Striking L.A. Port Clerks Cost U.S. $1 Billion a Day

A strike hobbling the nation’s largest port complex, affecting an estimated $1 billion of cargo a day, has halted paychecks for thousands of Southern California logistics workers before the holidays.

The walkout by clerical employees at the ports of Los Angeles-Long Beach has idled thousands of workers without pay, including almost 8,000 truckers, according to Robert Curry, president of California Cartage Co., one the largest freight handlers there.

“They’re dying,” Curry said.

About 800 office employees represented by the International Longshore and Warehouse Union went on strike in a contract dispute Nov. 27. Other workers refused to cross picket lines. Seven of eight Los Angeles shipping terminals are shut down, according to Phillip Sanfield, a spokesman for the city-owned facility. At the adjacent Port of Long Beach, three of six are closed.

Los Angeles Mayor Antonio Villaraigosa said today that the union and the Los Angeles/Long Beach Harbor Employers Association, which represents terminal operators, had agreed to use a federal mediator to help them reach consensus.

“We have met all night,” Villaraigosa said in a press conference. “We’re still some bit apart.”

Laboring Army

About 316,000 jobs in the region, or about 1 in 20, are tied to the harbor, according to the Port of Long Beach. Unlike striking workers who can count on union funds for aid, many others such as truck drivers are independent contractors who are paid per haul, according to Jock O’Connell, an international trade adviser with Los Angeles-based Beacon Economics.

“You have armies of people who work in these warehouses whose paycheck is directly related to what goes on at the port,” he said.

The two ports together are forecast to handle almost a third of the nation’s total container-packed shipments this year, the real-estate services firm Colliers International said in August. About $368 billion worth of cargo passed along their docks in 2011, according to Art Wong, a spokesman for Long Beach. Top imports include consumer electronics, furniture and clothing, according to the port’s website.

Chain Links

“It’s enormous in what this does to the economy,” said Paul Bingham, an economist with CDM Smith, a consulting firm in Arlington, Virginia. “It has repercussions right back to the supply chain that are growing every day.”

Fifteen ships are sitting at piers waiting to be unloaded while 11 lay at anchor offshore, according to Richard McKenna, executive director of the San Pedro-based Marine Exchange of Southern California, which monitors harbor traffic. Another 18 vessels have been diverted to other ports, mostly to Oakland, California, and to Mexico, he said.

Matthew Shay, chief executive of the Washington-based National Retail Federation, asked the Obama administration to intervene, citing the effects of the strike on retailers trying to fill their stores with last-minute holiday gifts.

“A protracted strike will ultimately result in higher prices at the very time we can least afford it,” he said yesterday in a statement.

The office and clerical employees have been working without a contract for 30 months, according to the union website. More than 50 jobs have been sent to other locations, including Costa Rica and Dallas, according to the website.

Jobs Moved

The workers, paid $41 an hour, want assurances their positions won’t be sent elsewhere when they get sick or retire, according to Craig Merrilees, a spokesman for the union.

Employers “have been secretly and systematically sending dozens of positions to Taiwan and Texas and everywhere in between,” Merrilees said.

The terminal operators want flexibility in hiring workers only when there is something for them to do, and won’t “support keeping artificial staffing levels if they are not needed,” their association said Dec. 1 in a statement.

Meanwhile, the work stoppage continues to spill over to other industries. Union Pacific Corp. (UNP), the nation’s largest railroad, no longer sends cargo to its international shipping facility in Long Beach, according to Aaron Hunt, a spokesman.

‘A Nightmare’

Don Simon, a manager at Coppersmith Global Logistics in El Segundo, said the strike has left client merchandise such as towels, tires and store displays sitting on ships. “It’s been a nightmare for us,” he said. “It’s got to end soon.”

Charlie Woo, chief executive of toymaker Megatoys Inc., based in Commerce, said he expects to race to catch up on orders when the strike ends.

“We have not gotten to the point of missing delivery dates yet, but it will create stress,” he said.

Some companies that use the ports are unscathed, among them Toyota Motor Corp. (7203), which operates the largest automotive- processing facility at the ports. The striking union “does not represent workers at Toyota Logistics Services in Long Beach,” Mike Michels, a company spokesman, said by e-mail.

“We had a ship arrive Saturday with no disruption,” Michels said. “We are keeping an eye on the situation, but so far, no impact.”

Honda Motor Co. (7267), with U.S. operations based near the ports in Torrance, California, ships cars through San Diego and Richmond, in the San Francisco Bay Area, according Marcos Frommer, a company spokesman.

Honda shifted its vehicle imports away from the Los Angeles and Long Beach ports over the past decade as the facilities are “over-subscribed” with container ships, Frommer said.

Labor strife will be an issue at other ports over the next few years, K.C. Conway, an executive managing director with Colliers, said by e-mail.

“A few can lock up a lot,” he said, “and union labor is empowered by a perceived belief that it has an ally in the White House.”

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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