Much of the activity at West Coast ports has come to halt because of union stoppage, causing pain across the economy. The stoppage also creates potential opportunities for foreign competitors.
The labor unions representing the nation’s 20,000 longshoremen and the Pacific Maritime Association, which represents about 70 shipping companies, have been locked in negotiations for nine months over issues such as healthcare coverage and pensions. A particular sticking point has been how to arbitrate future workplace disputes. There now seems to be some movement forward but the effects of the stoppage have been damaging to the U.S.’s fragile economy.
The situation creates problems for shippers, retailers, meat and poultry companies, and manufacturers across the country. Port closures have affected activity at 29 ports in hubs like Los Angeles, Long Beach, and Oakland in California, and Seattle and Tacoma in Washington state. These hubs manage about $1 trillion worth of cargo annually – almost a quarter of US international trade. LA and Long Beach have been especially hard hit as they account for over 40 percent of all US container traffic.
The impact is real. Those spring and summer fashions may take longer to get on the shelves of our favorite retailers, meaning businesses won’t be able to do as much hiring as otherwise. Port delays add costs to reroute merchandise and has retailers thinking about shifting to manufacturing on U.S. shores – even if manufacturing costs are higher – to avoid future shipping delays.
Retailers from Macy's to Gap and Steve Madden to Carter's cited delays at the West Coast ports—where operations have been disrupted by a labor dispute—as a substantial headwind for 2015. The International Longshore and Warehouse Union and the Pacific Maritime Association reached a tentative deal in February.
At Macy's, for example, management said about 12 percent of its first-quarter buys will be delayed one to five weeks. At Gap, executives predict delayed merchandise will dent its full-year earnings by 13 cents a share.
Contributing to cost increases are the extra expenses required to reroute merchandise to temper delays…
Other reasons include rising wages in China, and the halo surrounding items that are made in the USA, Vaughan said.
And there are broader implications for the economy. Some analysts have estimated that the strike could shave up to 1 percent from US GDP. Business Insider explains that last week's manufacturing index fell, merchants lost holidays sales due to delays in receiving merchandise, and agricultural exports have dropped as perishable products wasted away in storage containers waiting for shipments.
Bay area resident simply want to stop burning their hands on hot coffee cups because there’s a shortage of cardboard cup sleeves. They want this labor dispute to be resolved so that whichever container that contains stacks of cardboard sleeves for Peet’s Coffee & Tea can get into their hands.
Labor unions have a historic significance in fighting for the rights and needs of American workers. But labor unions are now in decline as more and more American workers feel that they can take advantage of opportunities without needing a union and paying union dues that often go to supporting politicians with whom they do not agree.
The percentage of the workforce that belongs to a union now stands at 11.3. It was nearly twice that—20.1 percent—in 1983. Unions are struggling, and they should realize that putting a damper on the U.S. economy doesn’t endear them to the majority of Americans. Union officials need more members to pay dues, but the American worker needs a robust economy that offers good jobs. This West Coast stoppage has been detrimental to the latter and, in the long run, is probably not going to be helpful to the former either. And it's not helping the unions to make any friends.