Port Workers' Threat of East Coast Shutdown Knocks Owners Off Stance

In what's being seen as at a least a temporary victory for organized labor, an announced agreement on Friday between port workers and business owners signals that the union's determination to organize a major strike in major East Coast ports was enough to force concessions.

A workers strike had been planned for this Sunday but the agreement to extend contract negotiations has now put those plans on hold.

After nine months of "fitful" contract negotiations between the International Longshoremen's Association and the United States Maritime Alliance (USMX), an association of shipping companies and terminal owners, talks broke off on Dec. 18 after deadlocking over container royalties, which are used to augment worker wages and benefits.

Dorothy Sue Cobble, a labor relations professor at Rutgers University, says that the USMX's push to cut labor costs was an example of "increased assertiveness among employers at a time when unemployment remains high and many unions are struggling."

"A lot of employers feel it's a good time to demand and receive givebacks," she said.

But, it seems, the threat of a strike and last minute third-party mediation, were enough to push the owners off their hardened stance.

According to a Friday memo put forth by the Federal Mediation & Conciliation Service, "the container royalty payment issue has been agreed upon in principle by the parties," while all remaining issues shall be negotiated over the 30 day extension (i.e., until midnight, January 28, 2013).

At the behest of a federal mediator, the two sides resumed talks this week in an effort to reach a deal before the deadline of 12:01 a.m. Sunday, the New York Times reports. If the talks had failed, ports up and down the coast would have closed immediately to cargo ships, triggering the first East Coast strike since 1977.

The threats by some 14,500 longshoremen to shut down ports from Boston to Miami are seemingly being answered, but whether their complaints will be fully recognized or whether the strike will proceed in thirty days remains to be seen.

The FMCS memo continues:

Given that negotiations will be continuing and consistent with the Agency's commitment of confidentiality to the parties, FMCS shall not disclose the substance of the container royalty payment agreement.

What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement. While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period.

Think Progress's Pat Garofalo, enumerated on the important details of the dispute:

1) Management wants to cut workers' pay. The largest sticking point in the negotiations between the port workers and a coalition of companies known as the United States Maritime Alliance (USMX) is a payment to workers for each container they unload. Instituted in the 1960s, the payments are meant as compensation for the mechanization of America's ports, which allows one worker today to do what used to take three workers. As the New York Times explained, "The companies want to freeze those payments for current longshoremen and eliminate them for future hires." The companies also want to cut future raises for workers to below the rate of inflation.

2) Port workers are highly skilled. The companies claim that workers are paid too much, rendering east coast ports uncompetitive. But the workers--whose numbers have dropped from 35,000 to 3,500 due to automation--are highly trained and "cannot be easily replaced." They also do not work consistent hours. According to the union, "longshore labor cost amounts to between 3% and 4% of the shipper's total cost."

3) The economic impact could be significant...or not. As Brad Plumer explained in the Washington Post, it's hard to figure out the economic impact of port closures. Estimates place the impact of a 2002 West Coast port closure at $1 billion per day, but the cost may have actually been far less than that.

4) Businesses are using political pressure to entice workers to cave. Business leaders and right-wing governors are urging the White House to invoke special powers to end the strike, should workers walk out. President Obama, for his part, urged the two sides to forge an agreement "as quickly as possible."

Nearly half of ocean-going shipping containers coming to and from the US go through the 14 ports involved, including Boston; New York-New Jersey; Baltimore; Charleston, S.C.; Savannah, Ga.; Miami; and Houston. Last year these points handled 110 million tons of cargo last year.

According to a strike-preparation memo (PDF) put forth by the International Longshoremen's Association, not all cargo would be affected. Workers will still handle U.S. mail, military cargo, perishable goods such as fruits and vegetables, as well as non-containerized goods such as cars, wood products, and steel.

East Coast and West Coast dockworkers have separate unions; the clerical branch of the West Coast association, the International Longshore and Warehouse Union, held an eight-day strike earlier this month at the nation's two busiest ports, Los Angeles and Long Beach, Calif.