Bill Mongelluzzo, January 26, 2015, JOC.com
Negotiators for the Pacific Maritime Association and the International Longshore and Warehouse Union have reached a tentative agreement on the chassis maintenance and repair issue that has been the major roadblock to reaching a new waterfront contract at West Coast ports.
PMA spokesman Steve Getzug said on Monday that the tentative agreement was reached, but that no further details will be released at this time. Getzug also said the ILWU work slowdowns that have crippled all West Coast ports since early November are continuing.
ILWU spokesman Craig Merrilees said negotiations continued through the weekend and into Monday, and he described the tone of the negotiations as “positive.”
Indeed, industry sources said the ILWU and PMA are now negotiating with an intensity not yet seen since the talks began on May 12, 2014, and both parties appear to want this saga of mutual recrimination and horrendous delays to end as soon as possible.
The three major remaining issues in the negotiations appear to be wages, pensions and the length of the new contract. In past contract negotiations, wages and pensions were held to the end of the talks and were normally resolved quickly. However, if the new contract extends longer than three years, that will be a surprise to many.
When the talks began last spring, the most important issue mentioned publicly was the Cadillac tax in the Affordable Health Care Act, also known as Obamacare, that is set to take effect on Jan. 1, 2018. The provision will levy a tax on high-end medical plans, with the revenue to be used to subsidize workers who do not have access to affordable health-care plans. Under the ILWU plan, employers pay 100 percent of the premiums, and longshoremen pay $1 co-pay for medicine, qualifying it as a Cadillac plan.
The PMA and ILWU in late August announced that negotiators had reached a tentative agreement on health care, leading most observers to conclude the new contract would run for three years, from July 1, 2014, until June 30, 2017, and the Cadillac tax issue would therefore be left for future negotiations.
However, employers are known to want as long a period of certainty on the waterfront as possible, and the last two contracts have run for six years, a practice begun after the 10-day employer lockout in 2002. Therefore, if the term of the contract must still be negotiated, it is possible that some type of financial agreement on the cost of medical care has been reached. PMA President Jim McKenna said last March at the TPM Conference in Long Beach that the Cadillac tax is estimated to add $150 million a year to the cost of medical insurance for longshoremen.
Although details of the chassis agreement have not been released, it is believed that the ILWU mechanics will have the jurisdiction to inspect every chassis before it leaves the terminal. This has not been an issue in the past because shipping lines owned almost all of the chassis, and the carriers are members of the PMA. However, the carriers in recent years sold their chassis to equipment-leasing companies. Those companies are not members of the PMA, and they have no contractual relationship with the ILWU.
Hundreds of longshoremen are mechanics, and their jobs would be threatened if the ILWU lost jurisdiction over chassis M&R. However, inspecting each chassis gives longshoremen significant leverage over employers. The ILWU last fall, for example, increased the intensity of its inspections, at times instructing truck drivers to exit their cabs while the inspection took place. This added costly time to the truckers’ visits to the terminals and contributed to congestion at the facilities.
Furthermore, because the chassis-leasing companies now own the assets, and are the financially responsible party if an accident occurs and injury or death results, the leasing companies must take M&R responsibilities seriously, which raises the question of why an additional inspection for roadability is needed at the marine terminals. Also, leasing companies do not want their equipment to be “red-tagged” as inoperable because of defects, if the ILWU chooses to do so frivolously to exert leverage over employers. During the negotiations, some truckers reported to their dispatchers that they were having trouble finding roadworthy equipment because the ILWU in Los Angeles-Long Beach would randomly hold a “red-tag party” at various terminals.
On the East Coast, the International Longshoremen’s Association has the right to inspect all chassis before they leave the marine terminals.