West Coast port lockout leaves suppliers dry
October 7, 2002,
The ongoing battle for control of a few hundred jobs in West Coast ports is threatening to hold the nation's economy hostage.
Home textiles suppliers and retailers have been tensely watching the situation for months, as many companies receive their goods from China through the affected ports. According to a retail lobby for closure on the issue, the West Coast Waterfront Coalition, the lockout has already set supply lines back by a month.
Asked about when the Fort Mill, SC-based Spring Industries first started making contingency plans, Ted Matthews, vp of corporate communications, replied, "When it became apparent there could be some difficulty. We've been monitoring the situation for many weeks and built up some inventory.
"Certainly, if this is short-lived, which we all hope for, I don't think we're going to see any impact on meeting our customer commitments.
"If this drags on, clearly everybody is in the same boat."
While Springs has not been immediately affected, quilt and bedding manufacturer Peking Handicrafts has. According to Janie Leonard, national sales manager for the San Francisco-based company, Peking has containers unloaded but has been unable to get to them and also has containers stranded on ships in the harbor in the affected ports. Peking had instituted some pre-emptive plans, namely bringing in goods earlier than normally scheduled, but the goods it cannot get to now are essential to day-to-day operations, she said.
"We are looking at shipping our goods to the East Coast," Leonard told HTT. "But that adds about 12 to 14 days. So now we're talking about 37 to almost 40 days of transit time and a lot more expense." The last time Peking was able to receive its goods, she added, was Sept. 30. On average, the company receives six containers of goods per week.
Todd Cella, director of sales and marketing, Richloom Home Fashions' Global Sourcing division, said the company has implemented contingency plans to redirect most of its goods to East Coast ports. But, certain goods could not be re-routed and are stuck as a result of the lockout.
"You do what you can to divert shipments around it," Cella said. "But some things are impossible to avoid."
Retailers face an even more frightening prospect: empty shelves during the crucial fourth-quarter selling period. Last week, retailers urged President George W. Bush to take whatever steps might be necessary in a letter issued by the West Coast Waterfront Coalition (WCWC), whose members include Family Dollar Stores Inc., the International Mass Retail Association, Kmart Corp., the National Retail Federation, Target Stores and Wal-Mart Stores Inc.
Upon sending the letter, Robin Lanier, executive director of the coalition, said: "The economic impact of the five-day shutdown of the ports is mounting. Even if we were to end this impasse today, it would take more than a month to recover and get our supply chains back in working order. This poses a tremendous threat to the holiday business so critical for many American retailers; and ensures that U.S. manufacturers will continue to experience parts shortages even well after the ports are reopened."
In the letter to the president, the coalition said: "We implore you to take whatever steps are necessary to reopen the nation's West Coast ports," the letter stated. "While we have always favored mediation, we believe some action must be taken before the economy suffers further damage. We strongly urge you not to delay in your actions, as each day imposes hardships and costs on a wide range of American industry, their customers, their employees and their shareholders."
The PMA and ILWU have been trying unsuccessfully to negotiate a new contract for the last five months. The original contract expired on July 1, but daily extensions through Sept. 2 had been agreed on. Although no extensions were granted after Sept. 2, union dockworkers continued to report to work.
The lockout was the result of what the PMA described as deliberate slowdowns and misplacement of containers. The ILWU insisted there was no slowdown and that it had done nothing to warrant the action.
The result then, and so far, has been the backup of potentially hundreds of cargo ships, many of which have been forced to anchor outside the breakwaters of the West Coast's 29 ports.
Estimates on the amount of business lost daily due to the lockout amounts to almost $1 billion. Collectively, the ports handle almost $300 billion worth of cargo annually.
The main issue causing the stalemate is the modernization of those ports. The PMA, the agency which represents shipping companies, contends the modernization is essential in order to speed up processing and delivery of cargo. While the ILWU has conceded that the ports need to be upgraded, it insists that no union jobs be eliminated in the process and that any new jobs that result remain under its control.
A federal mediator was brought in last Tuesday during a meeting in Oakland, CA, but only to discuss whether mediation may be used during the negotiating process between the organizations. The union was represented by its president and chief negotiator James Spinosa and four members of its negotiating team. The PMA was present with 15 members of its negotiating team as well as president Joseph Miniace. Less than an hour after the meeting began, however, the ILWU was informed that the two guards brought by the PMA, ostensibly to protect Miniace in the wake of death threats he had received, were armed. In response, the union representatives stormed out of the room with Peter Hurtgen, director of the Federal Mediation and Conciliation Service, asking them to reconsider.
During a news conference held later that day from the union's San Francisco headquarters, Spinosa said, "We felt it was life-threatening. It's outrageous to this membership … We feel this set of negotiations has taken a turn for the worse."
Hurtgen issued a statement, calling the use of the armed guards "inappropriate and a breach of bargaining protocol."