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West Coast port talks still in rough waters

Marvin Lazaro -- Home Textiles Today, August 5, 2002

Home textiles manufacturers and suppliers continue to watch with bated breath as negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) drag on with no end in sight.

Although the ILWU's contract expired on July 1, dockworkers continue to report to work, unload ships, load trucks and stock warehouses. The ongoing work is thanks to day-to-day and week-to-week agreements between the two entities, which continuously extend the old contract by periods of 24 to 48 hours. Extensions notwithstanding, the home textiles world is still being forced to cope and make adjustments if the worst does happen.

"We've been following it very closely," said Ted Matthews, vp of corporate communications for the Fort Mill, SC-based Springs Industries. "A strike would impact our business, especially if it was prolonged. We're making plans for how to deal with it."

Springs' alternatives are roughly the same for everyone in home textiles: accelerate some shipments, build up inventory and explore the possibility of alternate ports in Canada, Mexico or the East Coast of the United States. Although receiving orders via air is also an alternative, the high cost makes that option somewhat prohibitive. But, Matthews asked rhetorically, which would a manufacturer rather deal with, the cost of air shipments or the cost of losing business?

Keith Sorgeloos, president of the Atlanta-based Home Source International, said suppliers may be surprised by the good rates airlines may offer in order to attract more business if a strike does occur. Sorgeloos, who said his business will not be affected since Home Source's goods are shipped entirely to East Coast ports, estimated that air freight rates would be approximately 10 percent to 25 percent higher than ocean rates.

A contract offer was made to the PMA on July 16 that was immediately met with a counter-offer. The ILWU's offer would ostensibly save employers millions of dollars in cost savings while increasing efficiency and productivity. In return, the ILWU asked for jurisdiction over all remaining work and planning positions that have been outsourced to other work forces.

The PMA subsequently countered with an offer on July 21 that included cutbacks in benefits, pensions and arbitration process. This was offset by small wage and pension increases and a guarantee for clerks over the life of a five-year contract. The ILWU's vote soundly rejected the offer a few days later.

"We are disappointed that the ILWU rejected an offer that was substantial, fair and met the most significant of the union's contract demands," said Jack Suite, the PMA's director of contract administration. "PMA's offer would have increased overall compensation by 17 percent; provided for the key issue of maintenance of health benefits; and guaranteed jobs to all currently registered ILWU members. This was a premier offer for union members who already enjoy one of the finest wage and benefits packages in the nation."

Retailers going to manufacturers with concerns about their order fulfillment may hear that steps are being taken to ensure nothing interferes. But, as Dale Talbert, vp of Veratex, said, "I'll keep them informed as best I can, but [the whole situation] is out of our control."