A labor dispute with the potential to shut down much of the nation's busiest seaport complex may drag for weeks as the maritime clerks union and employers argue about a little-known agreement reached during the depth of the global recession.
The two sides at the Los Angeles and Long Beach ports are still far apart in their negotiations on a contract to replace the one that expired June 30, which prompted a clerk walkout at four container terminals. On Friday, the 900-member clerical union expanded picketing to a fifth container terminal, temporarily interrupting dock operations. But an arbitrator reiterated an earlier ruling that the clerks' picket lines were invalid, and longshoremen, who had briefly honored the picket line, returned to work.
The clash comes as the vital Southern California cargo and logistics industry struggles to recover from the sharp slowdown in international trade. The region's economy will suffer if the negotiations falter, said Jack Kyser, a consulting economist with the Los Angeles County Economic Development Corp.
"It's an important industry in the initial stages of recovery, and this could throw sand into the gears," Kyser said. "And all of the competing ports on the West Coast and the East Coast will try to use it against us."
So far, business at the twin ports hasn't been disrupted because dockworkers, who negotiate their contracts separately, have continued to load and unload ships. But the stakes are high. International trade employs 651,000 people from Ventura County to the Mexican border, and the threat of a slowdown could drive some cargo — and jobs — to other West Coast ports.
"They are trying to balance their books on the backs of the working men and women," said union negotiator John Fageaux Jr., president of the International Longshore and Warehouse Union's office clerical unit Local 63.
His counterpart, employer negotiator Stephen Berry, has a different take. "They are trying to tell these companies how to run their businesses," said Berry, who represents 14 shipping lines and terminal operators known as the Harbor Employers Assn.
The clerical union handles documentation and paperwork for the shipping containers moving in and out of the two ports, which receive about 40% of the nation's imported goods. On average, clerks earn $96,000 a year, with vacation, sick leave and healthcare benefits.
Some of the dispute's rhetoric is common to most contract debates. Union members say management is threatening their job security and trying to outsource their jobs to lower-cost locations. The employers say the union is being unreasonable in its wage and benefits demands.
But the real sticking point, insiders say, is a hastily worded pact reached last year that relieved struggling employers of certain costs. In effect, the lurking third party at the negotiating table this time around is the shadow of an 18-month economic decline that caused severe pain for labor and employers.
From 1993 through 2007, international trade boomed. Veteran longshoremen had all the overtime they wanted, and part-timers worked nearly full-time hours. Shipping lines went on a spending spree, ordering bigger and more expensive vessels.
Then the recession hit and international trade dried up. The shipping lines collectively lost as much as $24 billion in 2009. Veteran dockworkers were getting jobs as few as two or three days a week. Clerical workers have been so strapped that the local is raising funds for the first time in its history for part-time workers, aiming to buy them $100 grocery store gift cards.
In that contract-relief agreement reached in May 2009, the union said it would encourage early retirements and wouldn't press employers to hire part-timers to fill in for absent workers unless there was real work to be done. In exchange, the employers agreed that there would be no layoffs.
Now that 2010 has shown a slow but steady recovery in business, the union wants to return to a system in which part-timers are called in whenever veteran union members are absent. But the employers argue it's far too early to return to business as usual.
"After such a deep recession, confidence has been so thoroughly shaken and fears are so high that labor and management are reexamining everything they did," said John Husing, an economist with Economics & Politics Inc. who tracks international trade in Southern California.
"There will be a new normal on how businesses feel about their costs and how labor feels about its jobs," Husing said. "And while that is being established, negotiations will be very difficult."