Just as retailers prepare for their busiest time of year, East Coast longshoremen are threatening to go on strike. The impact could spread well beyond the ports of Savannah and Brunswick to inflict economic pain across Georgia.
If the men and women who load and unload cargo walk off their jobs Sept. 30, the ports will shut down, thousands of Georgians will be without work and one of the state’s most critical economic engines will stall. Already, East Coast retailers and manufacturers plan to reroute Asian imports through West Coast ports.
The timing is awful. Georgia’s economy muddles along with tepid revenue growth and unemployment — 9.3 percent statewide — again edging upward. September and October are also the busiest shipping months as retailers stock warehouses in anticipation of the holiday season. Shoppers may see higher prices, too, if the Wal-Marts and Home Depots pass along higher freight costs to consumers.
“Right now, with the state of the economy in the United States, we don’t need any negative drag on it whatsoever,” said Curtis Foltz, executive director of the Georgia Ports Authority. “A work disruption on the East Coast certainly doesn’t help our recovery.”
Foltz, though, expects Georgia’s port business to fully rebound if the International Longshoremen’s Association (ILA) strikes. The union says increased automation will cost jobs. President Barack Obama could postpone a walkout if he deems it a threat to the nation’s economy.
Contract talks between the ILA and the United States Maritime Alliance, composed of shipping lines and terminal operators along the East and Gulf coasts, broke down last week. ILA President Harold Daggett warned that a strike is likely once the contract expires.
Three-fourths of shippers polled recently by the Journal of Commerce say a strike is “likely,” and 68 percent have contingency plans in place.
Shippers, battling rising costs and intense global competition, want to “maintain … market share of the ports by improving productivity and removing the inefficiencies that threaten the economic viability of the ports,” according to Alliance CEO James Capo.
ILA workers who help load and unload containers earn, on average, $124,000 a year in wages and benefits. The shippers and terminal officials also oppose “low-show” jobs that pay ILA members based on a task rather the actual hours worked.
The union’s position is straightforward, according to Daggett: “to protect the ILA’s members and their families from the impact of new technology.”
“My concern,” he added in a June 2 letter to Capo, “is that the [the Alliance] wants to effectively eliminate the workforce through automation.”
Capo, Daggett and ILA Local 1414 President Willie Seymore, in Savannah, couldn’t be reached for comment. Roughly 1,500 card-carrying members work the docks of Savannah, the nation’s fourth-busiest container port. They tie up ships, attach cables to containers, ferry the steel boxes around the terminal and operate the port’s gates.
In addition, the Georgia Ports Authority employs about 1,000 people in Savannah. A strike would throw all employees — and thousands of other truckers, crane operators, warehouse handlers and more — out of work. The cascading impact statewide could be huge.
The Savannah and Brunswick ports directly support 153,884 jobs in Georgia, according to a recent University of Georgia study, and nearly $40 billion in direct spending.
“Georgia is a very port-dependent economy, and it would definitely get hit much harder than the average state east of the Mississippi,” said Jeff Humphreys, the report’s author. “A lot of our GDP is tied to the uninterrupted flow of cargo into Savannah and the East and Gulf coast ports.”
Foltz, the ports director, said the impending strike is “the first topic” of conversation with the shipping lines and terminal operators.
“A work stoppage at the East Coast ports would create enormous disruptions just as retailers stock up for the holiday shopping season,” said Brian Dodge, a spokesman for the Retail Industry Leaders Association. “The parties are playing chicken with tens of billions of dollars in commerce and the expectations of millions of East Coast holiday shoppers.”
A spokeswoman for Kia, which uses Savannah as its main import port, said, “We are constantly monitoring the [situation] and making adjustments as necessary.”
A 2002 longshoremen’s strike on the West Coast crippled trade flowing west to east — and forced retailers and manufacturers to shift imports closer to East Coast customers. Savannah benefited mightily, boosting the number of containers handled from 1.3 million (2002) to 2.9 million (2012). This time, West Coast ports ready for a surge in traffic.
“We are prepared to handle any cargo coming from the East [Coast],” said Rachel Campbell, spokeswoman for the Port of Los Angeles. “We’ve got the infrastructure and labor force already in place. Capacity is not an issue.”
The strike’s impact could be blunted, though. Burned by the 2002 strike, retailers such as Home Depot divvied up imports amongst ports in California, Washington, New York and Georgia. Savannah’s Foltz says the state’s exporters can speed up or delay deliveries to avoid the strike. And the White House could invoke the Taft-Hartley Act, or other emergency measures, to keep the ports open, minimize economic damage and bolster political fortunes.
Walter Kemmsies, the chief economist for Moffatt & Nichol, a global engineering firm located in California, said a two-week strike, for example, would only skew the national economy for a month or two.
“But we have a bunch of ports that are not at full capacity,” he added. “If you can use alternative gateways, then there shouldn’t be a big problem.”
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