PMA says it offered the ILWU a 5-year contract with 3% annual wage increases, and negotiations will continue, but a lockout could occur in 5-10 days.
The chief negotiator for the Pacific Maritime Association said employers on Tuesday made a contract offer to the International Longshore and Warehouse Union that he hopes can help avert a “coastwide meltdown” that he says is just a week or two away.
Jim McKenna, the president and chief executive officer, said that with congestion at terminals increasing and low productivity there could be a gridlock at ports and a lockout in five to 10 days.
“We are going to continue to monitor the network, the system, the vessels and at such point in time that we reach a gridlock situation with any of those three entities. I think our hands will be tied with what we do next. The last thing we want after nine months is to close this place down,” he said.
McKenna’s remarks came during a press conference Wednesday afternoon, the first the PMA has held since it began negotiations with the ILWU on May 12, 2014. The PMA and ILWU are trying to negotiate a new contract to replace a pact that expired on July 1 of last year. The ILWU represents about 20,000 workers at 29 Weat Coast Ports along the West Coast of the United States.
The ILWU issued a statement after the press conference in which it said it “is trying to keep dock employers at the negotiating table to finish an agreement that is ‘extremely close.’”
“We’re this close,” said ILWU President Robert McEllrath, who held up two fingers in a gesture indicating how close the parties are to reaching an agreement. “We’ve dropped almost all of our remaining issues to help get this settled — and the few issues that remain can be easily resolved.”
McKenna said the PMA is proposing a “comprehensive and generous” five year contract and that “we are optimistic that we will get to some sort of sane conclusion here and that this thing will be settled amicably.” In response to a question if the contract was a last, best and final offer, he only said it was a “best offer.” He later said the PMA has concluded its latest offer is “as far as it can go” but McKenna stopped short of calling it management’s final offer, saying that negotiations will continue with the union.
He said PMA has offered to raise the wages of ILWU workers by three percent over each of the next five years and raise the base rate for workers form $35.68 per hour to $40.68 per hour. He noted that ILWU salaries are subject to “multipliers” where workers make more for having certain skills, working night shifts or overtime. McKenna said full time longshoremen make an average of $147,000 per year. The registered workforce will also be guaranteed 40 hours of work.
He said the PMA is also offering to continue the ILWU’s fully-paid health care program that costs employers $35,000 per year, which is in the top one percent in the nation. With a five year contract, he said the Affordable Care Act’s so-called “Cadillac tax” on high benefit health care plan would only come into effect in the last year and have a minimal impact in the next contract.
He said the PMA has offered to increase the ILWU pension 11 percent to $88,800 per year.
McKenna said there are also work rule and jurisdiction agreements, including one that meets the ILWU’s demand to maintain and repair truck chassis.
He said the union has recently made a demand that would allow it to unilaterally remove arbitrators who rule against them.
Repeating that the union is engaging in work slowdowns and refusing to dispatch qualified workers such as yard crane operators, aggravating port congestion, McKenna said the union “has to decide how much longer we are going to pay longshore workers to work slowly. These slowdowns are having the same result as a strike, except the workers are still getting a paycheck. These slowdowns need to stop. The terminals cannot withstand anymore. We are truly close to gridlock.”
“The system can only take so much,” he added. “At some point the system will collapse under its own weight.”
Kip Louttit, executive director of the Marine Exchange of Southern California said that on Thursday morning there were 24 ships at anchor outside the Ports of Los Angeles and Long Beach, including 18 containerships, and McKenna said there were around another two dozen either at anchorage or offshore between the ports of Oakland, Tacoma and Seattle.
“The problem is, with the productivity we are seeing today, a ship that normally takes 4 days to work is now taking 15, so we are not taking them off dock, they are not staying in rotation, and they are just piling up on the West Coast and every day this goes on, more vessels accumulate,” said McKenna.
He said while terminals are not working vessels at night, they are hiring longshoremen to clear container yards and servicing trucks to get containers out of the terminals to keep them fluid.
“If you just keep unloading ships into your yard and you are not unable to evacuate your yard, you are bringing yourself to gridlock,” Mckenna explained. “You have to manage the flow from the ship to the yard to out the gate. At nighttime we are focused on grooming the yards, clearing the yards and whatever we need to do to keep it fluid.”
McKenna declined to provide details on the tentative chassis agreement that the PMA said it reached with the ILWU last month, but did say that neither automation nor converting casual workers into permanent longshoremen have been major issues in the talks.
McKenna said, at this point in the negotiations, there are a few
issues on which the two sides are far apart and other issues “we are
just dealing with. It’s probably 50-50 on the six that are open.”
Some shippers are diverting cargo to Canadian ports, said McKenna, and he said West Coast volume was down 6 percent in December, but did not have details on how much cargo is being moved to ports in Canada, Mexico or the U.S. East Coast.
“Long term, these slowdowns undermine the credibility of West Coast ports in an environment that is going to become more competitive with the expansion of the Panama Canal and the increase in trade with the East Coast via the Panama Canal,” said Mckenna. “A lot is at stake here — millions of jobs, and trillions of economic impact hanging in the balance. It’s time to conclude these negotiations and get our ports working again.”
The Retail Industry Leaders Association issued a statement Thursday saying that a closure of ports would have a severe impact on businesses and the U.S. economic recovery. “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbor waiting for manufacturers to build products and retailers to stock shelves,” Kelly Kolb, vice president for government affairs, said in the statement.
“The slowdown is already making life difficult, but a shutdown could derail the economy completely,” said Kolb. “For retailers specifically, a shutdown will have dire consequences for those dependent on spring inventory demand.”
A 10-day lockout in 2002 was estimated to have cost the U.S. economy about $1 billion per day.
“A port shutdown of even a short duration could de-rail economic growth and cause long-lasting damage and job losses across the country,” Kolb said. “There needs to be a greater urgency at the White House, before it’s too late.”
The Port of Oakland issued a statement on Wednesday saying “The West Coast waterfront labor impasse needs to be settled…quickly. Importers and exporters are suffering significant cargo delays. Central Valley farmers can’t ship their produce. Small business owners can’t get goods to put on the shelf. Harbor truckers can’t do their jobs. Everyone is suffering. If the situation, worsens…if West Coast ports shut down, the U.S. economy and the global supply chain will be jeopardized. In the San Francisco Bay Area, 73,000 jobs that depend on the Port of Oakland will be at risk. The impasse is good for no one. It is time to reach agreement on a new contract and put the disruptions and delays behind us.”
The ILWU said of the potential lockout “This is the second time in recent memory that the
employers have threatened to close ports at the final stages of
negotiations. The union has not engaged in a port strike over the coast
longshore contract since 1971, 44 years ago.”
“Closing the ports
at this point would be reckless and irresponsible,” said McEllrath. The
ILWU urged a federal mediator who joined the talks last month “to keep both parties at the talks until
the nearly-finished agreement is concluded.”
If the PMA closes the ports,
“the public will suffer and corporate greed will prevail,” said
McEllrath.
The union said major powers on the employer side are multi-national corporations who are foreign-owned.
“These foreign-owned companies make billions of dollars and pay their executives millions to do their bidding,” McEllrath added.
West Coast port labor talks reach impasse, lockout possible
