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News > Economy
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Hope in West Coast port talks
Union agrees to mediated talks aimed at ending work stoppage that has choked off U.S.-Asia trade.
October 3, 2002: 11:30 AM EDT
By Chris Isidore, CNN/Money Staff Writer

NEW YORK (CNN/Money) - West Coast port management and labor agreed to resume talks Thursday with the help of a federal mediator, one of the first signs of progress to end a week-long labor dispute that has closed all the ports and choked off trade between the United States and Asia.

The International Longshore and Warehouse Union, which represents 10,500 members at 29 West Coast ports, agreed to use mediation on the key point of contention in the dispute -- management's demand to make greater use of technology. The Pacific Maritime Association, the management group that represents major shipping lines and port terminal operators, had been pushing for mediation for some time, but the union had not agreed to that before Wednesday's announcement.

A ship docked at the Port of Long Beach, normally one of the world's busiest ports. Ports along the U.S. West Coast remain quiet due to a work stoppage that enters its seventh day Thursday.  
A ship docked at the Port of Long Beach, normally one of the world's busiest ports. Ports along the U.S. West Coast remain quiet due to a work stoppage that enters its seventh day Thursday.

The costs of the port shutdown to U.S. businesses are mounting. Robert Parry, president of the Federal Reserve Bank of San Francisco, estimated that costs to the U.S. economy are now up to $2 billion a day after being estimated at $1 billion a day during the first five days of the shutdown.

The lockout at the ports is disrupting the flow of goods to U.S. retailers preparing for the key holiday shopping period, as well as the flow of parts to U.S. factories. New United Motor Manufacturing Inc., a California auto plant owned by a joint venture of Toyota Motor Corp. and General Motors Corp., was forced to shut down early Thursday after running out of needed parts. The plant produces Toyota Tacoma pickups and Toyota Corolla and Pontiac Vibe compact cars.

PMA locked out the ILWU at ports from Seattle to San Diego last Friday after charging the union was leading work slowdowns that it said amounted to a strike with pay. The union has denied any slowdowns. Management negotiators said they were looking forward to a productive meeting with the union Thursday.

"We hope this signals a breakthrough, and we look forward to discussing with the union the steps that will enable the ports to re-open," PMA negotiator Tom Edwards said.

PMA has said it won't reopen ports until the union either agrees to a new contract or reinstitutes the expired pact, which had provisions for arbitrating slowdowns and other disputes. But the union said its members were able to untie a ship at the Port of Oakland Wednesday afternoon to allow it to sail with military cargo.

"We finally convinced PMA to order longshore workers out of the hall and get the essential military cargo out," ILWU Local 10 President Richard Mead said. The union said its officials and Maersk, the world's largest shipping line, had been asking for permission to have the union members untie the ship for three days, and that the union has offered to work all military cargo during the labor dispute.

The union said the Sealand Innovator had been loaded before the shutdown, but had been trapped in port. The ship sailed Wednesday afternoon. A spokeswoman for A.P. Moller/Maersk, the owner of the ship, could not give details on the military cargo or where the ship was heading.

Talks between the ILWU and PMA broke down late Tuesday after union officials said management brought "armed thugs" into a meeting with the union and Federal Mediation and Conciliation Service Director Peter Hurtgen. That meeting had been to discuss the offer of mediation and not an actual bargaining session.

Click here for a map of ports affected by the labor dispute

"There is no need for any armed guard," Hurtgen told a conference call with reporters Wednesday.

Hurtgen told reporters that "economic pressure is significant" to reopen the ports, but he could not say whether President Bush will force the two sides back to work.

"That's not part of my agency," he said. "That's not part of my responsibility."

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The president has the power to order the two sides back to work for an 80-day cooling-off period. But so far Labor Department officials have said it is too early to consider exercising those powers under the seldom-used Taft-Hartley Act.

Labor Department spokeswoman Kathleen Harrington said Wednesday that the administration did not consider the mediation process over since the union walked out of talks Tuesday and that it still is too early to consider using Taft-Hartley.

"Right now it's a significant focus on the mediation process," she said. "The administration wants to see the mediation process and the offers of assistance take hold."

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Kathleen Hays takes a closer look at the economic impact of the West Coast port lockdown.

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But businesses that are being affected by the port shutdown are growing concerned over the problems it is causing and are appealing to the federal government for help.

The breakdown of talks prompted a number of business groups to call on the White House for action to end the stoppage. Among groups writing to the White House asking for action to open the ports are the Toy Industry Association (TIA), the American Association of Exporters and Importers, (AAEI), International Mass Retail Association, which includes the nation's major retail chains, and the West Coast Waterfront Coalition (WCWC), which also represents the nation's major importers and exporters.

"We acknowledge that the negotiations between the PMA and the ILWU involve complex and sensitive issues that need to be resolved. Ideally the two parties could be left to sort out these issues themselves," said the letter from the AAEI and the TIA. "But their negotiations have now taken a course that seriously injures many others and involves broader interests, including your interest in pulling our country's economy out of a persistent sluggishness."

The Farm Bureau issued a statement saying a prolonged shutdown of West Coast ports would "inflict severe harm" on the weak farm economy, and spokesman Don Lipton said the group is preparing its own letter to the White House seeking action to open the ports.

"This has got the attention of every CEO in America," said Robin Lanier, executive director of the WCWC. "How long can the president give mediation when he has all his friends calling him or [presidential political adviser] Karl Rove telling him there needs to be action."

Salomon Smith Barney issued a note to clients that estimated that Amazon.com, the largest online retailer, estimated that the company could lose 1-to-2 cents a share for every month that shipments are disrupted. But it did not lower its earnings forecasts for the company due to hopes that an agreement can still be reached before it affects the company's bottom line. Amazon did not return a phone call seeking comment on that forecast.

Some analysts now believe presidential action isn't yet imminent.

"We continue to believe that the President is under some pressure to not appear anti-labor, and thus will probably not intervene until some time next week at the earliest," said Bear Stearns analyst Ed Wolfe. "But despite his recent popularity with the Teamsters and the AFL-CIO, Bush will, in our view, most likely choose to protect the economy, which appears to increasingly be at risk the longer the port disruption continues."

Other U.S. factories in addition to NUMMI could be forced to shut down later this week due to a lack of parts, and the port closings also can halt the flow of many goods that retailers are shipping for the holiday shopping season. In Hawaii, which depends on ocean shipments for about 90 percent of its goods and 65 percent of its food, many consumers are stocking up on items from toilet paper to fresh milk due to fears of shortages.

The labor dispute had been simmering all summer before the problems flared up into disruptions last month.

Management is seeking to have data from outside sources, such as shipping lines and their customers, downloaded into PMA computers rather than having it re-entered manually by ILWU clerks. Management says it will provide job guarantees for current ILWU members as well as improved benefits to win that greater use of technology. The union is demanding jurisdiction over other work and staffing level guarantees to allow the use of the technology, but PMA has rejected that offer as unworkable.

ILWU members are among the best-paid blue-collar workers in the nation. PMA figures show longshoremen earned an average of $82,895 last year, while clerks earned an average of $118,844 and foremen, who are members of the union, earned an average of $157,352.

Almost 30 percent of union members in the longshoremen classification work less than 1,600 hours a year, equivalent to 40 hours a week for 40 weeks. Only a few more than half work 2,000 or more hours, which is essentially full-time employment, across the year. Those working 2,000 or more hours had average pay of $106,883 in 2001, according to PMA.  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.