Guest: Port slowdown’s potential devastating impacts on Washington businesses

President Obama and Washington’s congressional delegation must intercede to prevent the contract dispute between West Coast unions and the Pacific Maritime Association from upending the economy, write guest columnists Kris Johnson and Jon DeVaney.

By Kris Johnson and Jon DeVaney, November 24, 2014, Seattle Times

 

THE contract dispute between West Coast dockworkers unions and the Pacific Maritime Association has nearly ground Seattle and Tacoma port traffic to a halt at the worst possible time. In our trade-heavy state, businesses are rightly worried this contract standstill could lead to a complete work stoppage.

 

According to the National Association of Manufacturers (NAM), when a breakdown in contract negotiations resulted in a 10-day lockout in 2002, it cost the U.S. economy an estimated $1 billion a day, and took half a year to clear the backlog. A shutdown now could be even more costly, an estimated $2 billion each day, according to a study conducted by NAM and the National Retail Federation.

 

Given our dependence on ports for nearly all industries — imports and exports — the slowdown could ultimately impact already-stressed state and local budgets.

 

The timing is devastating for agriculturists and retailers. Toys are on our docks that need to be under a tree this holiday season. Thousands of Christmas trees bound for Hong Kong are sitting idle. Producers of perishable commodities, from hay to the state’s iconic apples, are suffering severe economic harm.

 

Employers are at a standstill in some cases. Manufacturers like SGL Automotive Carbon Fibers in Moses Lake rely heavily on the ports for importing the raw materials they need to keep their production lines going. SGL recently closed down plant operations for three days because materials needed to build carbon fiber elements for BMWs were stalled off the coast.

 

Employers who export are also feeling the effects of the dispute, including KapStone Kraft Paper Corporation (formerly Longview Fibre) and Columbia Colstor. No doubt many more employers are feeling the impact.

 

Apple growers have been particularly outspoken because one-third of the Washington apple crop is typically exported and fresh fruit can spoil and devalue if not delivered on time.

 

Washington’s apple crop annually has a total economic impact of $7.5 billion, supporting 61,000 jobs. This year, exports are extremely critical as we had a record crop projected to exceed 150 million 40-pound boxes. Apples waiting to be shipped to Asian markets must leave our ports by Christmas or they will not arrive in time for the Chinese New Year on Feb. 19, when apples are in highest demand.

 

Export sales lost may not be made up later, and this fruit must be diverted to other markets. This would create an overabundance in the U.S., driving prices down, further hurting the industry and our economy.

 

Kittitas Valley hay processors and shippers report that trucking of containers to the ports is down as much as 80 percent due to the slowdown. This is impacting employers’ bottom lines and their workers’ job security. In some cases, workers are being reassigned to other tasks at the firms to keep them employed. The same is true for the tree-fruit industry. They report layoffs and reduced hours affecting hundreds of employees. With apples sitting idle at ports, lost sales opportunities and lower prices, they estimate losses of tens of millions per week.

 

Even short of a shutdown, the West Coast situation is creating high levels of uncertainty in our fragile economic climate. Many businesses are preparing contingency plans that come at a significant cost to jobs and economic competitiveness. Retailers in particular are facing the prospect of expensive airfreight to ensure that time-sensitive holiday merchandise arrives in time.

 

The International Longshore and Warehouse Union and the Pacific Maritime Association need to set aside their differences and reach an agreement that would ensure the continued success and competitiveness of these ports. But it is imperative that an agreement be reached without any shutdowns or further disruptions.

 

We urge President Obama and our congressional delegates to intercede to keep parties at the table negotiating in good faith.

 

Our economy depends on it. Jobs in Washington depend on it. Now is the time for action.

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