East Coast Labor Negotiations - Update
Peter Friedmann, maritime industry expert and counsel to the Coalition of New England Companies for Trade (CONECT), has provided the below practical look at the current state of negotiations between the two sides of the East Coast labor dispute.
Hello CONECT,
We expect no news on the East and Gulf Coast labor negotiations until Tuesday afternoon at the earliest. What remains to be negotiated? While royalty payments have been featured in the news, we understand there are 5 issues, of which the royalty payments are the first and probably the most expensive and difficult.
(Royalty payments were instituted in 1960 as a temporary measure to address the uncertainty at the time of the impact of the shift to containerized cargo. But now it has become a major income source for the longshoremen, above their regular wages, costing the terminal operators many millions each year.) Employers want to cap them, the ILA does not.
Other issues revolve around work rules, particularly those in Port of NY/NJ.
WILL THE PRESIDENT INTERVENE?
Many letters have been written to President Obama asking him to intervene. CONECT has signed onto those letters. I believe he is already is doing so, even though maintaining complete silence. The White House was silent prior to the expiration of the ILA contract at the end of September, but did intervene behind the scenes, resulting in the current contract extension. So the WH is no doubt playing a role now. However, I believe that it is extremely unlikely that the President will invoke Taft-Hartley if there is a strike (TH orders the parties back to work and back to negotiations, once there is a strike), because TH is seen by unions as a real assault against them - even George W. Bush waited 10 days before invoking TH, and he did not have the same relationship with organized labor as President Obama does.
WHAT WILL HAPPEN?
Everybody wants to know, no can know, and no one is willing to predict. But here is my assessment, as of today (obviously we will know much more after Tuesday next week):
- The ILA and USMX could reach an agreement next week. Many of us doubt that, but it is possible. 10% chance
- The ILA and USMX could agree to extend the contract again, for a couple weeks (ILA will not strike New Year's day, when they get triple-pay) or maybe a month. 75% chance
- The ILA strikes early January. 15%
Peter
Liberty will continue to provide updates on this topic as more information becomes available.
