Obama’s showdown at West Coast ports slowdown

It may not be a happy Valentine’s Day for President Obama if the Pacific Maritime Association (PMA) decides to lock out the International Longshore and Warehouse Union (ILWU) at the West Coast ports. Although the Obama administration has worked favorably with organized labor, we’re about to find out what a real State of the Union speech sounds like. By Valentine’s Day, the president may have to choose between the love of labor and the love of commerce — if he is forced to throw the switch and invoke Taft-Hartley. Either way, we all have a big problem here.

{mosads}A flotilla of cargo vessels is rapidly building up off the West Coast of the U.S. Ships are stacked up at the ports of Long Beach, Calif.; Los Angeles; and Oakland, Calif. They are loaded with cargo and sit idle while waiting for berth time at America’s busiest ports. On the land side, trucks are lined up and waiting to onload American exports to the vessels. Between the importers and exporters stands the ILWU, who has been “slowing down” for weeks, and the PMA, who has been making counteroffers to try to sort out the issues.

This all started last July, when the 20,000 members of the ILWU at 29 West Coast ports watched their labor contract expire. Negotiations have been about benefits, work rules, safety, pensions and salary. Some of the negotiations have progressed quite well, but the ports are stacking up with containers and have now reached a point where chaos is setting in. Even if this were to end tomorrow, it will take weeks to sort out the backlogs.

Just last week, the PMA decided to publicize their offering, likely in a bid to win public empathy by revealing a generous package that they openly displayed. They did this to create some angst amongst the business community for comparison, while companies in the U.S. are suffering immense losses by failing to import or export cargo in a timely manner. Estimates of the losses run in the millions or probably billions, but that’s all fuzzy math for people who have perishable cargo or require on-time deliveries. Nobody wants heart-shaped candy boxes after Valentine’s Day and what do we do with the California navel oranges consigned to Asia for Chinese New Year? People often forget that the pendulum swings both ways.

While the president may have to backtrack on the administration’s statement that encouraged both sides to reach an agreement “through the time-tested process of collective bargaining,” this port fiasco continues to be an ugly situation, and the biggest loser (when the dust settles) may be the West Coast ports themselves. Keep in mind that by 2016, the Panama Canal will be widened to accommodate the larger (New Panamax) vessels that can haul monster cargo. For sure, the East Coast ports of Bayonne, N.J.; Elizabeth, N.J.; New York; Norfolk, Va.; Charleston, S.C.; and Savannah, Ga. will be very excited to grab more business.

The advice to the West Coast negotiators and to the ports is, quite simply: Be careful what you wish for — you might get it.

Helfenbein is chairman of the board of the American Apparel and Footwear Association. He is a strong advocate for a robust U.S. trade agenda and lectures frequently on the subjects of supply chain and international trade. Follow him on Twitter @rhelfen.