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“Catastrophic Shutdown Of America’s Supply Chain Looms” As West Coast Port Worker Talks Break Down

port strike

This article was originally published at Zero Hedge

For those who have been following the recent ISM reports, one of the recurring concerns of respondents in both the manufacturing and service sector has been the congestion at West Coast Ports – which handled 43.5% of containerized cargo in the U.S and where transiting cargo accounted for 12.5% of US GDP – as a result of reduced work output by the local unions who have been more focused in recent weeks on ongoing wage hike negotiations.

And according to the latest update from the 29 west coast ports that serve as the entry point of the bulk of Asia/Pac trade into and out of the US, things are about to get far worse for America’s manufacturing base, because as RILA reported earlier, talks between the Pacific Maritime Association (PMA) representing port management, and the International Longshore and Warehouse Union (ILWU) officially broke down on Wednesday, and without an agreement, experts have suggested that nearly 30 west coast ports could be shut down within a week.

As RILA reports, “a work slowdown during contract negotiations over the past seven months has already created logistic nightmares for American exporters, manufacturers and retailers dependent on an efficient supply chain. A complete shutdown would be catastrophic, with hundreds of thousands of jobs at risk if America’s supply chain grinds to a halt.”

More:

“A west coast port shutdown would be an economic disaster,” said Kelly Kolb, vice president of government affairs for the Retail Industry Leaders Association. “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbor waiting for manufacturers to build products and retailers to stock shelves.

“The slowdown is already making life difficult, but a shutdown could derail the economy completely,” said Kolb. “For retailers specifically, a shutdown will have dire consequences for those dependent on spring inventory demand.”

The last prolonged port shutdown of the West Coast ports was the 10-day lockout in 2002 which was estimated to cost the U.S. economy close to $1 billion a day.

“A port shutdown of even a short duration could derail economic growth and cause long-lasting damage and job losses across the country,” said Kolb. “There needs to be a greater sense of urgency at the White House, before it’s too late.”

One can see why the US retail association is concerned. So will there be a strike? Here is Bloomberg’s take:

Union-led work slowdowns could halt the 29 U.S. West Coast ports in five to 10 days, the head of the shippers’ association said, urging the union to accept a new offer that includes 3 percent raises. James McKenna, the president of the Pacific Maritime Association, said backups and delays at many of the ports are harming farmers, manufacturers and consumers as the flow of goods approaches a “coast-wide meltdown.” He called on the International Longshore and Warehouse Union to accept management’s second formal contract proposal since negotiations began last May.

“We’re not considering a lockout,” McKenna said on a conference call with reporters, his first public comments since the talks began. “What I’m really saying is that this system will bring it to a stop. Once that happens, we really don’t have a choice.”

Which is like the ECB saying “we don’t really want Greece out, but we will halt their liquidity. Once that happens, Greece doesn’t really have a choice.”

Here are the port workers’ demands:

The association of shipping lines, terminal operators and stevedores made public details of its contract offer, including 3 percent annual raises over five years, retaining employer-paid health care, and raising pensions by 11 percent. The average dockworker now makes $147,000 a year in salary, plus $35,000 a year in employer-paid health care and an annual pension of $80,000, according to an association press release.

And while there hasn’t been a formal lock out yet, the reality is that the workers have made their displeasure felt loud and clear:

McKenna blamed the union for work slowdowns that have contributed to congestion at the largest West Coast ports, including Los Angeles, Long Beach, Oakland, Seattle and Tacoma. Twenty-two ships were queued up Wednesday at the harbor shared by the Los Angeles and Long Beach ports, up from as few as four in mid-December, according to the Marine Exchange of Southern California, in one measure of the backups confronting shippers.

Since early November, the longshore union has been dispatching fewer crane operators in Los Angeles and Long Beach and slowing cargo movement in Oakland, Seattle and Tacoma, according to a Feb. 3 maritime association presentation. McKenna said productivity at many ports is down by as much as half, suggesting that cargo movement “will collapse under its own weight.”

Some of the impacts of the already experienced slowdown has included keeping U.S.-raised Christmas trees from reaching consumers in Asia, depriving McDonald’s customers in Japan of french fries, and stranded shipments of Mardi Gras beads bound for New Orleans.

Should talks fall apart, it probably will not be the end of the world: a nearly identical situation developed one decade ago leading to a 10 day lock down and which ended up costing the US economy $10 billion per day:

In the conference call, McKenna said the two sides remain at odds over wages, pensions, the duration of the contract and arbitration for workplace disputes. He said the sides are “far apart” on some issues and nearing agreement on others.

The parties negotiated many of the same issues in 2002 before the maritime association locked out workers for 10 days amid slowdowns. That stoppage, which ended when then-President George W. Bush invoked the Taft-Hartley Act, cost the U.S. economy $1 billion a day, the maritime association said.

A 20-day lockout now would cost more than $2 billion a day, the association said in a report last year, including losses to railroads, ocean carriers and the broader economy.

Which incidentally, in an economy that is desperate for any “one-time, non-recurring” item to explain what is now global secular stagnation and economic slowdown, an excuse such as a port strike, or a harsh winter, or a strong dollar, or plunging crude, may be precisely the scapegoat that the central-planning doctor ordered.

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Brandon Smith

Oath Keepers Merchandise

6 comments

  1. Or…

    Why not restart America’s manufacturing base instead of using materials and assembling them here as a falsely “made in America” goods? This is a great time to ween off our businesses (not THE “corporations”) from foreign, (not)Free Trade, etc so that we can create jobs from within and build a base NOT dependent on any other nation or those traitors who are currently – and were – serving within our governments.

    Let’s follow the US Constitution on building this – First the Separation of Powers inherent within our governments REQUIRE that all agencies ONLY have the lawful powers of the branch they are under. So an agency cannot make up the rules and regulations, laws that bind us, judge our guilt or innocence in following the before mentioned list, nor enforce it.

    A Legislative agency may bind us to LAWS, REGULATIONS, etc that those we elected created themselves, but not that an agency creates since those we elected cannot lawfully give away or assign their powers to another. Basically, if they do not want to do the job, then get out of the position because that is EXACTLY what they were elected for, and what they took an Oath to do. It is their contract.

    Same with the other two branches and any agency under them. Same with the state governments and their agencies.

    Will we maybe have to start out with less then “modern equipment at the beginning? Maybe, maybe not.

    Why can we not at the same time incorporate an alternative currency and trade as we lawfully can do under our Legitimate government to give all of us/those who wish to create their business a boost.

    Another thing we can do is create Militia “bucks” which represents $XX that is good in any state for any business that accepts the alternative $$ because constitutionally each state is REQUIRED to have and maintain a Militia.

    Other alternative forms of currency could be traded in a clearinghouse kind of organization for those needed in the state the person moves to, etc. That “clearinghouse” bank can hold some of every states alternative currency for straight trade for the appropriate kind. Understand I am NOT a financial person that way, but why would that not work, plus be there to assist those when the dollar fails as most agree it will?

    it is past time for America and Americans to ignore and go around the traitors currently occupying until we can get them arrested for trial and BUILD OUR OWN INFRASTRUCTURE, OUR NEW AMERICAN FOUNDATION starting now.

    I never said it would be easy, but better minds then mine can probably figure out ways we can all do this. That IS the American way. Take nothing and build a strong nation from it.

  2. Yeah. Globalism. Relevant towards the artical on ‘Manipulation Crafts’. As all are actuality contrivances of towards altering, controlling and/or deleting.. The definition of Liberty and Independence was rather well beguiled in the hearts and mind of many. The floating of America’s basic five industries, Agriculture, Mining, Energy, Manufacturing and Retail on world markets, the results are dependencies and lack of self-suffiencies As like ‘True Beauty’, True ‘Energy’ is reliant on labor of the hearts, minds and the weariness of individuality. Love sets in, Industriouness thus begins as a Republic was born of them. As Temptation plays its game,will stoutness and resilience remain the same, as the honorable who will/is be blamed, commitment towards liberty will be shamed..
    .

  3. This is kind of the first step, of many ways to create the same outcome, we have been talking about for years. Kelly Kolb, VP of what? Government control, of what? Has an all to recognizable odor. For the Republic. msc

  4. It’s not the longshoremen you need to worry about, it’s the shipping lines/agencies who are refusing to dock & unload, keeping ships & cargoes in the roads, & blaming the longshoremen & truckers. This situation will create shortages across the nation, which will, in turn create a level of social unrest, & a further imposition of the ‘police state’. Who benefits? Figure it out, if you haven’t already.

  5. With salaries nearing $200,000a year, (and I’m sure MUCH more than that with overtime) it’s a little difficult to find sympathy for these folks. Yes, I know, it’s a dangerous job and they live in a high cost area, but still, they really don’t have much room to be complaining in our stagnant economy. And yes, we need more home made products going out and fewer imports. It’s time the government reduce incentives for corporations to move offshore. Reducing outrageous taxes on U.S. products and increasing import tariffs would go a long way to shifting to a stronger economy. Yeah, yeah, it’s not that simple, but it would be a start. Excuse me, I need to go feed my unicorn.

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