LOS ANGELES — Local manufacturers, fearful it’s only a matter of days before buyers cancel orders, said Thursday that they can’t wait another week for the ILWU and PMA to take another baby step forward.
This story first appeared in the October 4, 2002 issue of WWD. Subscribe Today.
Many had been counting on the Bush administration to swiftly invoke Taft-Hartley, a hope that’s dying on the vine as the port shutdown hits the week mark today.
In Washington, importers were buoyed Thursday by news that the warring parties were talking again. However, at press time there was no movement toward reopening the 29 ports and businesses began wondering why President Bush hasn’t done more to help.
It’s been six days since the shippers’ Pacific Maritime Association locked out 10,500 International Longshore & Warehouse Union workers at all West Coast ports. Reports of U.S. businesses being harmed by not getting their cargo off the docks and from ships stacked up offshore are increasing by the day.
Bush’s press secretary, Ari Fleischer, said “The President is routinely informed about the status and it is an ongoing cause of concern,” but declined to comment on whether Bush was set to intervene.
“What can he possibly be waiting for?” asked Mitchell Quaranta, president of $120 million sportswear firm Swat-Fame. “This is not a time for politics. Get them working. Get them talking.”
Quaranta, who has 100,000 units stalled off the coast, said he will pull another 100,000 units of denim off a ship scheduled to sail for Los Angeles on Monday. Air freight, currently priced $1.80 per pound, will chop between 10 and 15 percent off his margins, he estimated.
“I’m very disappointed the government is not getting involved,” said Self Esteem president Richard Clareman, who has about 10 percent of October goods stranded.
He was more concerned about fabric suppliers, some of whom are still bringing in goods that Self Esteem plans to cut for holiday orders.
“The wholesalers are quite concerned,” said Lucinda Sapienza, who consults to retailers and vendors. “The two scariest things they’ve heard are ‘Lowered fourth-quarter expectations’ and ‘West Coast Dock Strike.’ With those hitting at the same time, [order] cancellations become a big concern.”
Sapienza said the West Coast’s small and mid-sized vendors are particularly vulnerable.
“The bigger you are, the more clout you have with shipping companies when it comes time to clean up the backlog of goods,” Sapienza noted. “If you’re a small guy without full containers out there, you’re probably loosing a lot of sleep right now.”
Rampage ceo Larry Hansel, who has $1 million worth of goods aging in the harbor, called the situation a “nightmare.”
“The biggest danger is what this is going to do the market,” he said. “There will be short-term desperation for goods and then there will be a huge oversupply and cancellations.”
Meanwhile, the Pacific Marine Exchange, which monitors port traffic, prepared itself for more stranded ships by seeking Coast Guard approval to chart 50 more anchorages to the Long Beach-Los Angeles port complex. More than 90 ships are currently anchored there, said Marine Exchange deputy executive director Richard McKenna.
Rick Darling, president of New York-based Li & Fung USA, said the sourcing powerhouse has some goods sitting at the harbor. “Fortunately, we don’t have a lot,” he said. “We began planning for this back in May and June.”
Still, given that early October is a key period for shipping goods for the holiday retail season — and particularly the critical Thanksgiving kick-off weekend — Darling said the strike has strong potential to crimp holiday selling.
“Disruption is happening already,” he said. “If this goes on for another four or five days, it could really have a major effect on the holiday season.”
Darling noted that most apparel sold over the Thanksgiving weekend typically has to be in the U.S. by Oct. 15 to 30. Some Li & Fung customers have begun to ship goods by air freight, but those who run on a tight margin are still waiting out the strike, Darling added.
Besides holding up the goods currently in West Coast ports and on ships idling outside harbors, the strike means that ships that are expected to return to Asia will not be back on time, and that goods currently being loaded at Asian ports aren’t being shipped either. Darling said he estimates that even if the strike ends within a week, “it could take two to three months to straighten everything out.”
The absence of the President using his bully pulpit to urge both sides along, “does defy the imagination,” said Robin Lanier, executive director of the West Coast Waterfront Coalition, whose members represent many industries, including retailers. “He could be using a great deal more leadership in showing the nation how bad the situation is.”
White House officials said they continue to monitor the situation and again encouraged both sides to settle their differences through a federal mediator. The ILWU and the PMA on Thursday met with a mediator for the first time since the lockout. Talks were focused on how the impact of installing technology, such as electronic bar code readers, would affect the union workforce.
At press time, there was no indication the parties agreed to extend the expired ILWU contract while mediation continues, thus paving the way for ports to reopen. At Bush’s disposal is the Taft-Hartley Act, which would allow him to order the ILWU back to work for an 80-day cooling-off period. Lanier said businesses, including retailers, have mixed opinions about whether the act should be invoked.
Under a cooling-off period, cargo could begin flowing, however the ILWU could be irked by presidential intervention in a labor matter and resume work slowdowns, Lanier said. Cargo processing at times inched along during September after the union refused to keep renewing its expired contract after months of contract disputes with the PMA.
It’s estimated that the port closure is costing the U.S. economy about $1 billion a day in unsold merchandise and idle factories unable to use imported parts. For every day the ports are closed there is another week’s delay in cargo arriving and being processed, Lanier estimated.
Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, said, “It’s a crisis now and it has the potential of becoming a real bad crisis in just two or three days from now.”