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Latest News - March 2015

March 2, 2015
NRF's Shay: Port labor-management negotiation system must change
Source: JOC.COM

LONG BEACH, California — Matthew Shay, president of the National Retail Federation, on Monday called on Congress and the Obama administration to change how unionized port labor and waterfront employers negotiate agreements so “the interest of thousands” can no longer threaten the livelihood of millions.  “The time has come for us all to say, ‘Enough is enough!’ ” Shay said in an address to the 15th annual TPM Conference in Long Beach. “The ongoing uncertainty and unpredictability from labor negotiations every few years can’t be standard operating procedure.”

The months of U.S. West port congestion — exacerbated by tension between the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association — have cost retailers sales and workers jobs, Shay said. Although the ILWU and PMA have a tentative contract, he warned that retailers would feel the pain from the drawn-out talks through the second quarter, because many wouldn’t get their spring inventory in time. Gap Inc. and Wal-Mart recently told investors that port delays threaten their ability to restock shelves with spring items.

Shay stressed that he wasn’t taking sides on whether the ILWU and PMA were to blame, and added that ports not being as modern as needed also contributed to congestion. But making improvements in port infrastructure will go for naught if the system around conducting port labor negotiations doesn’t change, he said.  "Add my voice to yours to make an urgent appeal for an end to these chronic disputes that are hurting everyone. Future negotiations cannot resemble those of the past," Shay said, according to prepared remarks. 

As congestion worsened and dozens of ships sat at anchor off West Coast ports, the PMA accused the ILWU of engaging in slowdown tactics, a charge the union vehemently denied. The ILWU blamed port congestion on marine terminals’ inability to handle larger vessels and the majority of carrier exiting the chassis business, leading to a dislocation of the crucial equipment.  Retailers aren’t the only ones feeling the pain, Shay said. Automakers, for example, have had to use costly air freight services because they couldn’t wait for inputs to make their way through clogged ports. U.S. exporters have lost business, too, and their inability to deliver goods on-time threatens future contracts.

And, while the stress on U.S. business has been severe, with some companies forced to shut doors or plans for new businesses scrapped, port congestion threatens more than just economic growth. Delays have endangered the supply of personal protection for U.S. medical workers, because 95 percent of medial items, such as gloves and masks, are imported.  “Thank God we didn’t have a real health emergency,” Shay said.

The industry can act like it “dodged a bullet” now that a five-year tentative agreement is in place, but should, instead, see recent events as a “wake-up call,” he said. Broadly speaking, U.S. labor-management relations work, Shay added. In the depths of the recession, Ford Motor Co. and the United Automobile Workers, for example, came together to make Ford one of the leading global car manufacturers, he said.  “We can do the same here,” Shay said, referring to port labor-management relations. “Once we’ve modernized our labor agreement system, we can then get on with the work of modernizing our ports and expanding global trade.”

Shay didn’t outline how legislators should reform what he called the antiquated port labor-management labor system, but a few potential ways are already apparent. First, labor and management could begin negotiations earlier. The ILWU and PMA began negotiations in May, less than two months before the contract expired. Another potential way to reshape the labor-management system is by placing longshore labor under the purview of the Railway Labor Act, the same legislation governing labor negotiations in the rail and airline industries.

The National Labor Relations Act, which currently oversees labor tied to U.S. ports, doesn't have any protections to make sure both sides reach an agreement and don’t interrupt commerce, Douglas Holtz-Eakin, president of the American Action Forum, a center-right policy institute, told in December. But the RLA does have such protections, with the National Mediation Board claiming 99 percent of the rail and airline mediation cases it has conducted since 1980 have been completed without interruption



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