1971 and 2033

1971 and 2033

As a rookie reporter, I once handed in a story describing something as unprecedented. An old editor quickly blue-penciled the adjective. He noted that after 6,000 years of recorded history, it's increasingly unlikely that anything is without precedent.

That editor's advice is worth remembering as we assess the continuing mess on the West Coast, where the Pacific Maritime Association and the International Longshore and Warehouse Union are operating under an 80-day cooling-off period imposed under the Taft-Hartley Act.

Most people have forgotten how common Taft-Hartley injunctions used to be on the docks. Between 1948 and 1971, the law was used nine times to force longshoremen back to work -- twice for the ILWU and seven times for the International Longshoremen's Association on the Atlantic and Gulf coasts.

In 1971, Taft-Hartley was used against both unions to halt simultaneous strikes. The ILWU struck for 134 days -- for 100 days before the Taft-Hartley injunction and for 34 days after it expired -- in a bid for higher pay and jurisdiction over off-dock container stuffing and stripping. (Does that sound familiar?) The ILA walked out for 56 days in a squabble over funding of a guaranteed annual income for New York dockworkers.

So don't waste time on nostalgia for the good old days. They weren't so good. Still, it's interesting to note the parallels -- and differences -- between now and 31 years ago.

Then, as now, the economy was fragile. In 1971 the Vietnam War was winding down. President Nixon had just taken the U.S. off the gold standard and was using wage and price controls to try to control inflation. In fact, a government pay board rejected the final ILWU wage accord as being too costly.

Ocean transportation has changed since 1971. Carriers may have been hurt even worse by that year's strikes than by the current PMA-ILWU impasse. Today's container ship operators have much higher fixed costs than their 1971 counterparts did, but most ship lines then were independent operations that could not rely on sister companies.

Shippers and cargoes also have changed. Three decades ago, the U.S. was a net exporter. With limited import competition, most U.S. producers concentrated on the domestic market. Today, imports dominate, particularly in the trans-Pacific trade. Inbound ships are crammed with consumer goods, many bound for mass retailers. In 1971, Wal-Mart was a tiny Arkansas company that had been incorporated for only two years. Now it has $220 billion in annual sales, the most of any company, and is the largest U.S. importer.

Mass retailers have been both a contributor to and a beneficiary of modern logistics. In the 1980s, deregulation of U.S. surface transportation allowed companies to control transportation expenses. At the same time, runaway inflation made inventory costs more visible. Aided by information technology, manufacturers and retailers have embraced just-in-time supply chains, sometimes extending globally.

The current unrest on the West Coast is spurring companies to re-examine their JIT systems' vulnerability to labor disruptions. Some will add "safety stock" or increase their use of all-water routings through East Coast ports. But a wholesale shift from the West Coast is unlikely. Asia still enjoys comparative advantage in manufacturing costs, and the West Coast is the most direct route to the U.S. market. Most cargo will still move that way after the current dispute is settled.

And it will be settled. In the heat of the current dispute, the ILWU has claimed the PMA is out to break the union. That's nonsense. The PMA is merely trying to regain some of what it has lost during the last 30 years. Eventually, maybe next year (the 1971 contract wasn't settled until Feb. 20, 1972), the ILWU and the PMA will strike a deal.

How the agreement will be structured is anyone's guess. Here's mine: Management will win the right to introduce labor-saving technology but will pay dearly -- in money and job guarantees and in "hard-timing" of employers by ILWU members after the contract is signed. The issue of the ILWU efforts to expand union jurisdiction will be settled with contract language that saves face for union leaders but is vague enough for management to live with.

And one additional prediction: Thirty-one years from now, the PMA and the ILWU will still be arguing over technology and jurisdiction. By then, however, as trade becomes more globalized, U.S. laws may have been changed to reflect the view that port work stoppages are too disruptive to be allowed. There's a strong precedent: It's called the Railway Labor Act.

Joseph Bonney is deputy editor of The Journal of Commerce. He can be reached at (973) 848-7139, or via e-mail at jbonney@joc.com.