For most of the past few months, contract negotiations between West Coast dockworkers and port management moved forward amicably. Early on, both sides agreed to remain at the table — and on the job — until a new agreement could be finalized. More recently, however, congestion at the ports has risen to crisis levels, due in part to the lack of a contract. And in the last several days, negotiations have become toxic, with management accusing labor of “orchestrated slowdowns” and labor accusing management of attempting to “smear the union.”
The sudden change in tone is alarming and suggests that a shutdown of the ports — either from a walkout by labor or a lockout by management — is imminent. That cannot be allowed to happen. This is not the time to jeopardize our nation’s fragile economic recovery.
A shutdown of the ports would be more than untimely. A shutdown would cause serious harm to nearly every sector of the U.S. economy. For retailers, toys are on those docks that need to be under a tree by Christmas. Manufacturers rely on the ports both to bring in parts for products they make and to export finished goods. Farmers rely on ports to export their crops, many of them perishable. The impact on those and other industries across the economy could be catastrophic.
We know what can happen if the ports shut down. It’s happened before. When a breakdown in contract negotiations resulted in a 10-day lockout in 2002, it cost the U.S. economy an estimated $1 billion a day, and took half a year to clear the backlog. A shutdown now could be even more costly — a study conducted by the National Association of Manufacturers and the National Retail Federation estimates the cost at $2 billion a day.
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Even short of a shutdown, the West Coast situation is creating high levels of uncertainty in a fragile economic climate that has forced many businesses to undertake contingency plans that come at a significant cost to jobs and economic competitiveness. Millions of containers of imported goods were brought into the country early this year in fear of a shutdown, containers are already being diverted to other ports, and retailers in particular are facing the prospect of expensive air freight to ensure that time-sensitive holiday merchandise arrives in time.
The shutdown of 2002 has not been forgotten by businesses that rely on the West Coast ports, and another shutdown would only make companies more hesitant to make long-term commitments there. Ports just over the borders in Canada and Mexico have already taken market share of the cargo that once flowed to U.S. West Coast ports, and expansion of the Panama Canal next year will make it easier to bypass the West Coast entirely in favor of East Coast ports that more directly serve many major U.S. markets.
The International Longshore and Warehouse Union and the Pacific Maritime Association need to set aside their differences and reach an agreement that will ensure the continued success and competitiveness of these ports. But it is imperative that an agreement be reached without any shutdowns or further disruptions.
That’s why a broad-based coalition representing nearly every sector of the U.S. economy has called upon President Obama to use all of his available options to keep the parties at the table and head off a shutdown. Waiting for one to occur would be too late. It’s time for the president to immediately appoint a mediator from the Federal Mediation and Conciliation Service to facilitate the talks, and the ILWU and PMA should willingly accept the services of a mediator.
Negotiating under a news blackout, the ILWU and the PMA have said little about what their differences might be. But whatever the dispute, the consequences of a West Coast ports shutdown are too severe to be allowed to happen. It’s not just dockworkers’ jobs that are threatened. The standing of the United States as a global supplier, our nation’s economic competitiveness, and the millions of jobs relying on goods moving through the West Coast ports are at stake.
Thomas J. Donohue is president and CEO of the U.S. Chamber of Commerce. Matthew R. Shay is president and CEO of the National Retail Federation. Jay Timmons is president and CEO of the National Association of Manufacturers.
Date: November 14, 2014