James McKenna, the president of the Pacific Maritime Association, who will lead negotiations this year for employers on a new contract with the International Longshore and Warehouse Union, said Tuesday that while negotiations with the union may go past the July 1 expiration date for the current labor pact, he expects an agreement to be reached without a labor stoppage.
“I am personally optimistic that we are going to get a contract without disruption,” said McKenna, speaking at the Journal of Commerce
’s TPM 2014 conference in Long Beach, Calif.
McKenna said the PMA is finalizing the employer’s specific proposals for 2014 negotiations and that ILWU members have been caucusing for two weeks in San Francisco to prepare their goals for the talks.
During a question-and-answer session, Jon Gold, vice president, supply chain and customs policy, for the National Retail Federation, asked McKenna why PMA and the ILWU were waiting until mid-May to begin negotiations, noting “folks are really stressing now.”
Gold said discretionary cargo was leaving the West Coast and shippers were making contingency plans “to enact fairly shortly to make sure they do not get caught up in some kind of disruption, which I believe most folks believe something is going to happen.” An early start to talks, he said, might give shippers the confidence to remain in the region.
McKenna responded by saying that in 2008, the two sides had met beginning in mid-March, but that nothing got done until the beginning of June.
“The parties felt no pressure to move. It was a lot of stalemate, a lot of frustration, a lot of nothing getting done,” he said. “We started early, and we did not get done early; we will never get done early.
“This contract is not resolved before it expires,” McKenna continued. “It creates leverage. It will go past the July 1 deadline; it will go past the July 4, July 5 deadline. And I believe somewhere between mid-July and the end of July, we will have a contract. That is the process.”
While the last two contracts between the PMA and ILWU have been six-year pacts, McKenna said it was hard to tell if the next agreement would be six years or three years in length.
McKenna drew a contrast between the labor negotiations between the PMA and ILWU and the 2012-2013 negotiations between employers represented by the United States Maritime Alliance (USMX) and the union that represents dockworkers on the East and Gulf coasts, the International Longshoremen’s Association. Whereas USMX and ILA met periodically over several months, McKenna said the PMA and ILA will meet every single day until they get a contract.
“There is absolutely time to do it,” he said.
Gold also asked if a federal mediator might be brought into the talks early, but McKenna rejected the idea of bringing in a mediator from the Federal Mediation and Conciliation Service, though he said they are aware of the talks. The FMCS did assist the USMX and ILA in their negotiations.
“Having them involved is not necessarily a good thing,” McKenna said. “It means you can’t do it yourself. That is the last resort. They really don’t have the power to make you do anything.”
McKenna said that the two sides will talk about hours, wages, working conditions, work rules, pensions, jurisdiction and health care.
He noted that under the Affordable Care Act, employers must pay a nondeductible tax if they offer employees “Cadillac” health plans. McKenna said actuaries have told PMA that the tax could raise costs up to $150 million per year.
“That is not acceptable to us, and we are going to have to address that issue,” he said.