The Longshoremen’s union is getting ready to do to LA/Long Beach what the UAW did to Detroit. By wrongly assuming that port operators can be extorted because the Pacific Ocean can’t be moved, the ILWU is badly overplaying its hand. Mediation from Washington may help settle things before they deteriorate into an open strike/lockout, but much of the damage is already done.
Bad Industrial Relations in the Digital Era
Old school trade unionism hangs on the idea that taking physical control of production assets is a good way to force management concessions. This approach worked in the industrial 20th century when gigantic factories were built around natural features like rivers, mineral deposits and ports. The story of this bygone era was one of well paid, secure jobs steadily wrested from capitalists through painstakingly slow, albeit strategic collective bargaining. It worked in the midlands and shipyards of Britain as well as the industrial heartland of the United States.
But the unions went too far and slowly but surely, capital moved away leaving Detroit, Sheffield, Cleveland and Newcastle starving for any kind of economic dynamism. Undeterred, big labour continues to believe in short sighted hostage taking as a means to deliver steady employment to their members. The problem is that real value, and therefore power, is not tied up in physical assets so much as it is in ideas which are very easy to move.
This may seem not to apply to the ports of Long Beach and Los Angeles, especially when the ILWU has a grip on the coast all the way from Seattle to San Diego, but in fact, the shift has already started. In the last week alone I have heard from one a huge food company about outbound shipments that can’t get to Asia, a small retailer about apparel that can’t get in, and a big US tech manufacturer about finished goods stuck at sea. They are all losing money now.
The reaction however is in no way centred on planning for higher costs of transport through west coast ports. All are thinking in terms of avoiding the ports altogether. For tech and apparel makers this means rebalancing their global manufacturing footprint away from China and toward either domestic production in the US or more investment in Mexico, Latin America and even the Caribbean.
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