U.S. dockworkers threaten to strike against automation, creating economic uncertainty

Vowing to stop machines from taking their jobs, 45,000 U.S. longshoremen are threatening to go on a strike that would shut down ports on the East and Gulf coasts and could damage the American economy just as President-elect Donald Trump returns to the White House.

If the standoff sounds familiar, it’s because the same dockworkers — members of the International Longshoremen’s Association — staged a three-day walkout last fall. In October, they suspended the strike until Jan. 15 after reaching a tentative agreement with ports and shipping companies for a 62% pay raise over six years. But union members must approve a final contract before receiving the higher wages.

That’s where things get complicated.

Negotiations resume Tuesday between the ILA and the U.S. Maritime Alliance, which represents ports and shippers. The sticking point is a familiar one at America’s ports: machines replacing human labor, specifically semi-automated cranes operated by software or employees working remotely to guide containers onto trucks or trains.

The Long Island Association business group in a statement Tuesday said that while some businesses are preparing to weather a possible strike, an agreement needed to be found soon.

“With billions of dollars in economic activity at stake, it is imperative that cooler heads prevail and that a fair and reasonable agreement be reached,” said Matt Cohen, president and CEO of the LIA.

“While many businesses have been prepared for this deadline by stockpiling goods, it wouldn’t be long before they feel the negative impacts that will both hurt their bottom line and also trickle down to consumers on Long Island,” Cohen said.

The union and its president, Harold Daggett, are dead set against allowing additional automation at East and Gulf coast ports. They argue that the machines aren’t any more efficient than human labor.

“This isn’t about meeting operational needs,’’ Daggett's son Dennis Daggett, the union’s executive vice president, wrote last month. “It’s about replacing workers under the guise of progress while maximizing corporate profits at the expense of good-paying, family-sustaining U.S. jobs.’’

Port operators and shipping companies argue that U.S. ports are falling behind more automated ports such as those in Rotterdam, Dubai and Singapore.

Facing the Jan. 15 strike deadline, the two sides will have barely a week to reach an agreement. “They’re not giving themselves a whole lot of time,’’ said Jonathan Gold, a vice president at the National Retail Federation who handles issues involving supply chains and trade.

Executives with grocer Stew Leonard’s, a chain with two locations on Long Island, said while most of its goods are purchased domestically, a number of select items might be more challenging to get if a strike occurs.

Items including lamb from New Zealand and the store’s own brand of marinara sauce made in Italy could be potentially impacted, said Stew Leonard Jr., president and chief executive of the family-owned grocery chain. Additionally, his family’s separate wines and spirits business could run into supply shortages on German beers and scotch.
“We’re monitoring the situation almost hourly,” he said.

On top of strike concerns, potential tariffs this year could lead to certain types of produce becoming more costly.

“Avocados keep me awake at night a little bit,” Leonard Jr. said. Because the supply of avocados for the U.S. market largely comes from Mexico, they could become pricier under tariffs.

“They are one of our No. 1 sellers in our produce department,” he said. “I can get them from California…but they don’t produce enough for the entire United States.

Trump has already weighed in for the union. After meeting Harold Daggett at the Mar-a-Lago club in Palm Beach, Florida, the president-elect posted on social media that additional automation of ports would hurt workers: “The amount of money saved is nowhere near the distress, hurt and harm it causes for American workers, in this case, our Longshoremen.’’

The stakes are high for the U.S. economy. Ports on the East and Gulf coasts handle more than half the nation’s traffic in shipping containers, the steel boxes at the center of world trade, which carry everything from smartphones to fresh fruit to automobiles.

“A strike that lasts less than a week won’t have a material impact on the broader economy,’’ said Mark Zandi, chief economist at Moody’s Analytics. “Inventories are generally ample, which will forestall shortages ... However, a strike that lasts much longer than a week will cause increasing disruptions and shortages that will result in mounting economic costs, rising from an estimated $500 million a day to over $2 billion a day if the strike lasts more than a month.’’

The retail federation’s Gold says it take three to five days for supply chains to recover from a one-day disruption. “If you go anywhere longer than five days, then you’re into serious difficulties,’’ he said. “Then you’re into weeks of serious recovery.’’

"A longer strike could hurt retail profitability as there would be delay in future deliveries, with seasonal and fashion goods arriving past their peak selling period, resulting in lower sales and an increase in markdowns to clear these goods,'' said Christina Boni of Moody's Ratings, a credit agency.

With Victor Ocasio