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L.A. Ports Edge Toward Crisis

The ports of Los Angeles and Long Beach, the biggest port complex in the U.S., face a possible shutdown after negotiations between a clerical union and shipping companies reached an impasse Monday morning.

LOS ANGELES — The ports of Los Angeles and Long Beach, the biggest port complex in the U.S., face a possible shutdown after negotiations between a clerical union and shipping companies reached an impasse Monday morning.

This story first appeared in the July 17, 2007 issue of WWD.  Subscribe Today.

A work stoppage could create a major headache for the fashion industry because of delays in fall and holiday apparel shipments.

“This [possible strike] is a big deal for several reasons, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “One is that if there is a work stoppage, it is coming at the start of the peak season. If you have something on a ship headed this way, you are starting to wring your hands and tear out your hair. Obviously, there are ripple effects across the country and it will cause a lot of distortions for our transportation system.”

The Office Clerical Unit of Local 63, a division of the International Longshore and Warehouse Union, had issued a midnight strike deadline during talks with 14 employers over a new three-year contract. Negotiations continued past the deadline without a deal and without an immediate work stoppage.

A strike by the clerical union, which represents 930 workers at the ports of Los Angeles and Long Beach, would trigger a much larger action and all ILWU members would walk off their jobs in solidarity. There are about 15,000 longshoremen that operate out of the two ports, which handle an estimated 40 percent of all cargo container traffic coming into the U.S.

John Fageaux Jr., president of Local 63’s Office Clerical Union, said the union, based in San Pedro, Calif., would give its final offer to employers Monday afternoon. He described the offer as covering wages, working conditions, health benefits and hours, and insisted that the union would strike if the employers did not agree to the terms.

“If the past is any indication of what they are going to do, there is not a very good chance of them accepting it,” he said. “We have done as much as we can do and have gone as far as we can go.”

Among the main sticking points between the employers and union members, whose contract expired July 1, are wages and health benefits. Fageaux said employers wanted to change the health plan for new hires to HMO coverage for 18 months instead of the PPO coverage that current clerical union members receive at no cost to them.

But employers have argued that the wage package proposed by the union has led the talks to break down. The union reportedly has rejected an offer by the shipping companies to increase clerical union workers’ hourly wages from $37.50 to $39.20 in the next three years. Clerical workers make an estimated $78,000 annual salary before benefits.

Fageaux would not elaborate on the wage demands made by the clerical union. However, speculation is that the union has asked for $53 an hour in three years, a 40 percent hike from today’s hourly pay.

Cecilia Winter, import operations manager at Hurley International, based in Costa Mesa, Calif., said that, in the event of a strike, the company would divert its shipments to other ports such as Seattle and Oakland, Calif., or, in dire straits, resort to air freight.

The Pacific Maritime Association, which negotiates contracts with the ILWU, is not involved in the current dispute and will not be unless the ILWU walks out. If the longshoremen join a work stoppage, Steve Getzug, a spokesman for the PMA, said the association would seek to arbitrate to force them back to their jobs.

A 10-day port lockout by the shipping companies in 2002 resulted in estimated losses of $15 billion.