California Apparel News

Threats of disruption in import/export activity, port security and the local and national economy are becoming more and more ominous as a potential port strike resulting from the longshoremen’s contract expiration on July 1 looms on the horizon.

Barry Sedlik, chief executive officer of the World Trade Center Organization, an organization of nearly 300 World Trade Centers in almost 100 countries, said a strike could directly impact the apparel industry, but he also warned that there are other issues lurking.

“Overall, I think the port disruption is just one issue that impacts the sourcing for apparel manufacturers as well as the prospect of exporting to countries that are now looking to receive California-made design goods,” he said.

Sedlik said that other issues with the potential to impact international trade include the Customs Trade Partnership Against Terrorism Initiative, a joint government-business supply-chain security measure designed by the U.S. Customs Department to build cooperative relationships between businesses to strengthen overall supply-chain and border security. Under the initiative, Customs is asking businesses to ensure the integrity of their security practices and communicate their security guidelines to their business partners within the supply chain, using security guidelines jointly developed by Customs and the trade community.

“This will require onerous documentation on importers,” noted Sedlik. “This could really create havoc in the apparel industry with these onerous new rules.”

The security issue was also raised by the National Retail Federation (NRF), which recently asked the White House to get involved in staving off a strike at the West Coast ports.

The NRF cautioned that such workplace interruptions could interfere with the current global economic recovery as well as domestic defense efforts if striking workers were unavailable to assist in the ports’ security efforts.

But Teresa Adams-Lopez, public information director for the Port of Los Angeles, dismissed such potential.

“There will be no negative impact whatsoever,” she said. “We have a strong security plan in place and have for many years. It’s been heightened after 9/11, and it has nothing to do with the people involved in a strike if there were to be one.”

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., called the threat of strike at the port “highly likely” and said the effects of a strike could have reverberations beyond the immediate region.

“The situation is more confrontational than usual, and there could be a strike,” he said. “While some people expect this to ’devastate’ the local economy, such an event would have national economic implications. The economies of the U.S. and other developed nations are in a modest recovery mode, and the U.S. dollar is weakening, which is good news for exporters.”

A strike could arise if negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) fail. Productivity at West Coast ports could be affected by any failure in negotiations of key issues, including programs designed to alter workplace practices that will increase productivity while reducing congestion resulting from cargo growth.

Impacting negotiations are shippers and truckers who seek longer gate hours, which they say will reduce congestion at busy ports such as Los Angeles and Long Beach. In order to accommodate, longshoremen would have to agree to a change in work rules that currently provide eight-hour wages for five-hour work shifts on the third watch.

Therein lies the stickiest portion of negotiations. If the longshoremen agree to work longer hours, they would demand concessions from employers. Those concessions could emerge in increased costs of shipping, negatively impacting the local and national economy, according to Kyser.

A time-buying plan has been offered by the West Coast Waterfront Coalition, which represents some of the nation’s largest shippers, including Wal-Mart, Target and Best Buy. The Coalition has urged waterfront employers to continue negotiating past the deadline, extending the existing contract even in the face of potential work slowdowns implemented by the longshoremen.

In contract negotiations of 1996 and 1999, the ILWU staged workplace slowdowns, and according to Robin Lanier, executive director of the Coalition, importers and exporters are prepared to appeal to key political officials if the same thing happens again, refusing to allow the ILWU to “hold the whole economy hostage.”

While Adams-Lopez would not speculate on the likelihood of a strike, she said that there would be negative results for the Port of Los Angeles in the event of a strike.

“Obviously, that would impact us if it happens,” said Adams-Lopez. “The ships are coming in and we need to have them unloaded.”

Still, some parties remain hopeful that a strike can be averted, or at the very least, its negative impact dampened.

“Both sides always have their positions, but hopefully in the end, reason will prevail and this can be resolved without a strike,” said Sedlik. “A threat of a strike is always disruptive and any disruption to the port is going to be hurtful to our regional economy. If there is a strike, hopefully it will only be a short duration.”