NEW YORK (CNN/Money) - The first attempt by the U.S. government to resolve a labor dispute between West Coast dockworkers and port operators broke down Tuesday after the longshoremen's union said "armed thugs" were brought into a meeting with a federal mediator.

The Pacific Maritime Association, which represents shipping companies and terminal operators at ports from San Diego to Seattle, said it was necessary to bring a security detail to the first session held under the guidance of a government mediator.

But International Longshore and Warehouse Union (ILWU) President James Spinosa, who walked out of the talks, said that bringing "two security personnel packing weapons" to the talks is "an outrageous action."

"This shows how they approach negotiations, hiding behind the government and armed thugs," Spinosa said in a statement.

Tuesday's meeting, following a brief and apparently fruitless negotiating session Monday, was aimed at reaching a framework for federal mediation in the dispute, which has idled virtually every major port along the West Coast. The dispute is choking off trade between the United States and Asia and posing an increasing threat to the U.S. economy.

"The security detail was not in the meeting room," the PMA said in a statement. "They were simply on the same floor where the meeting was taking place."

The two sides were talking to federal mediators Tuesday, but only to discuss whether mediation will be used in the process. A Labor Department spokeswoman was not immediately available for comment on the failed talks. It was unclear if discussions to revive the mediation process would resume.

A labor dispute shuts down sea ports along the U.S. West Coast. CNN's Casey Wian reports. Play video (QuickTime, Real or Windows Media)

The lockout of unionized dockworkers that began Friday at the West Coast ports could cost the U.S. economy as much as $1 billion a day. The lockout ended briefly Sunday but quickly resumed. The Pacific Maritime Association has charged the union was engaged in a work slowdown. The ILWU has denied that charge.

As for the failed talks, PMA President Joseph Miniace said he was not aware that the security detail had remained on the floor after escorting him to the place where the meeting was set to occur.

"We would hope the union would understand these circumstances, rather than trying to create an issue that has absolutely nothing to do with bargaining," the port operators' statement said.

The setback comes on the same day that President Bush told reporters that he is very concerned about the lockout. Still, the Labor Department said Tuesday that it is not close to having the president invoke his powers under the seldom-used Taft-Hartley Act, which could order the two sides back to work.

Some U.S. factories could be forced to shut down as soon as this week due to a lack of necessary parts, and the port closings can also halt the flow of many goods that retailers are shipping for the holiday shopping season.

Businesses that depend on the ports would like to see the administration act sooner than later. Robin Lanier, director of the West Coast Waterfront Coalition, which represents major importers and exporters, said that her membership is willing to let the administration try to solve this without ordering the two sides back to work, but that presidential intervention will be needed soon if those efforts fail.

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 that 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 bit 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.  

-- CNN/Money Staff Writer Chris Isidore contributed to this report