With a two-year contract extension barely in place, the International Longshoremen’s Association and Atlantic and Gulf waterfront employers already are looking ahead to their next negotiations.
Those talks could come as soon as 2011, long before the newly signed extension expires Sept. 30, 2012. The union and United States Maritime Alliance usually start negotiations early to deter shippers from rerouting supply chains to avoid a possible strike.
“We’ll probably be back at the table in a year-and-a-half,” said Leonard Riley of Charleston, co-chair of the Longshore Workers Coalition, an intra-union faction that criticized ILA leaders’ handling of last year’s negotiations with USMX and campaigned against the extension.
Union members approved the extension by nearly 2-to-1 in a Nov. 17 referendum. The outcome was a relief to shippers and carriers, who dreaded the prospect of port closures at a precarious point in the international trading economy. The ILA hasn’t had a coastwide strike since 1977.
Like last year’s talks, the next negotiations will be influenced by economic conditions and union politics.
Employers and the ILA say they achieved their broad goals of a deal that addressed top union concerns while avoiding long-term commitments in an unsettled economy. The LWC insisted the union should have driven a harder bargain and delayed talks in hope the economy would rebound. Coalition leaders will try to elect local delegates to the union’s July 2011 convention, when top officers will be chosen.
Riley said he was disappointed in the referendum’s outcome — the extension won majorities in every port except Charleston and Baltimore — but said it forced the ILA’s top leaders to be more accountable to members. “The only thing we can brag on is that we were right on the issues,” he said. “But I think we have not lost anything in this struggle, and we have gained some in the form of democracy.”
Harold Daggett, the ILA’s executive vice president, has said he plans to run for the union’s presidency next year. Daggett briefly allied with the LWC in its criticism of the union’s contract strategy before agreeing to cooperate with ILA President Richard Hughes. Daggett’s New York-New Jersey local approved the extension by a 328-19 vote.
Even LWC leaders said the contract’s promise of substantial pay increases made it hard for dockworkers to reject, especially in today’s economy. “I think they went for a bird in the hand,” Riley said.
The extension immediately boosted starting pay for container handling from $16 an hour to $20 and raises top hourly wages from $31 to $32 in 2011. Gaps between wage tiers will narrow in 2012, when workers with nine years’ experience will rise to top scale and less-experienced workers will receive raises of several dollars an hour.
James Capo, chief executive of USMX, said 85 to 90 percent of current workers would be at the top wage scale after the new schedule kicks in. He said the nine-year progression from entry-level to top pay will be continued in subsequent contracts.
Employers entered negotiations with the goal of avoiding immediate cost increases for container carriers that lost an estimated $11 billion globally in the first three quarters of 2009.
Capo estimated the extension’s pay increases and lifting of caps on carriers’ royalty payments for bonuses and benefits would raise employers’ costs by close to 5 percent over the contract’s life. Most of the increase will come in the extension’s final year, when hefty raises to less-senior workers will narrow wage gaps.
Negotiators kept costs down by reallocating money from royalty funds and from medical and other funds that have surpluses. Carriers will retain $42 million in royalties to offset this year’s wage increases. In subsequent years, all royalties will go to the union, which can use them to augment bonuses or bolster local pension and benefit programs. “I think that somehow got lost in the equation,” Capo said. “This is real money, and as long as the business picks up and continues to hold, it’s another source of income to the union.”
The previous contract capped carrier royalty payments at 73 million tons. Capo said container traffic through Atlantic and Gulf ports is expected to total about 95 million tons for the contract year that ended Sept. 30, down from 112 million in the comparable 2007-08 period and 108 million tons in the 2006-07 period. In its negotiations, USMX projected 100 million tons in each of the next three years, he said.
“None of our carriers really disagrees with that estimate,” Capo said. “I think it’s probably realistic, but I don’t know. I thought things might pick up a little bit toward the end of (2009), but I don’t see it, and I certainly don’t see it” for this year.
Riley predicts employers would try to revise some wage increases that will take effect around the time of the next negotiations. “I think they’re going to say that the economy hasn’t sufficiently recovered and they can’t pay for what they agreed to pay,” he said.
Capo said it’s too early to speculate about the next round of bargaining.
“It’s give and take,” he said. “That’s what negotiations are.”
Contact Joseph Bonney at email@example.com.