February 2015

Tough to brakeThe Inertia behind Conflict

When people ignore the factors or circumstances that surround a dispute, it escalates into a conflict, and unless resolved quickly at this point, the conflict hardens and becomes intractable.  Once this happens, it becomes much more difficult to resolve a conflict without leaving scars. We don’t have to look at the great conflicts playing out on the world stage. Examples of the inertia that leads to conflict are readily available here at home. One such example is the adversarial relationship between management and labor. The inherent clash of interests in extraordinarily difficult to break through in a constructive way, and a case in point is the labor dispute between the 29 West Coast ports and the unions. The contract between the unions and the ports expired early last year, and since then the unions and the port authorities have negotiated on a range of issues without success.

It is clear from the reporting that has occurred over this period that neither party exhibited any zeal to address the issues sooner rather than later. The unions disguised their lack of urgency by engaging in sporadic strikes and slowdowns, but offering no real compromises on which an agreement could be reached. The managements of the 29 ports involved exhibited even less urgency than the unions with the result that both sides exhibited an almost callous disregard of the adverse consequences on the U.S. economy.

The consequence of this protracted dispute is that it has choked the flow of good into the country. Inventories are piling up in source countries because they know their goods will not be offloaded in a timely manner, dozens of ships wait for days and weeks to have their cargos unloaded, and empty trucks are lined up for miles outside the L.A. Port. The dispute is damaging our national supply chain, and threatening the very existence of thousands of small businesses. The neglect of this situation by federal authorities is hard to understand.  It took almost nine months before the Federal Mediation Service was sent in, and the FMS efforts have been disappointing.

The back and forth between the two sides is too detailed to include in my letter, but here are a few brief highpoints to illustrate the difficulty in reaching agreement.  The unions are asking for a 14% increase over the life of the contract which would mean that the average dock worker would have a wage roughly equal to that of a U.S. senator.

  • The average healthcare package is worth $35,000 and the union members object to contributing any amount of their wage toward healthcare. They are excused from participating in the federal healthcare system, and their plans are exempt from the taxes that affect other Cadillac plans.
  • And then there is the demand that all union workers be paid for 40 hours per week even when there is no work.

Without offering an opinion one way or another as to the merits of any position, as a mediator, I know that neither side was ignorant of the other side’s point of view before the contract ended. Typically discussions between the parties begin before the contract expires and those discussions should have provided clear signals as to how wide the gap was in this instance.

What most people do not realize is that the economic factors at play in many America ports are unique and work against things being done quickly. The roots of this dispute lies not in the contract itself but in the Jones Act, which is a law enacted in the 1920’s that is a reflection of the world as it was more than 100 years ago. The effect of this law today is that it distorts everything related to ports and shipping.  It also gives unions a disproportionate amount of power to the point that doing work in a port or shipyard is hugely expensive, and too many things take too long to accomplish.

This dispute is a text book case for early intervention by a mediator, and serious questions should be asked why competing interests were allowed clash with national interests for as long as they did before serious action was taken in response.

Food for Thought: The strictest law often causes the most serious wrong. (Cicero)

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