Bush Orders Dock Study

WASHINGTON — The Bush administration Monday took the first step toward having a judge order West Coast ports reopened, possibly by this week.<br><br>But while some cargo might soon start flowing again after more than a week of standstill, federal...

WASHINGTON — The Bush administration Monday took the first step toward having a judge order West Coast ports reopened, possibly by this week.

This story first appeared in the October 8, 2002 issue of WWD.  Subscribe Today.

But while some cargo might soon start flowing again after more than a week of standstill, federal intervention in the form of an 80-day, back-to-work, cooling-off period would be just a temporary fix.

The International Longshore and Warehouse Union and shippers’ Pacific Maritime Association still need to reach a contract agreement. Talks collapsed Sunday night, and as of Monday afternoon, both sides remained away from the bargaining table.

ILWU president James Spinosa in a statement Monday characterized the PMA’s latest five-year wage and pension proposal as “full of takeaways” and representing “a move backward” because it did not provide for wage increases in the first three years, except for some crane operators.

Countering, PMA president Joseph Miniace, in a conference call with reporters Monday, said management’s latest offer would make dock workers “the envy of every blue-collar worker” by guaranteeing that any registered union member displaced by technology would be retrained for related jobs.

After watching from the sidelines and being barraged by requests from retailers and other businesses for help, President Bush Monday took the first step to invoke the Taft-Hartley Act.

Bush signed an executive order creating a three-person panel to examine the labor dispute and its economic impact. The panel will report to the President today. If Bush determines the port shutdown is endangering “an entire industry or a substantial part thereof” — a standard expected to be easily met — then federal lawyers will ask a federal judge to order the 29 ports reopened.

The administration offered no timetable for court action or where the case will be heard. However, Labor Secretary Elaine Chao indicated the ports could open this week.

“Factory workers are being laid off because they can’t get vital parts delivered,” said Chao.

The port situation has also sent Christmas holiday inventories from the Far East into cargo limbo. “These layoffs will only increase if the ports do not reopen this week,” Chao added.

The cost of the West Coast port shutdown to the U.S. economy has been estimated to be as high as $2 billion a day. Clearing the backlog of cargo waiting on docks, in ships and redirected to Mexico, is expected to take several weeks.

“I see this as a positive development,” said Kevin Burke, president and chief executive officer with the American Apparel and Footwear Association, of Bush’s intervention. However, Burke underscored the limits of presidential action. “You can invoke Taft-Hartley once. But if things aren’t resolved in 80 days there’s nothing the administration can do.”

There’s also concern presidential intervention could anger labor. Being forced back to work might prompt longshoremen to again stage work slowdowns, although they would likely be considered illegal under terms of a judge’s order.

“When there is an injunction, the parties have an obligation to cease their use of economic weapons [such as slowdowns] and an obligation to open the ports and work under normal practices,” Labor Department solicitor Eugene Scalia, told reporters. “They also have an obligation to negotiate, but the injunction does not require them to reach an agreement.”

A cooling-off period “is not a panacea,” said Robin Lanier, executive director of the West Coast Waterfront Coalition, whose members include major retailers. “This is going to make organized labor unhappy. A contract agreement would be far more preferable than this.”

Erik Autor, vice president of international trade with the National Retail Federation, said he hopes a federal judge will ensure that dock worker productivity is monitored. However, “We’re glad the President is moving toward action and seems to be moving quickly,” Autor said.

Asked about slowdowns during a cooling-off period, the PMA’s Minace said shippers would monitor productivity and notify an arbitration judge if slowdowns are suspected. “We would be able to detect even the slightest slowdown,” he said. “We are in serious peril and this is no time to be playing games on our terminals.”

Minace said there’s a 200-vessel logjam at the ports that will take six weeks to clear.

Charles Craver, a professor of labor and employment law at George Washington University, said if forced to work, longshoremen at the onset “probably won’t load and unload ships as fast as they normally would.” However, Craver expects ports to eventually get back to normal and both sides should resolve differences. Both sides “have an ongoing relationship and they really do have to get along,” Craver said.

If a judge orders the ports reopened, this will be the first time the 1947 Taft-Hartley Act will be used in a lockout in any industry. Of 11 port strikes administered under the act, eight or nine strikes were not resolved during the 80-day cooling off period, Scalia said. He noted it is “not clear” what happens if the two parties cannot reach a resolution after 80 days. Legislation could be one avenue to force a contract resolution, he said.

Although under Taft-Hartley both sides would be required to continue negotiations with a federal mediator, vendors worried that the furor could restart after the 80-day cooling-off period. Disruptions would then hit as vendors prepared to receive spring 2003 goods.

“We could be right back where we are in 80 days,” said Jonathan Gold, director of international trade at the International Mass Retail Association. He said he expects ports to reopen Thursday.

If a contract dispute lingers passed the 80 days, “the impact on the apparel industry would be gigantic,” said Jim Stark, ceo of The Rays Group, a large sportswear importer based in Costa Mesa, Calif., and an Op licensee. “Airing in massive amounts of goods would be devastating.”

Like many others, Stark has goods on the water now, due into port next week.

If the cargo isn’t moving briskly by then, Stark said he’ll be “asking for favors” on extensions.

“I’m not too optimistic about the responses I’m going to get,” he said. “Retail is down across the board. Very few retailers are even holding their own against last year and they’re going to take any excuse.”

Some suppliers are already getting the dreaded calls.

At Epic Textiles International, based here, firm principal Albert Hakimi took his first cancellation late last week for 5,000 yards of rayon stuck in the harbor.

“I’m not sure how I’m going to move it,” he said. “Everyone’s fabric will be clearing at the same time and there will be an oversupply.”

Hakimi has 50,000 yards of rayon stuck in total.

The giant complex of Los Angeles-Long Beach together handles 52 percent of all apparel imported into the U.S. The Port of Los Angeles handled more than $1 billion worth of apparel from China alone in 2001.

Asked about slowdowns during a cooling-off period, Miniace said the PMA will continue to monitor productivity and will take its data to an arbitration judge if slowdowns are suspected.

“We would be able to detect even the slightest slowdown,” he said.

The ILWU’s Spinosa criticized Bush’s action. Management’s “strategy all along has been to use the lockout to push this situation to crisis and get the government to bail them out with the Taft-Hartley injunction.”