Auto and auto parts imports from Asia could be seriously effected if West Coast dock workers and management can’t come to an agreement on a new contract soon.
The existing contract between the International Longshore Warehouse Union and the Pacific Maritime Association expired July 1. The two sides have been trying to iron out a new pact since May 12, but there doesn’t appear to be much movement.
The two sides issued a joint statement after the old contract expired: “While there will be no contract extension, cargo will keep moving, and normal operations will continue at all ports until an agreement can be reached between the Pacific Maritime Association (PMA) and ILWU.”
Last Stoppage in 2002
The ILWU, which represents 14,000 port workers at 29 ports from San Diego to Seattle, has threatened to go on strike if a new agreement can’t be reached. The last work stoppage, which occurred in 2002, lasted 10 days and caused an estimated $15 billion in reported losses and created a backlog of cargo that took several months to be cleared.
If a strike occurs this year, one of the biggest sectors that could be affected is the import auto industry. While more than 40% of the nation’s imports come through the West Coast, close to 100% of the vehicles manufactured in factories in Japan, Korea and other Asian countries arrive there.
More than 2.4 million vehicles per year are exported to the US from Asia, most of which come through the Long Beach, Oakland and Seattle-Tacoma ports. The West Coast ports also are the destination for many different vehicle components, including engines, transmissions, and tires that are manufactured in China, South Korea and Japan and are used at assembly plants throughout North America.
Strike Could Affect Economic Growth
The National Federation of Retailers and the National Association of Manufacturers recently commissioned a joint study, which determined that a West Coast port strike would have a serious impact on the still-fragile US economy.
“A protracted dispute between the negotiating parties could lead to reduced or shuttered terminal operations for an extended period,” the study warned. “If such disruptions occur, the economic impact would be significant and widespread.”
Even if there is no work stoppage, ILWU members could try to flex their muscle with occasional slow downs.
The PMA is seeking for the union to offer concessions in benefits, especially medical costs, which have more than doubled over the past decade. The PMA said benefits cost $93,200 per registered worker in fiscal year 2013. For its part, the ILWU is seeking to expand its jurisdiction.
Even a five-day work stoppage would reduce gross domestic product by about $1.9 billion per day and would disrupt 73,000 jobs, while a 10-day stoppage like the one that occurred in 2002 would cut the GDP by $2.1 billion daily and affect more than 169,000 workers.
West Coast ports handle more than two-thirds of all US retail container cargo and most of the cargo arriving from Asia. While an expansion of the Panama Canal is expected to open up East Coast ports to the Panamax super-freighter cargo ships that commonly are used for Asian imports, the deepening and widening of the canal won’t be finished until later this year.