LOS ANGELES — The race to save back-to-school imports is likely to come down to a photo finish this weekend.
With less than a week to go before the labor contract between the International Longshore and Warehouse Union and the shipping companies expires, vendors and retailers expect to squeeze the last of b-t-s goods into ports and airports before the July 1 cutoff.
These efforts to hustle goods into the country early represent basic contingency plans only — retailers and vendors are gambling that history and the Bush administration are on their side, and that a crippling strike or union lockout won’t occur.
Accordingly, industry players have brought in enough inventory to tide themselves through a few bumpy weeks of labor slowdowns and disruptions, but there’s little protection if a dispute extends beyond mid-July. Although the labor contract is renegotiated every three years and is often beset with work slowdowns, a strike hasn’t occurred since 1971.
Still, anxiety permeates the industry. The stakes are high, with 52 percent of the nation’s apparel received through West Coast ports, and the two sides are said to be ready for a bitter fight.
Retail’s big guns — including J.C. Penney, Kohl’s, Target and Wal-Mart — opted to reassure investors on a conference call Monday held by Salomon Smith Barney.
SSB analysts outlined retailers’ postures, ranging from Penney’s confidence that should the ILWU strike, President Bush would quash it with the Taft-Hartley Act, which calls for a mandatory 90-day cooling-off period.
Accordingly, Penney’s “has not prepared the depth of contingency plan as other retailers,” noted Salomon Smith Barney analyst Deborah Weinswig.
She said Kohl’s was “in the best shape.”
“They’re going to be set for back-to-school by the middle of July,” she said. “That’s their competitive advantage — set it out on the floor early” and then go back in for the reorder business.
Target, which brings 15 to 20 percent of its merchandise through the port of Los Angeles, accelerated its deliveries. Wal-Mart, which uses seven ports to bring goods into the U.S., has stockpiled three to five weeks worth of inventory.
“They’re always a few years ahead in terms of planning,” said Weinswig. “But they also believe that the way this is going to get worked out is on the political side.”
The West Coast Waterfront Coalition, which represents Wal-Mart, Target, Gap and other retail giants, has been aggressively lobbying the White House over the past several weeks, including meeting with members of Congress, the Commerce Department and the Maritime Administration.
Despite the commotion, the Pacific Maritime Association, which represents shipping companies, and the ILWU are keeping mum. A media blackout has been in place since negotiations started May 13, but sources said talks have been progressing slowly. Sources also said the ILWU has issued strike assignments, although that’s standard protocol for some local chapters. Historically, the union has worked past its contract deadlines.
Under debate is the PMA’s desire to implement electronic data interchange to document shipments, and use nonunion workers to manage the process. In its press statements, PMA cited increasing congestion and inefficiency at West Coast ports as reasons to automate. The union views a switch to nonmember clerks as management’s attempt to weaken union ranks and replace high-wage union jobs.
While retailers have been lobbying on a national level, vendors have been making tough calls about how to get goods in. Mostly, they’re nervously eyeing the space on planes, knowing that if a strike happens, that will be the key issue — not cost.
“I’m going to be delivering, no matter what,” said Alden Halpern, chief executive officer of denim label Tyte. “I’m just waiting until the last second to see. Because you air goods in and say goodbye to your profits.”
Seattle-based Tommy Bahama decided a month ago to bite that bullet, said import manager Lynne Desplanches.
“We decided at great expense that we would air-freight our commitments in,” she said, estimating the cost of transporting garments soared from 40 cents per piece to $2.25 per piece.””