As the West Coast port labor dispute wears on, cargo companies have now taken the unusual tactic of going straight to West Coast dockworkers with what they call their “last, best and final” offer in a contract crisis that has choked off billions of dollars in international trade, an Associated Press (AP) story reports.
The employers—in a move which most likely will infuriate union leaders negotiating behind closed doors under a media blackout—distributed letters with the contract offer to rank-and-file longshoremen at 29 ports from Los Angeles up into Washington state. It detailed a third, comprehensive contract offer the employers made Feb. 12, which is more recently than has been previously disclosed, AP reports.
It would seem the employers hope union members will support the offer and then pressure their negotiators to accept it. The letter explains the offer includes wage and pension increases and the maintenance of low-cost health benefits, according to AP. Its “last, best and final offer” language is significant, AP notes, because it may lay the groundwork for the declaration of an impasse and a full lockout of workers by employers.
U.S. Labor Secretary Tom Perez joined the San Francisco negotiations for the first time on Tuesday, urging the parties to “come to an immediate agreement to prevent further damage to our economy,” reports a Reuters story. In a show of just how far tensions are escalating, also joining the talks on Wednesday were U.S. Commerce Secretary Penny Pritzker and Los Angeles Mayor Eric Garcetti, whose city is home to the nation’s busiest cargo port and neighbors the second largest cargo hub at Long Beach.
The labor dispute has had a ripple effect on supply chains. Japan’s top three automakers said yesterday that the West Coast port difficulties have had an impact on their North American production. Honda said it was reducing output at four plants in the U.S. and Canada by a total of 20,000 units this week—primarily of its Accord and Civic models—and added that a decision would soon be made on further production cuts. The company also has begun shipping cargo by air to avoid port difficulties.
Toyota also said this week it too is now resorting to airlifts and changing shifts to keep production moving. Finally, Nissan says there has been “some impact” on its North American operations, and that it too has started limited use of air freight to deliver parts from countries in Asia to the U.S.
Some estimates say that relying on air cargo rather than seaborne shipments results in a cost that may be five or more times more expensive.
On the other hand, Detroit automakers are not experiencing any “significant” problems in shipping or production due to labor disputes at West Coast ports, the Detroit News reported last Friday. Officials for General Motors, Ford and Fiat Chrysler Automobiles NV on Friday each told the paper that their respective companies have either made alternative arrangements for shipping or are not experiencing any major shortage of parts or shipping problems.
“With the strong support of our suppliers, carriers and manufacturing sites, we’ve adjusted buffers and established alternate ship contingencies,” GM spokeswoman Freda Agboka wrote in an email to The News. “In some instances, additional cost occurs because of premium freight.”
While the U.S. auto companies may not yet notice a “significant” problem, the West Coast port labor strife is costing them time and money, nonetheless. The Japanese companies’ tactical shift to rely more on air cargo and to adjust production shifts in North America will catch up to the bottom line eventually.
Regardless of your industry, has your company seen an impact of the West Coast port labor dispute?