California Apparel News

A strike at 15 East and Gulf Coast ports has been avoided as both sides in the negotiation process agreed to extend the longshore workers contract for more than one month. They also resolved one of the more difficult issues that had been holding up moving forward on a new contract.

The International Longshoremen's Association, representing 14,500 workers at ports from Massachusetts to Texas, and the U.S. Maritime Alliance, which negotiates the waterfront contract on behalf of container carriers, direct employers and port associations on the East and Gulf coasts, announced on Dec. 28 that they would continue negotiations while the contract is extended until midnight, Feb. 6, 2013.

The Federal Mediation and Conciliation Service, which brought the two sides back together after negotiations had broken down Dec. 18, said the two sides resolved a container-royalty payment issue that had been holding up the talks.

"The container royalty payment issue has been agreed upon in principle by the parties, subject to achieving an overall collective bargaining agreement," said FMCS Director George H. Cohen, adding that the terms of the container royalty payment will not be revealed while negotiations are ongoing. "What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement. While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period."

Still, apparel manufacturers and retailers have been making contingency plans in case a looming strike by 15 East and Gulf Coast port workers actually takes place. Longshore workers, whose contract expired at midnight on Dec. 29, had been threatening to go on strike on Dec. 30, virtually shutting down all shipping at major container terminals.

Both sides involved in negotiating a new contract returned to the bargaining table after Christmas at the request of the federal mediator. 

Some major Los Angeles apparel makers who send their goods to the East Coast are diverting their merchandise to the West Coast, said John Salvo, president of Carmichael International Service in Los Angeles. “We have seen some of the bigger [apparel] guys divert,” Salvo said.

Other manufacturers and retailers were keeping their contingency plans to themselves, hoping not to alert their competitors about their next steps.

“I know most companies have contingency plans, but they are not talking about what that contingency is,” said Julie Hughes, executive director of the U.S. Association of Importers of Textiles and Apparel. “If they do strike, there is a lot of pressure for the president to intervene, especially with the ‘fiscal cliff’ looming.”

The American Apparel & Footwear Association, an Arlington, Va., trade group whose members are large apparel and footwear manufacturers and labels, had urged the Obama administration to do what it could to avoid a strike. It even suggested invoking the Taft-Hartley Act, which imposes limits on labor’s ability to strike for 80 days while negotiations resume.

The National Retail Federation noted that any port disruptions could potentially disrupt or delay Spring and Summer retail merchandise deliveries. “If a strike or lockout occurs, 15 separate container ports—Boston, New York/New Jersey, Delaware River, Baltimore, Hampton Roads, Wilmington, Charleston, Savannah, Jacksonville, Port Everglades, Miami, Tampa, Mobile, New Orleans and Houston—would immediately cease operations,” the NRF said in a statement.

Negotiations for a new contract broke off over the controversial container royalty provision, which is a payout originally instituted in the 1960s when freight began being transported in cargo containers. The longshore union thought containerization would lead to fewer jobs on the docks, which it has. 

The container royalty provision provides payouts to union workers based on increases in cargo-container volumes. The payouts have been increasing because of the rise in annual container volumes passing through the ports. Currently, the payouts average about $15,500 a year to each union worker, according to port operators. 

The USMX had tried to cap container royalty payouts. But the ILA said the payments are an important supplemental wage, not a bonus, for its workers, who, on average, earn $50 an hour.

News of progress in the contract negotiations was making for a happy new year.

“The last thing the economy needs right now is another strike, which would impact all international trade and commerce at the nation’s East and Gulf Coast container ports,” said Jonathan Gold, the NRF’s vice president for supply chain and customs policy.

Waterfront strikes have been a common tactic this year. In late November, most of the container terminals at the ports of Los Angeles and Long Beach experienced an eight-day strike by 800 clerical workers, who are part of the International Longshore and Warehouse Union. The strike was honored by thousands of other ILWU workers, causing a $1 billion-a-day loss to the local economy.

Clerical workers complained that computer-based jobs were being outsourced to other states and countries, an allegation that was denied by the Harbor Employers Association, which represented terminal operators and shipping lines in the contract negotiations.

The strike was resolved on Dec. 4 after Los Angeles Mayor Antonio Villaraigosa called in two federal mediators.—Deborah Belgum