, the ILA was forbearing — from its undeniable position of strength, it could certainly afford to be. While the talks on Aug. 22 ended on a sour note, federal mediators urged the ILA and the USMX to return to negotiations in mid-September — two weeks before the contract was set to expire. Though not much progress came from these talks, the two parties did agree to a three-month extension of the bargaining process, kicking the can for a potential strike down to the year’s end.

Talks picked up again in mid-December, with the deadline once more approaching rapidly. But as happened earlier in the year, negotiations broke down almost as soon as they began. A federal mediator recommended a further 30-day extension that the ILA rejected, as the ILA vowed to strike with the full support of its membership.

Yet a last-ditch effort by the mediator — one day before the strike was to begin — yielded a ceasefire between the two parties that extended into February. A contract was agreed upon by Feb. 2, though it controversially restored the cap on container royalty funds that the ILA had claimed was non-negotiable.

Many ILA members were also concerned that the employer contributions required by the final agreement were insufficient to restore pension and benefit funds that had been decimated by the lingering aftermath of the Great Recession.

But the ILA did win on a few key points, most notably on automation. In effect, any workers displaced by technological advancements would be guaranteed other jobs within the ILA’s purview. This purview was itself broadened by the contract. Climbing through the ranks of the ILA’s tiered pay system was also made a shorter process, down from nine years’ requisite experience to only six.

This contract was achieved, in part, by the possibility of a coast-to-coast strike action by both the ILA and ILWU. The situation is different now: As mentioned earlier, the ILWU has a master contract in place that will not expire until 2028.

Even so, ILWU leadership has voiced its support for the ILA in the latter’s ongoing negotiations: “As you continue negotiating and move close to the expiration of your contract,” wrote ILWU International President Willie Adams, “the ILWU stands in solidarity with the ILA for a fair contract that respects dockworkers and protects our jurisdiction.

”From coast to coast, the ILWU and the ILA remain militant and resolute in our fight against automation. We will not settle for a substandard deal that does not adequately address our concerns about the future of our workplace and the safety of our members.”

ILA President Harold Daggett responded to the ILWU’s show of unity in kind: “Knowing we have this support from the ILWU arms us with a powerful weapon to fight the intentions of so many greedy shippers, who put profits over people, and fail to recognize the contributions your members and mine have made to this industry.”