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Looming Port Strike Deadline Pressures Obama to Intervene

Dec. 27 (Bloomberg) -- Sheila Dharmarajan reports on the possible dockworkers strike. She speaks with Erik Schatzker on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

President Barack Obama is facing pressure to block a strike that would gridlock eastern U.S. ports and risk damaging industries from retail to manufacturing.

Federal mediators have been pushing for a deal between dockworkers and their employers before a Dec. 29 deadline. Talks between the International Longshoremen’s Association and the U.S. Maritime Alliance broke down last week amid a dispute over container royalty fees, levies that supplement wages.

A walkout would be the first at East Coast and Gulf Coast ports since 1977, and would halt shipments of containerized cargo, including clothing, frozen foods and car parts. Obama would be left to choose between forsaking a pro-labor stance by invoking the 1947 Taft-Hartley Act and allowing a union action that could compound the effects of the fiscal cliff.

“To throw that kind of a strike on top of the economy right away in January, I’m sure is something the administration would rather not see,” Mike Asensio, a labor lawyer at Baker Hostetler LLP in Columbus, Ohio, said in a telephone interview. “Would it create that much of a nightmare for him that they would be willing to do something that would anger part of their constituency in organized labor? That’s the $64,000 question.”

Photographer: Ken James/Bloomberg

A dockworker walkout would be the first at East Coast and Gulf Coast ports since 1977, and would halt shipments of containerized cargo, including clothing, frozen foods and car parts. Close

A dockworker walkout would be the first at East Coast and Gulf Coast ports since 1977,... Read More

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Photographer: Ken James/Bloomberg

A dockworker walkout would be the first at East Coast and Gulf Coast ports since 1977, and would halt shipments of containerized cargo, including clothing, frozen foods and car parts.

Matt Lehrich, a White House spokesman, declined to comment beyond a statement last week that the administration was monitoring the situation and urging the parties “to continue their work at the negotiating table to get a deal done as quickly as possible.”

Salvaging Talks

The Federal Mediation and Conciliation Service, which has guided talks since September, organized a meeting between the two sides this week in an 11th-hour effort to salvage negotiations. All three parties declined to provide further details on the new talks.

“I believe in my president, and I will follow him down whatever road he leads us,” Carl Chiofolo Jr., a union member and clerical worker at New Jersey’s Port Elizabeth, said in a phone interview. “Solidarity is the No. 1 thing here. We have to keep together on this. It literally is a fight for our lives.”

If federal mediation fails, the only remaining tool in the government’s arsenal is Taft-Hartley, which empowers the president to intervene in strikes that are deemed national emergencies, said Phillip Wilson, president and general counsel at the Labor Relations Institute in Broken Arrow, Oklahoma.

The act was last invoked by President George W. Bush in 2002 after a lockout closed West Coast ports for 10 days. The most recent successful use prior to that was in 1971 under President Richard Nixon.

Retail Pressure

The National Retail Federation and Florida Governor Rick Scott have urged Obama to use the law to avoid an eastern port shutdown that they say would cripple an already weak economy.

“The threat to national health and safety that would result from mass closure of the ports cannot be overstated,” Scott, a Republican, wrote in a Dec. 20 letter to Obama. “The Taft-Hartley Act provides your administration with tools that can help avoid this threat.”

On a conference call with port directors today, Scott said he hasn’t yet received a response from Obama and reiterated his call for an intervention. About 550,000 people depend on Florida ports directly and indirectly for their jobs, he said.

The Port Authority of New York and New Jersey said a strike would cost the region an estimated $136 million a week in personal income and $110 million in economic output.

“Any disruption to port activity will negatively affect tens of thousands of local jobs as well as both the regional and the national economies,” Steve Coleman, an authority spokesman, wrote in an e-mail. “We urge the parties to resolve their differences as soon as possible.”

Labor Support

Even as pressure for action mounts, Obama may hesitate to undermine the union’s bargaining power, Bradford Livingston, a partner at Seyfarth Shaw LLP, said in an interview from Chicago.

Labor unions “continue to be one of the bigger donors of the Democratic Party,” Livingston said in a phone interview. “As the top Democrat, even though he may not be re-elected, he’s going to want to be a friend to organized labor for the next four years.”

The Longshoremen’s political action committee gave 96 percent of its $549,050 in 2012 election donations to Democratic candidates and committees, according to the Washington-based Center for Responsive Politics. Obama didn’t accept PAC contributions for his re-election campaign.

West Coast

Calls from the Retail Federation for presidential intervention during an eight-day strike last month at the Port of Los Angeles and adjacent Port of Long Beach went unheeded. A strike at East Coast and Gulf Coast ports would need to last at least as long or longer before Obama steps in, according to the Labor Relations Institute’s Wilson.

“The president intervening is a big deal,” he said in a phone interview. “At the end of the day, the way these situations are supposed to work out is the parties inflict whatever pain they can on each other and then they reach a deal.”

Still, with the fiscal cliff of more than $600 billion in spending cuts and tax increases looming at the end of the year, the president won’t be able to linger on the sidelines, said Jock O’Connell, international trade adviser at Los Angeles-based consultant Beacon Economics LLC.

“There’s always the possibility that the mediators will lead the respective parties to come to a solution before the strike,” O’Connell said in a phone interview. “After that, then the clock starts ticking. The precedent in this case is about a 10-day clock before pressure on the White House to invoke Taft-Hartley starts becoming irresistible.”

To contact the reporter on this story: Brooke Sutherland in New York at bsutherland7@bloomberg.net

To contact the editor responsible for this story: James Langford at jlangford2@bloomberg.net

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