BY RON BRINSON
Think about it as another of those metaphorical “cliffs” we Americans seem to be skirting these days. This one lurks with notable consequences for South Carolina, and especially Greater Charleston.
We are eight days away from possible longshore workforce actions that would cripple the Port of Charleston and all other major seaports from Maine to Texas. The effective contract dates to 2004. It was extended once in 2010, and then again last September when cooler heads decided to spare the 2012 Christmas holiday shipping season the uncertainties of long-lingering waterfront labor issues.
That extension expires Dec. 29, and negotiations are not going well. The International Longshoremen’s Association has authorized a strike, and one highly-ranked union official glumly declared, “There won’t be a contract; our only hope now is for some extension.” That was a distinct possibility as the parties met in New York last Tuesday. But no progress was made on threshold issues, and the ILA and U.S. Maritime Alliance (USMX) negotiators returned to their respective corners. Federal mediators are standing by, but no meetings are scheduled for this Christmas week.
There’s been plenty of such brinkmanship through the decades, but no major ILA work stoppages since 1977. Most industry observers agree that the sound and tone of this stalemate seems different, more ominous. There could be an extension, but sooner or later, simmering issues with huge money consequences must be resolved if the parties are to reach their goal of a new six-year master agreement.
We South Carolinians ought to be paying more attention. As taxpayers we own the S.C. State Ports Authority enterprises. We might be less aware that all modern ports — including Charleston — depend fundamentally on unionized longshore labor to prime returns on public investments in port facilities.
Our state is populated by global businesses that depend upon highly-tuned multi-modal logistics that have little tolerance for port operation interruptions. A labor stoppage at the Port of Charleston would instantly bruise South Carolina’s economy. The longer it would last, the bigger that bruise.
“Royalties” is the polarizing issue for the ILA-USMX negotiations. These payments date back 50 years, to a time when container ships dramatically reduced longshore labor demands. The ILA responded sternly, insisting on mitigation. Last year, royalty payments amounted to $211 million. The USMX wants to cap and then phase out royalties over the next 25 years. The savings would be pledged to other benefits programs. But union leaders argue the impacts of containerization are inherent and permanent. And, they correctly note that even greater applications of technology and automation are on the way. Essentially, the ILA wants a royalty plan in perpetuity.
The royalty formula is a port-by-port computation based on volume. Thus, longshoremen at faster-growing ports receive a larger annual royalty. Charleston longshoremen with three years of service receive about $24,000 in royalty benefits. At Savannah, it’s about $31,000.
On average, longshoremen earn about $80,000 annually and a benefits package valued at about $40,000, plus the royalty.
“Nobody wants a strike or any stoppage,” said Charleston’s Ken Riley, president of ILA Local 1422. “But we’re talking about a six-year agreement. That’s a long time in an industry that is changing right in front of our eyes. We have to get it right, and make sure longshoremen are not penalized.”
Another important issue for the Port of Charleston — the SPA’s long-standing terminal operating model will be considered in these talks. This could be a strategic game-changer for the Ports Authority — and it has no place and no voice at the negotiating table.
Riley and other union leaders are insisting on resolution of long-standing union jurisdiction issues at Charleston, Savannah and Wilmington, N.C. If they’re successful, the change would likely eliminate the role of non-union public employees in terminal operations. “This is squarely on the table and I intend to do all I can to get it resolved once and for all,” Riley said. “This is about 2,000 jobs in three states that should be ILA jobs. We just can’t wait another six years to correct this.”
Two weeks ago, we got a glimpse of costly economic and logistics impacts of an eight-day clerical-union strike that shut down most of the sprawling Los Angeles-Long Beach port complex. At one point 13 fully loaded container ships were queued in San Pedro Bay and 11,000 port workers were idled. The estimated hit to the Southern California economy was a billion dollars a day.
That upset should remind us of the unmistaken public interest in the down-to-the-wire ILA-USMX negotiations. We don’t need another costly cliff fall to document just how important seaports and longshoremen are to the national economy, and especially to South Carolina’s.
Ron Brinson, a North Charleston city councilman and former associate editor of this newspaper, served as president/CEO of the American Association of Port Authorities 1979-86, and president/CEO of the Port of New Orleans 1986-2002. He can be reached at email@example.com.