West Coast employers in 2014 are bracing for what could be the most frustrating contract negotiations they’ve had with the powerful International Longshore and Warehouse Union in decades.
The source of frustration is that key issues that will arise in negotiations leading up to the July 1 expiration of the current contract have their genesis outside of the Pacific Coast Longshore and Clerks’ Agreement.
Controversial developments involving ILWU jurisdiction, health care and the emergence of super-alliances among shipping lines aren’t directly addressed in the waterfront contract, limiting the ability of employers to negotiate these hot-button issues. To cite a timely example, President Obama’s Affordable Health Care act imposes a tax on so-called Cadillac plans under which corporate executives are covered. The ILWU medical plan would make many corporate executives envious. ILWU members pay no premiums, and their co-pay for medicine is $1.
“Who is going to pay the additional $150 million in taxes?” said Jim McKenna, president of the Pacific Maritime Association, which represents employers. “The ILWU doesn’t want to pay for it,” he said, but employers don’t either because increasing costs for benefits drive up the cargo and man-hour assessments that employers must pay.
McKenna sees the key issues in negotiations this spring as being pension language, jurisdiction and health care. Wages, of course, are always central to the contract, but wages haven’t been a stumbling block in recent contracts.
Longshoremen are among the highest-paid blue-collar workers in America. According to the 2012 PMA Annual Report, the average annual earnings for general longshoremen working 2,000 or more hours were $132,046. Marine clerks averaged $149,800.
In some respects, the 2014 negotiations will tackle less explosive issues than those addressed in the 2002 and 2008 contracts. The 2002 negotiations were especially memorable because they involved a 10-day employer lockout involving the right of employers to eliminate some marine clerk jobs through the use of information technology.
Most container terminals now have optical character readers, global positioning satellites, computerized yard-management systems and other electronic processes that have streamlined terminal functions and increased terminal capacity without having to add acreage. The 2008 contract was equally significant in that it gave employers free rein to introduce machines such as automated guided vehicles and automated stacking cranes that are expected to eliminate hundreds of general longshore jobs.
The overarching issue unions face today, then, is retention of jurisdiction as automation eliminates jobs. Unions in many industries seek to expand jurisdiction in order to capture new jobs created by automation. “As we look at labor today,” McKenna said, “automation and technology are affecting blue-collar labor everywhere.” Unions are taking action within their contracts to protect their jobs, and outside of their contracts to carve out new jurisdictions, he said.
ILWU President Bob McEllrath sees jurisdictional disputes as inherent in the labor movement, especially in times of rapid technological change. “Jurisdictional disputes have happened along the waterfront for most of the past century,” he said.
Judging from demonstrations and work stoppages at West Coast ports in recent years, however, the ILWU isn’t taking jurisdiction lightly. The ILWU has been involved in about a dozen incidents that in some way involved jurisdiction. Some disputes centered on the potential loss of jobs to non-union labor, while others involved ILWU competition with other unions.
A dispute at the Port of Portland between the ILWU and the International Brotherhood of Electrical Workers over the equivalent of two jobs handling refrigerated containers illustrates how seriously unions are taking the jurisdiction issue.
The IBEW had performed the work for the past 30 years, when Portland was an operating port. When a private operator, ICTSI, took over the Terminal 6 container facility and joined the PMA two years ago, the ILWU claimed jurisdiction over the reefer work. Demonstrations and sporadic work stoppages involving this and other issues prompted Hanjin Shipping, the port’s largest container line, to announce it would leave Portland this month after serving the port for 20 years. The dispute was resolved inDecember when the IBEW agreed to relinquish the work to the ILWU, but the two jobs still could be diminished this month if Hanjin follows through and leaves the port.
The Port of Oakland last year experienced damaging demonstrations, work stoppages and congestion when SSA Marine took over the operation of two adjacent marine terminals. SSA hires International Association of Machinists workers to maintain and repair equipment, whereas the APL terminal that SSA took over had used ILWU workers. SSA assigned the M&R work to the IAM, infuriating the ILWU.
Oakland the past three years has suffered through a number of labor-related actions that interfered with cargo-handling operations. Dockworkers at times refused to cross picket lines by ILWU pensioners protesting lengthy delays in the payment of medical claims, and harbor truckers protesting new environmental regulations.
Some cargo interests warned that the work environment in Oakland has become so unpredictable that they will divert their cargo elsewhere if the situation doesn’t improve quickly.
McEllrath said Oakland has certain logistical advantages that will always make it an important gateway. Labor demonstrations are “as American as apple pie,” and are part of a democratic society, he said. There are a few places in the world where dockworkers are complacent, “but I don’t think any of us would like to live in those places.”
M&R work on chassis was a major issue on the East and Gulf coasts during the 2012 International Longshoremen’s Association contract negotiations as shipping lines exited the business of providing chassis to truckers and cargo interests. Chassis haven’t been as big an issue on the West Coast.
The existing contract states that the ILWU has no inherent right to perform M&R work for equipment owners that aren’t members of the PMA, McKenna said. As a practical matter, however, if defects are discovered when the equipment is on a marine terminal, the ILWU usually performs the work, he said.
Anticipating such issues, the PMA and ILWU in the 2008 contract “red-circled” certain jobs the union has traditionally performed and would therefore remain with the ILWU.
“We got it right,” McKenna said.
The increasing costs of pension programs are an issue in both the public and private sectors, and pensions will be a key issue in the ILWU negotiations. “Everyone has an appetite for more, but we can’t afford to pay more,” McKenna said.
Medical coverage is a huge cost for waterfront employers, and the issue blew up last year when an audit uncovered $40 million in fraudulent claims and charges involving doctors and longshoremen in the first half of 2013. “We didn’t negotiate fraud into the contract,” McKenna said. The ILWU has always considered medical benefits to be sacrosanct, so reaching a compromise on rising health care costs won’t come easy.
A number of demonstrations, work stoppages and loss of jurisdiction at a half-dozen grain terminals in the Pacific Northwest also occurred in 2013. The ILWU grain contract is separate from the container contract, and the grain terminals aren’t PMA members. “That’s not our contract,” so the PMA doesn’t get involved in the disputes, McKenna said. The heated demonstrations in Washington and Oregon, however, contribute to an overall image of instability at West Coast ports.
McEllrath blames the mostly foreign-owned terminals for locking out ILWU workers as they seek “even more profit by changing the rules to squeeze workers.” The ILWU will attempt to reach a grain agreement that “respects workers, protects local communities and allows the companies to still make plenty of money,” he said.
Carriers’ relentless move to form or expand their alliances in order to cut costs in a capital-intensive industry reached a new level last year when the world’s three largest carriers by fleet capacity — Maersk Line, CMA CGM and Mediterranean Shipping Co. — announced plans to form the P3 Network. When carriers form alliances, they reshuffle port and terminal calls, potentially pitting one port or terminal against another to improve productivity.
McEllrath said the trends toward more and larger alliances, and productivity at any cost, can lead to bad safety practices and loss of revenue for ports, making those ports and the ILWU natural allies. “Ports and workers have a common interest in preventing big companies from manipulating us into compromising safety standards or competing against ourselves,” he said.
Although carrier alliances will push for improved productivity, the full impact of the alliances is uncertain, McKenna said. This winter’s ILWU caucus likely will examine alliances, and could generate one of many resolutions to emerge before contract negotiations begin. “We’ll see 100 proposals come out of the caucus,” McEllrath said.