Pacific Maritime Association CEO James McKenna on Wednesday released details of the employers’ contract offer to U.S. West Coast longshoremen, a comprehensive offer the PMA hopes will head off the need for a lockout or strike by the International Longshore and Warehouse Union during negotiations that appear to be at an impasse.
The surprising PMA offer includes an agreement by employers to continue paying 100 percent of dockworkers’ medical costs, including the Cadillac tax under ObamaCare. The employers’ proposal would increase annual pension payments to $88,800 a year, in a contract employers propose will run for five years.
“There are no take-aways,” McKenna told a press conference Wednesday, attempting to head off any concerns among the rank and file of the ILWU that hard-fought provisions from previous contracts would be compromised.
ILWU President Robert McEllrath responded that there should be no need for an employer lockout or a dockworker strike because an agreement is “extremely close.”
“We’re this close,” he said, holding up two fingers in a gesture to indicate how close the two parties are to a contract resolution.
McKenna said no one wants a lockout, but with ports at the point of gridlock and most vessels in the trans-Pacific trades stuck on the West Coast, the system will soon shut itself down. No one can predict when that will happen — five days, seven days, two weeks — but the ports will soon grind to a halt, he said.
There are six “open” contract issues that must be resolved, including details of the employers’ offers on wages and pensions that the ILWU must sign off on. One of the issues that employers find especially troubling is a new demand by the ILWU that arbitrators can be unilaterally fired by either the ILWU or the PMA.
The 50-year-old arbitration system on the West Coast prevents both parties from being able to hold ports hostage through a claim, such as for health or safety reasons. This grievance process is currently null and void because the ILWU refused to extend the previous contract when it expired on July 1, 2014. If it had been in place, employers could have immediately asked the agreed-upon arbitrators to rule on safety claims by the union that have slashed crane productivity in Oakland, Seattle and Tacoma and reduced the dispatching of yard crane operators in Southern California to a trickle.
At present, the PMA and ILWU must both agree to remove a local arbitrator at the various ports. This provides continuity and a balanced, fair approach to arbitrating waterfront claims, McKenna said. An arbitrator who could be dismissed at the whim of one side or the other would not be able to act with impartiality, he said.
McKenna has undoubtedly surprised a number of industry observers by revealing that employers have agreed to pay 100 percent of the Cadillac tax in the Affordable Health Care Act. He told the JOC Group’s Trans-Pacific Maritime Conference in March 2014 that the provision will come at a cost of $150 million a year, and that the ILWU didn’t want to pay it and employers couldn’t afford to pay it. The tax is scheduled to take effect on Jan. 1, 2018.
McKenna dropped another surprise at the press conference by saying the employers propose that the agreement will run for five years not three years as many had surmised, so employers’ exposure to the Cadillac tax will be “minimal.”
Employers have also made another significant concession in their proposed agreement, which is to give the ILWU jurisdiction over chassis maintenance and repair, including the ability to inspect every chassis before the equipment leaves the marine terminal.
This provision would preserve hundreds of ILWU mechanic jobs, but it also grants huge leverage to mechanics to arbitrarily place equipment out of service for the flimsiest of reasons. It is a highly-controversial concession given the fact that most chassis are now owned by equipment leasing companies and truckers. The Harbor Trucking Association of Southern California is on record as saying it will consider all legal options as soon as longshoremen attempt to detain trucker-owned chassis.
Employers believed as recently as last week that a contract agreement was imminent because they agreed to the concession on chassis inspections. McKenna said those hopes faded when ILWU negotiators returned to the bargaining table with a new list of demands, some of which could be devastating for employers.
McKenna was careful in handling all questions concerning an employer lockout, such as the 10-day lockout that occurred in the 2002 negotiations. He said employers can no longer afford to pay longshoremen for productivity that is down about 50 percent, but he said the reality of the waterfront is that the ports are so congested and vessels are now stuck at the ports for weeks, so the system will sooner rather than later grind to a halt.
If employers do call a lockout, it would set in motion a process that could lead to President Obama invoking an 80-day cooling off period under Taft-Hartley. President Bush invoked Taft-Hartley when the PMA lockout in 2002 reached 10 days.
Taft-Hartley is not a cure-all for poor productivity and gridlock, however. It would not guarantee, for example, that crane operators in the Pacific Northwest would overnight increase their productivity back to 28 moves per hour from about 18 at present. Nor would it force the ILWU dispatch hall in Southern California to resume sending out 110 skilled yard crane operators each day as it had done for years. On some days last month, PMA records show that as few as two yard crane operators were dispatched.
McEllrath said the union “dropped almost all of our remaining issues to help get this settled -- and the few issues that remain can be easily resolved.” He said the ILWU pledged to keep the ports open and to keep cargo flowing.