What's Up Dock?
Labor disputes at ports on both US coasts could disrupt trade in the new year and skew high frequency employment data. In could produce shortages of some consumer goods. The resulting higher prices could filter through into measured inflation.
The proximate cause of the disputes differ, but at its heart is a push by the employers to boost competitiveness through forcing changes in labor practices.
In 15 ports from Massachusetts to Texas, including the New York and New Jersey, the employers' union association, the U.S. Marine Alliance, seeks to cap the "container royalty", which are payments made to workers based on the weight of container cargo. The dock workers, represented by the International Longshoreman Association, are resisting. The workers also insist on maintaining the eight-hour a day (of pay guarantee).
The union represents 14,500 works at the 15 ports, the NY-NJ, accounting for 4,000. Last year, NY-NY handled $208 bln worth of goods. It is the second largest port in the country to household imports from China. Overall, it handles 10% of imports from China, almost 70% of imports from Israel, and 37% of imports from Italy. Forty percent of the imported autos come through the NY-NJ docks.
Following the breakdown in negotiations, and with the December 30th deadline looming, both sides have agreed to mediation. The situation in the four northwest ports does not look as promising. The 3,000 dock workers, represented by the International Longshore and Warehouse Union, rejected the contract proposals of the employers, which indicated it was their "last, best and final" offer.
The ports cover two-thirds of the US grain terminals in the Puget Sound and along the Columbia River and account for a quarter of all US grain exports and half of the wheat exports. Reports suggest the employers have sought over 750 changes in the contracts, in some cases, upending 80 years of practice. However, most of the issues come down to control of the workplace. The shippers want to use few workers to (un)load ships, allow elevator workers to assist in the loading of ships, and greater management discretion on hiring and staffing issues.
The shippers and owners of the grain terminals are represented by the Pacific Northwest Grain Handlers Union Association, seem particularly aggressive. The union has not asked for authorization to strike. It has not set a strike deadline. It has not threatened a walk out. Nevertheless, there are reports that the shippers are considering locking out the union employees and keeping the ports open with replacement workers. A Delaware company, specializing in providing security and replacement workers during labor disputes (shades of the Pinkertons) has been hired.
A capital strike is when investors withdraw from the productive process and squeeze interest rates highers in hope of driving the debtor to change its behavior. A labor strike is when employees withdraw from the productive process, disrupting the ability to complete the circulation of capital from investment to profits.
A lockout is not a strike. It when employers force employees out of the productive process until they capitulate to the employers' demands. Through the employers' union, association, they have a monopoly on the supply of jobs for longshoremen.
By preparing to establish buffer zones to prevent the labor dispute from interfering with the port activity, the US Coast Guard, and by extension, the US government abandons the honest broker role to favor the employers. It compliments the use of replacement workers and seeks to minimize the ability of the labor dispute to interrupt business.
The employers seek a type of pattern bargaining. After a protracted struggle, the union had capitulated to new workplace rules at a new grain terminal in Washington in 2011. The employers want all the dock workers to adhere to those new rules. Deeper still, shippers are facing competition from rail. For a number of different reasons, using rail roads to bring grains to the ports may be less expensive than barges.