By James Nash and Alison Vekshin
(Bloomberg) — West Coast dockworkers and their employers ended their
nine-month standoff with a five-year contract deal, averting a shutdown
of 29 ports that could have cost the U.S. economy $2 billion a day.
“This is now in the rear-view mirror,” Labor Secretary Tom Perez told
reporters late Friday outside the San Francisco headquarters of the
Pacific Maritime Association, which had been locked in the contract
battle with the International Longshore and Warehouse Union. “A
significant potential headwind for this economic recovery has been
removed.”
Perez brokered a compromise on the issue of whether the union could
fire arbitrators in workplace disputes, which had held up settlement on a
contract after the sides agreed on other terms. Instead of a single
arbitrator, a panel now will hear grievances, union President Robert
McEllrath told reporters.
The labor standoff had reduced productivity at West Coast ports by as
much as half since November. California citrus fruit bound for Asia
spoiled on the docks, while Mardi Gras beads destined for New Orleans
instead languished on cargo ships off the Southern California coast.
Carmakers flew in vital components at more than 10 times the cost of
shipping them, while Japanese McDonald’s restaurants rationed french
fries because of a shortage of Idaho potatoes.
Perez had arrived in San Francisco on Feb. 17, dispatched by
President Barack Obama after a federal mediator failed to bridge the gap
between the two sides.
Clear Backlog
“This is great news for the parties involved in the negotiation and a
huge relief for our economy -– particularly the countless American
workers, farmers, and businesses that have been affected by the dispute
and those facing even greater disruption and costs with further delays,”
the Obama administration said late Friday in a prepared statement.
Obama also called on the parties to cooperate to clear the backlogs
and congestion in the ports as they work toward a final agreement,
according to the statement.
The Port of Los Angeles, the nation’s busiest, handled 29 percent
less cargo in January 2015 compared with January 2014, and volumes were
down 19 percent in neighboring Long Beach, the second-busiest port,
according to statements from both ports.
The contract agreement won’t end cargo bottlenecks right away, even
after port operations return to normal by Saturday night, Perez said.
“The parties have agreed to ensure that there are fully operational
ports up and down the West Coast beginning tomorrow evening,” Perez said
on a conference call with reporters. “I am confident that they
understand the urgency of the task of eliminating the backlog.”
Workplace Grievances
Talks had broken down this month over a union demand that it be able
to fire arbitrators in workplace grievances. The two sides had reached
terms over salaries, benefits, the right of union members to maintain
and repair truck chassis used to haul shipping containers and health
care.
On Feb. 4, the management association publicized details of its
contract offer, including raises of 3 percent per year for full-time
dockworkers, along with maintaining fully paid health care that costs
employers $35,000 per worker per year. The maximum pension would rise to
$88,800 per year as part of the proposed five-year contract, the
association said at the time. The union and Perez wouldn’t confirm
details of the final deal Friday evening.
The tentative settlement still needs approval from unionized dockworkers from San Diego to Bellingham, Washington.
Reduced Capacity
“After more than nine months of negotiations, we are pleased to have
reached an agreement that is good for workers and for the industry,”
said maritime association President James McKenna and McEllrath, the
union president, in a joint statement released late Friday. “We are also
pleased that our ports can now resume full operations.”
In their statement, the union and management declined to release
details of the contract agreement until they are presented to members.
Negotiators for the two sides were seen shaking hands and hugging in
the the Pacific Maritime Association headquarters shortly after 6 p.m.
local time, just as word of a deal leaked out.
The West Coast ports, responsible for 43.5 percent of U.S. trade,
have been operating at reduced capacity since late October as
dockworkers slowed cargo movement and port employers cut shifts.
The deal came after Perez gave the dockworkers’ union and shipping
lines and terminal operators at the ports until the end of Friday to
respond to a contract settlement he proposed. He said that had they not
reached an agreement, he would have moved the talks to Washington next
week.
Copyright 2015 Bloomberg.