RAY SUAREZ: For more, I'm joined by Peter Olney, associate director of the Institute for Labor and Employment at the University of California-Berkeley, and a former organizer for the longshoremen's union. Steve Cabot, a labor relations lawyer with Harvey-Pennington, a Philadelphia-based firm. He has represented shipping companies in previous labor disputes and John Mitchell, an economist at US Bank in Portland, Oregon.
Well, Steve Cabot, from the view of the companies, what are the core issues that are keeping the locks on the port gates?
STEVE CABOT: I think we're dealing with a labor dispute, with a labor union, that has a fairly well established, entrenched history of feather bedding, and creating a need for workers when there isn't the need. What's happening now with this same union is that they're trying to hold on at all costs to try to again retain workers when there is not or may not be a need.
The technology on the West Coast ports is at least five to ten years behind other ports around the world. Eventually what's going to be happening is that the cost of labor, the cost of delivering the efficiencies that are needed are going to force other shipping companies and other people who need the services there to look elsewhere --- very much like what happened with the steel industry. We have some of the highest paid unemployed steelworkers in the world.
And the longshoremen workers apparently and the union are just blinded to the fact that what technology normally means is that there will be other work, that there will be efficiencies that will allow additional work to come into the ports, which means more jobs. It just seems to me that what is being sought here is short- term gain for wages without any meaningful expectation for job security in the future.
RAY SUAREZ: Don't ILWU workers agree with you that there will be more jobs but that the argument is who gets jurisdiction over those jobs?
STEVE CABOT: A lot of these arguments, like we need to slow down, said the union because of safety issues, are red herrings. Yes, there may be an expense initially where some jobs could be lost, although the association negotiators made it clear, the PMA made it abundantly clear in negotiations that anyone who is adversely affected will not lose their jobs.
And, please, let's keep in mind who we're talking about. We're not talking about people who are making $5 an hour. We're talking about clerks that record information in many cases by hand, which is somewhat akin to the dark ages, who are making six-figure salaries and in some cases as much as $180,000 a year. So when we're dealing with these types of highly paid workers, like in other industries, they're out-pricing themselves. The technology now is allowing work to be done, the type of work that had been done so much efficiently, so much more cost effectively that now the docks can be run better, smarter, more effectively. So that hopefully more work will come into the various ports along the West Coast. What I fear....
RAY SUAREZ: Let me turn to Peter Olney at this point because you've been listening to -
PETER OLNEY: Yeah. I've been listening carefully.
RAY SUAREZ: -- one particular view of the dispute and what's at issue. From the ILWU's point of view, what are they fighting for?
PETER OLNEY: Well, the problem with this gentlemen's perspective is that history proves him wrong. In 1960, the ILWU, led by Harry Bridges, pioneered in implementing the mechanization and modernization agreement, which led to the introduction of the container, which some people say has revolutionized world shipping, expedited world shipping.
This is a union with vision and foresight that said we can't stop technology, we're going to allow the implementation of new technology, but we want guarantees that any jobs created in our jurisdiction, which simply means handling cargo in the ports or off the ports, should be represented by our union. And this is a key point because it ensures that in the ports, in the surrounding areas, that we have workers making good wages with good benefits. Here in the Bay Area, for instance, our Local Ten of the IWLU is a majority African-American union, and there's no better community development strategy than putting good wages and benefits into the pockets of American workers.
RAY SUAREZ: But when Mr. Cabot talks about modernization, talks about cost, one thing that's changed a lot since the move to containers is the globalization of the world economy and the tremendous run- up in the bulk of cargo that comes in to West Coast ports. America has become a very strong importer. Hasn't that changed the economics? Haven't the supply chains of manufacturers changed in ways that also have to be reflected at dock side?
PETER OLNEY: Well, as I said, Ray, the introduction of the container did revolutionize shipping. And we all understand that the West Coast ports account for like 40% of the water-born cargo coming into and out of this country. The introduction of technology is not the issue. The issue is: who is going to be in those jobs? What kind of wages and benefits are they going to get? Many of these jobs, because of the introduction of computers, can now be done off dock. That doesn't change the fact that they're basic long shore work and should be represented by the ILWU. That's the union's position.
The employer in 1960 was ready to make a deal. In 2002, the employer is resisting, a simple deal that would result in a few thousand union jobs. The employer has locked out the workers, created a crisis in the economy over a fraction of their cost of doing business, about 5% of their costs of doing business are in labor. Most of their costs are in giant capital equipment involved in ships, cranes and the cost of fuel. So this crisis has been provoked by the avarice of the Pacific Maritime Association.
RAY SUAREZ: John Mitchell, is Peter Olney right that this is only a small part of the total cost of doing business?
JOHN MITCHELL: I believe that that is correct in terms of the total investments that are involved in the process.
RAY SUAREZ: And what are we looking at over the interests of, what, about 10,000 workers along the western shores, what are we looking at in the national economy as far as risk?
JOHN MITCHELL: Well, the risk, I think, for the national economy is that this is just one other event on top of weakness in the equity markets, you know, fear of war on top of a very slowly growing economy. This could be just another factor that, you know, puts us closer to the possibility of additional weakness. The timing is very, very critical.
RAY SUAREZ: The port gates have only been shuttered for a short number of days. Certainly with perishable items like fruits and vegetables, there could be some pretty substantial losses. But with other things, components for manufacturers, already finished garments, things like that, are we looking at problems in retail, problems in manufacturing, if this goes on too long?
JOHN MITCHELL: I think we are. We've seen in recent years, of course, an increased integration and globalization, a spread of the just-in-time manufacturing system. You know, we've already seen one motor vehicle company or producing- facility in Fremont, California have to shut down. We've seen reduced hours back at Midwestern auto plants, and that's just within a few days. A lot of retailers, I suspect, prepared for this in the sense the risk had been known and you saw an acceleration in imports in the second quarter, that may give retailers some time. But with the... as this drags on, those inventories are going to be gone and of course we're heading into the all important Christmas season.
RAY SUAREZ: And Steve Cabot, it sounded like the two sides are still pretty far apart. Is there some incentive given what the economist just said for the docks to make a deal, for the shippers, the companies?
STEVE CABOT: I think it's really time for the employer community, who is involved in negotiations to finally take a stand. We are at least five to ten years behind in technology with regard to competing ports around the world. And for Peter to be talking about 1960, I think we need to be focusing on the 21st century. And the issue here of fighting over people who are making $130 some to $180,000 a year when they're being guaranteed by the employer group that no one will lose a job but that we need to create the opportunity for increased technology to do things better, that to resist this is almost like attacking Santa Claus at Christmastime.
And it's just poppycock to listen to the rationalizations of Peter and other representatives of organized labor when we're talking about the need to deal with the global competition. It's something that unions for a long time have resisted.
And unfortunately in the steel industry, they resisted too long. We're simply saying now, I'm suggesting, wake up before it's too late so that we don't have the dinosauric industry on the West Coast as opposed to a thriving industry where there's more than 10,000 dock workers and the people who can do the work most cost effectively and efficiently will get the work. For Peter to say we want guarantees, we want the union to keep the jobs is kind of like when I heard when I was a young lawyer in the '60s, that same jargon didn't make sense then and it doesn't make sense now. If the longshoremen perhaps weren't getting paid $150,000 plus a year, that maybe they would be more competitive and the PMA might be more interested in creating job opportunities for them.
RAY SUAREZ: Peter Olney, how do you respond to that?
PETER OLNEY: Can I respond to that?
RAY SUAREZ: Please quickly.
PETER OLNEY: Yeah, I think one thing that happened post 9/11 was that the American people found a new found respect for working people, people who braved tremendous adversity and risked their lives to do difficult jobs. Longshoremen are out on the decks of ships lashing containers, risking life and limb every day.
So it's time to stop bashing workers and it's time to remember that the kind of protections that a union gives people is something that workers at Enron and WorldCom and Adelphia and Tyco who saw their pensions and their futures disappear because of corporate raiders engaged in free market activity, those workers would be very happy to see the power of a good old-fashioned union.
SUAREZ: Is there a risk in taking this too far, that a lot of this cargo will instead go to Canadian Pacific ports and Mexican Pacific ports?
PETER OLNEY: No, there's no risk of that, Ray. Studies have shown that this cargo, because of rail and infrastructure questions, has to come through the West Coast. Mr. Cabot, in comparing long shoring to the steel industry, perhaps does not understand that you can't move the port of Los Angeles or the port of Long Beach to Singapore. You need a port on the West Coast. These ports are going nowhere. These workers are going nowhere and the employers need to sit down and strike a fair deal.
RAY SUAREZ: Peter Olney, Mr. Cabot, John Mitchell, gentlemen, thank you all.