Contract talks resume today between the International Longshoremen’s Association (ILA) and its employers, represented by the U.S. Maritime Alliance (USMX), in Delray Beach, Fla.
Shipper groups are urging the two sides to stay at the bargaining table to reach an agreement, with some saying Hurricane Sandy had added new urgency to the need to reach a settlement and avoid a strike when their contract expires on Dec. 29.
On Friday, a group of 70 trade organizations representing U.S. manufacturers, farmers, wholesalers, retailers, and transportation and logistics providers sent a letter asking the ILA and USMX to “make every attempt possible at reaching agreement on a new contract.”
Both the National Industrial Transportation League and National Retail Federation also sent separate letters to negotiators saying Hurricane Sandy makes reaching a settlement all the more important because of the need for building materials to restore the storm-wrecked New York and New Jersey area.
Even as those letters were being sent on Friday, some sources familiar with the negotiations said they were not hopeful about an agreement being reached.
"My guess is they will not get too far," said one source who asked not be identified. "I just don't see it coming together."
Harold Daggett, president of the ILA, has brought his full wage scale delegation to Florida for three days this week, which observers believe he is doing to build unity among his membership.
While the union and management have discussed the possibility of finding savings by redirecting contributions to the union's health plan because it has a substantial surplus, the source said management is frustrated because some of their major concerns about container royalties and work practices have not been discussed.
He also said the strike by members of the International Longshore and Warehouse Union that shut down the ports of Los Angeles and Long Beach has emboldened the ILA.
At the same time, he said "the management group is staying together. It looks like it is going to be a rough and rumble sort of negotiation."
The ILA and USMX are meeting to negotiate a new contract that expired Sept. 30. The two sides agreed to extend the contract 90 days until Dec. 29 and work with a federal mediator in September. But they have held few meetings and in November they exchanged sharp words, with the USMX asking the ILA to engage in “serious” negotiations and the union complaining that employers were engaging in “misleading rhetoric and scare tactics.”
On Friday, upwards of 90 trade groups signed on to a letter to Daggett and James Capo, chief executive officer of USMX, asking them to “stay at the negotiating table until a deal is reached even if this extends beyond the current deadline of December 29."
"Failure to reach an agreement will have serious economy-wide impacts. The threat of an East Coast and Gulf Coast port shutdown creates a level of uncertainty in a fragile economic climate and has forced many businesses to once again enact contingency plans that come at a significant cost to jobs and our economic competitiveness," the letter continued.
A separate letter from the NIT League warned "any disruptions in the operations of our national port system would have devastating impacts resulting in enormous losses to retailers, manufacturers, farmers, municipalities, consumers and others who are all dependent on freight moving through our nation’s ports. These impacts would come at a critical time, just when our economy is showing positive signs of a recovery."
The letter signed by Bruce Carlton, NIT League president and chief executive officer, said "the horrific outcomes resulting from Hurricane Sandy have brought tragedy to millions of Americans in the northeast, and they would face additional hardships if they are not able to receive necessary supplies due to port closures. This is another reason why the two sides must try to reach common ground on a new contract."
Matthew Shay, president and CEO of the National Retail Federation, made a similar point in yet another letter to Daggett and Capo: "You are well aware of the economic impact that Superstorm Sandy has already had on the region, specifically on the Port of New York/New Jersey. This port cannot afford to be shut down again as a result of a labor dispute."
Peter Gatti, NIT League's executive vice president, said materials are need to rebuild damaged to homes, businesses, and infrastructure from storm in the New York, New Jersey and other states last month. He said a strike could result in delays of much needed materials needed for rebuilding.
However, Noël Perry, a managing director and senior consultant at FTR Associates, pointed out that many building materials such as lumber and concrete are sourced in the United States or Canada and can be shipped by rail or truck.
He also pointed out the deadline for the contract is coming during the winter when there is lower demand for building materials.
But Tony Callahan, a Kennesaw, Ga.-based consultant who specializes in supply chain issues for the building materials industry, said seasonality is a double-edged sword, because most building supply companies have also reduced inventory that could cushion a strike.
He agreed that materials such as lumber can be sourced domestically, and products such as nails and screws can be trucked from the West Coast at relatively low cost since they are so small. But he also noted that many products used for remodeling - lighting, for example - is sourced from overseas, so that builders trying to repair homes damaged in the storm might be affected by a strike, depending on how long it goes on.
“It’s not a positive,” he said. - Chris Dupin