Bill Mongelluzzo, April 7, 2014, Journal of Commerce
As U.S. West Coast waterfront employers prepare to enter contract negotiations in May with the International Longshore and Warehouse Union, their message to the ILWU is clear: The new contract must keep West Coast ports competitive in the battle among North American ports for discretionary cargo.
West Coast ports over the past decade have seen their share of the U.S. container trade drop steadily to 45 percent from 51 percent. “That’s not a good trend,” Jim McKenna, president of the Pacific Maritime Association, told the JOC’s TPM Conference in Long Beach in March.
However, the mantra among West Coast dockworkers during this round of contract negotiations is preserving ILWU jurisdiction, and that can conflict with the employers’ requirement for efficiency.
Terminal operators are turning to technology and automation to improve efficiency and reduce cargo-handling costs. “Efficiency enables us to compete,” McKenna said.
The 2002 contract allowed terminal operators and shipping lines to use computers for the processing of shipping documentation, a development that has threatened ILWU marine clerk jobs. Today, virtually all terminals have computerized gate operations and terminal operating systems.
The 2008 contract allows those terminals to invest in costly automated horizontal ground transportation systems and automated stacking cranes without being blocked by the ILWU. Robotics improve productivity and allow terminal operators to increase throughput significantly on the same footprint, but this technology threatens longshore jobs.
“The survival of the ILWU and the job security of our members depend on our having these remaining jobs, which will mostly involve the servicing and maintenance of the robotics and other machinery,” ILWU President Bob McEllrath wrote in a letter to the AFL-CIO last August when he accused the umbrella organization of failing to protect ILWU jurisdiction over waterfront jobs.
Employers are laser-focused on terminal productivity because the landscape of global container shipping is changing dramatically. Carriers calling at West Coast ports today are operating vessels with capacities of 8,000 to 14,000 20-foot container units — more than twice the size of vessels deployed in the trans-Pacific during the previous decade.
Those mega-ships require a level of productivity and terminal automation common in Europe for 20 years. Antiquated work rules and resistance to automation, however, have kept U.S. ports in the Dark Ages of cargo handling until recently.
At the JOC’s Port Productivity seminar last December in Newark, N.J., Christopher Parvin, vice president of marine operations at Mediterranean Shipping Co., said it’s clear that U.S. port productivity isn’t what it should be, and it certainly doesn’t meet global standards.
At the same time, other port ranges are poaching cargo from West Coast ports. Carriers aren’t waiting for the Panama Canal expansion project to be done before deploying larger vessels to the East Coast, choosing instead to operate 9,000-TEU vessels in all-water services via the Suez Canal. This development is contributing to the erosion of West Coast market share.
Meanwhile, the Port of Prince Rupert, British Columbia, which opened its container terminal in 2007, handles more than 550,000 TEUs a year that could be moving through U.S. West Coast ports.
The relentless spread of technology and automation threatens ILWU jurisdiction because maintaining the sophisticated cargo-handling machines and equipment requires a new level of skills. These demands pit the ILWU against mechanics and electricians who are members of other waterfront unions, such as the International Association of Machinists.
As a craft union, the IAM puts its members through rigorous educational and apprenticeship programs to remain current with the demands of today’s waterfront, Don Crosatto, senior area director of IAM Local 190 in Oakland, told the TPM Conference. The ILWU must do the same. “You can’t just hand a longshoreman a wrench and expect him to be a mechanic,” Crosatto said.
The ILWU is so concerned about its jurisdiction over waterfront jobs and competition from “craft-based unionism” that it pulled out of the AFL-CIO last summer.
Some waterfront unions also apparently can perform certain jobs more efficiently than the ILWU. Since last summer when SSA Marine in Oakland took over two adjacent terminals, the IAM mechanics that work for SSA now do maintenance and repair work at those facilities with 14 mechanics, compared with 80 ILWU mechanics that previously did the work, Crosatto noted.
The question in this summer’s contract negotiations is how the PMA and ILWU can develop a contract that ensures employers of improved productivity and efficiency while protecting ILWU jurisdiction.
In the past, the ILWU and PMA have used the waterfront contract to protect what they believe to be the ILWU’s right to control most waterfront work, Crosatto noted, but he said some recent labor-board decisions have shown that not all of those jobs are in the power of the PMA to give to the ILWU.
The ILWU also is expected to fight tenaciously to ensure that union members don’t pay the cost of the Affordable Health Care Act’s so-called Cadillac tax on highly compensated employees. McEllrath was so upset about what he called the AFL-CIO’s “moderate, over-compromising policy positions” on health care reform that he cited it as one of the reasons the ILWU pulled out of the AFL-CIO.
McKenna estimated the tax could cost the industry $150 million a year — an amount he said employers simply can’t afford to pay. Employers favor a cost-sharing formula with the union, but another mantra of the ILWU has always been “no give-backs.” Under the current ILWU health care plan, members pay no premiums and only $1 per prescription for medicine.
Despite these potentially deep chasms that could prevent the PMA and ILWU from reaching an agreement by the July 1 deadline, McKenna is optimistic a new contract will be negotiated without a strike or employer lockout, such as the lockout that occurred in the 2002 contract negotiations.
He said the negotiations could go beyond July 1, as negotiators use leverage during that period of limbo to squeeze concessions from the other side, but he said a contract later in July is attainable.