ILWU deal could hinge on union's demand to fire local arbitrator

With both the Pacific Maritime Association and the International Longshore and Warehouse Union trying to avoid an employer lockout or a strike by longshoremen, the fate of the current coastwide negotiations could depend on what is largely a local issue.

In a teleconference on Wednesday with media from throughout the country, PMA CEO James McKenna said the ILWU recently brought a new, but troubling issue to the table in the coastwide negotiations: The union wants the right to unilaterally fire a local arbitrator. Talks between the ILWU and PMA have been underway since May 12, 2014.

“The union has recently made new demands, and is insisting on changes to the arbitration system, that would give them the ability to unilaterally remove arbitrators who rule against them. That is simply unacceptable,” he said.

Local arbitrators are appointed jointly by the ILWU and PMA, with a local arbitrator serving in each of the major port ranges on the West Coast. When the coastwide contract is in force, and a dispute arises between the employer and the ILWU local, an arbitrator is called in to gather testimony and render a decision.

In most instances, the local arbitrator can prevent what is often a minor disagreement from shutting down a maine terminal for an entire day, or longer.In the worst case scenario, as is occurring right now, the absence of the arbitration process can allow work slowdowns to continue endlessly.

The ILWU on July 1, 2014, refused to extend its previous contract. “With no contract in place, there is no arbitration system in place,” McKenna said. “Without an arbitrator, the union can essentially do whatever they want, and that includes staging devastating slowdowns up and down the coast,” he said.

The PMA said that beginning on Oct. 31, the ILWU reduced crane productivity in the Pacific Northwest from about 26 or 28 container moves per crane, per hour, to below 20, where it remains to this day. Crane productivity slowdowns later spread to Oakland.

On Nov. 3, the ILWU notified employers in Los Angeles-Long Beach that rather than dispatching 110 yard crane operators per day as was the norm, the union hall would be dispatching only 35 per day. The latest PMA numbers show that for a week in mid-January, the daily dispatch of yard crane operators for the largest U.S. port complex were: 12 on Jan. 16, two on Jan. 17, five on Jan. 19, three on Jan. 20, 10 on Jan. 22 and two on Jan. 23.

“They did so knowing these are the very workers who are most essential to clear backlogged cargo,” McKenna said. The inability of terminal operators to keep containers moving through the yards has pushed yard utilization to 95 to 97 percent at the Port of Los Angeles, which is far above the 80 percent utilization rate that terminal operators consider to be full utilization before service deteriorates, said Gene Seroka, executive director of the Port of Los Angeles.

ILWU President Robert McEllrath disputed the assertion of terminal gridlock. The ILWU on Thursday released photos it said show “large tracts of space that would easily fit thousands of containers. PMA is leaving ships at sea and claiming there’s no space on the docks, but there are acres of asphalt just waiting for the containers on those ships, and hundreds of longshore workers ready to unload them,” McEllrath said.

While the two sides trade barbs with each other, the terms of PMA’s contract offer have been released. McKenna on Wednesday noted that at present full-time longshoremen earn $147,000 a year. Additionally, employers pay 100 percent of the dockworkers’ medical benefits, which costs employers $35,000 a year. The current maximum pension is $80,000 a year upon retirement.

McKenna said employers have offered the ILWU a contract that will increase the base wage $5 an hour to $40.68 an hour over the life of the contract. Rank and file longshoremen often question the earnings statements released by the PMA. If the current base wage of $35.68 per hour is multiplied by 2000 hours a year, or a normal 40-hour week, the total annual earnings would be $71,360.

“It’s important to remember that ILWU wages are subject to dramatic multipliers -- skill rate increases, shift premiums, guarantees, overtime, vacation and holiday pay -- which result in their current average full-time wages of $147,000 per year,” McKenna said.

For example, some positions add a skill differential of 15 to 30 percent to the hourly wage. Some positions guarantee a longshoreman eight hours of straight-time pay and two hours overtime pay each day, even though the worker is on the job only eight hours.

McEllrath took on that issue in a press release Thursday when he referred to McKenna’s press conference.

“What the ILWU heard yesterday is a man who makes about $1 million a year telling the working class that we have more than our share,” he said.

McKenna said the PMA contract offer on the table includes maintaining the current provision of employers paying 100 percent of the health plan premiums for ILWU workers. “Let me repeat: health care is fully paid by employers, and workers pay no premiums, no co-pays and no deductible for in-network benefits,” McKenna said Wednesday. PMA also proposes to increase the maximum annual pension for longshoremen 11 percent to $88,800 a year.

McKenna also referenced a significant concession employers offered in its proposal, which is to pay the cost of the so-called Cadillac tax on generous health-care plans that will take effect on Jan. 1, 2018, under the Affordable Health Care Act. The ILWU health plan ranks in the top 1 percent in the nation, he said. He estimated that the Cadillac tax will cost employers an additional $150 million a year.

McKenna also emphasized another employer concession that will award the ILWU jurisdiction over chassis maintenance and repair at marine terminals, even though PMA members no longer own the chassis. The chassis issue held up negotiations for several weeks last month. It was a key ILWU demand in Southern California, where there are almost 100,000 chassis in harbor use, and close to 10 percent of the jobs are held by ILWU mechanics.

In fact, when the PMA last week announced employers gave into the ILWU’s demand for jurisdiction over chassis M&R and the right to inspect all chassis before they exit the marine terminals,employers were guardedly optimistic that an agreement was close. Then the ILWU came in with a new set of about a dozen demands.

The key new demand was that the ILWU have the right to unilaterally fire a local arbitrator. McKenna said that would effectively end any hopes for fair and impartial arbitration of waterfront disputes because an arbitrator would know that if he or she ruled against the union, the arbitrator could be fired.

Michael Belzer, an industrial relations and economics professor at Wayne State University who has written books and papers on labor relations, said the disagreement over the arbitration issue could point to a larger problem in the current state of the contract negotiations, which could be political in-fighting within the ILWU. The previous coastwide contract, and the PMA proposal on the table for a new contract, appear to be quite favorable to most longshoremen up and down the coast, Belzer said.

There is reportedly friction between the ILWU locals and the arbitrator in Southern California. At the same time, the president of ILWU Local 13, the largest local on the coast, will run for re-election next month. A spokesman for the ILWU said he did not know if a Local 13 election is scheduled for next month. Local elections are held frequently up and down the coast due to the democratic nature of the union, he said.

Belzer said it doesn’t make sense for a union to hold up what appears to be a good contract for most of the members over what is essentially a local issue. However, in labor contracts in the U.S. going back at least to the 1960s, there have been cases “where political issues internal to the union drive the negotiations,” he said.

Some employers and some cargo interests believe that when a stalemate of this type exists, especially when negotiations have dragged on for almost nine months, the only option left for employers is to lock out the union and, when commerce is completely halted, wait for the president to go to court and seek an injunction for an 80-day cooling-off period under the Taft-Hartley Act.

President Bush did just that in the 2002 negotiations when the ILWU engaged in work slowdowns and the PMA responded with a lockout of the union. Bush sought the injunction after West Coast ports had been shut down for 10 days.

Belzer said a Taft-Hartley injunction carries risks for both parties. Although the federal mediators can not force a settlement, government involvement can pressure internal developments in both parties. If the union’s international leadership can not influence leaders of the locals to withdraw demands that may not be supported by the majority of union members, and the federal mediators apply pressure,  “which faction of the union wins out?” Belzer said.

On the other hand, a Taft-Hartley injunction can be risky and very costly for employers, and for cargo interests, he said. Federal mediators could attempt to pressure the union to stop the work slowdowns, but there is no guarantee that this would be effective. That would mean that the work slowdowns and port congestion could continue for 80 days and the terminals would be no better off after the cooling-off period than they are today.

McKenna hinted at that possibility at the news conferences, noting that without the arbitration process in place, the ILWU is calling the shots and employers are powerless to stop the slowdowns. “Some might wonder how the union was able to take such unilateral actions to cripple the West Coast ports.The short answer is, because they can,” he said.

Contact Bill Mongelluzzo at [email protected] and follow him on Twitter: @billmongelluzzo