US dockers’ struggle highlights the vulnerabilities of globalisation

On Friday 13 February a nine-month-old dispute over new employee contracts between 20,000 members of the International Longshore and Warehouse Union (ILWU) (which primarily represents dock workers on the West Coast of the United States and has a record as one of the USA’s more militant trade unions) and the Pacific Maritime Association (representing various dock owners and freight companies) ended in victory for the workers.

The settlement reached caused the right-wing news website Breitbart to spit with rage: “The labour dispute was settled with the ILWU signing a five-year contract that included maintenance of nearly no-cost health coverage, an $11,000 increase in maximum pension benefit to $91,000 a year, and a $1-per-hour wage increase over each of the five years.” (‘West Coast dock strike settles – just in time for oil refinery strike’ by Chriss Street, 22 Eebruary 2015)

There was no lock-out and no strike, but the flow of cargo through 29 US West Coast ports was severely backed up during the course of the struggle, causing mayhem to world shipping. Trans-Pacific maritime trade with Asia was affected by huge losses and fines, with the result that producers, retailers and transport giants from all over the world now face extended courtroom battles as a consequence of the delays.

The port authorities blamed the huge backlog on ‘slowdown’, or ‘working to rule’ as we would call it in Britain, while the union blamed the incompetence of the employers, who have routinely relied on workers cutting corners to get the job done.

Cost of the strike to the US economy

Whichever view you care to take, what is obvious is that the USA – or, indeed, any other capitalist country – by the very nature of its being, which demands that production is carried out in the cheapest possible manner by the cheapest possible labour (wherever in the world that happens to be), is increasingly leaving itself with overextended and vulnerable supply chains.

Even manufacturing within the US, was adversely affected. For example, Honda and other car-makers announced that they would have to stop production at their US factories owing to parts shortages, and some companies were forced to fly in parts to keep plants running.

The computer industry, still reliant on offshore microchips, currently lacks some of the components needed to make PCs, and some clothing companies expressed fears that they would not receive their new season lines (manufactured abroad) in time for spring delivery.

A vast range of foods and other goods, perishable and otherwise, have not yet arrived in the waiting shops, leading to shortages. Meanwhile, US farmers producing crops for export such as oranges, potatoes, soybeans and Christmas trees, and who already face stiff global competition, have been hard hit, as their products either arrived spoiled in Asia or were simply unable to reach there at all.

On top of all this, the situation has been further complicated by a lack of storage, since today’s infrastructure is modelled around a ‘Just in Time’ (JIT) method of delivery that is designed to do away with its associated costs. Of course, having things delivered exactly when they are needed is excellent for maximising profits, but with all contingency taken out of the system, shortages are felt instantly – hence the turmoil being experienced in so many sectors as a result of the West Coast delays.

That this protracted stand-off between the union and employers was seriously affecting the US economy is shown by the fact that President Obama sent a representative into the negotiations to try and force a resolution as quickly as possible. Representing Obama, Secretary of Labour Thomas Perez told West Coast mayors on a conference call that if the two groups could not come to a resolution within 24 hours, they would be ‘invited’ to the nation’s capital.

Joe LaVorgna of Deutsche Bank went on record to declare that the West Coast port slowdown could reduce fourth-quarter GDP by 1 percent. In fact, the last time that the dockworkers were in a serious dispute with their employers was during the lockout of 2002, when the lockout was lifted after 10 days under a court order sought by President George W Bush. The shipping industry estimated that the 2002 lockout caused $15.6bn in economic losses and it is widely accepted that the present dispute could be much more costly.

Nearly 50 percent of all clothing and shoes are imported to the US via the ports of Los Angeles and Long Beach, leading the American Apparel and Footwear Association to comment: “This dispute has left a damaging effect on our industry – causing extreme delays and millions in lost sales.”

Linus Bike executive Chad Kusher has revealed that his company had, during the dispute, been diverting cycles manufactured abroad to the East Coast and then trucking them across the country at a cost that was more than double what the company would normally pay to distribute goods via the West Coast. Meanwhile Jason Carr, the president of Softline Home Fashions, has said he will still have to fly curtains and other goods in from Asia in order to meet time-sensitive orders.

What now?

The speed and scale of the crisis arising from the backlog has spurred some to call for less dependence on foreign manufacturing and for the restarting of many of the industries previously to be found in the USA but which have moved abroad to save costs. However, this is asking the imperialists not to be imperialists and is therefore as unrealistic as it is unlikely.

The workers in the transport industry (and not just in the USA) cannot help but have noticed the further potential strength that they have acquired as an objective but doubtless unintended consequence of capitalist globalisation, and the top-dog imperialist that is the USA may well as a result see more disputes of this type. No doubt we will also see attempts from the government to outlaw or seriously restrict industrial action by these workers, which are likely in turn to spark further resistance.

The port employers may be trying to overstate the seriousness of this episode to their industry, perhaps with a view to staving off future industrial action via the scare tactic of declaring that business lost through the dispute may never come back, but there is no denying that it has been a very painful experience for them financially. Gene Seroka, executive director of the Port of Los Angeles, said after the settlement: “Just based on the mathematics, it will be about three months before we return to a sense of normalcy.”

Given that it took two-three months for things to settle down and the work to catch up in the aftermath of the 2002 lockout, this seems likely to be true. Unlike during the lockout, there was no complete shut-down of the ports this time, but the slowdowns were spread out over a far longer period. Moreover, according to Jannine Miller, director of Georgia’s Centre of Innovation for Logistics, the ports have doubled their capacity since 2002. “What they have working against them is just an overall, much greater flow of product than they did last time,” she has pointed out.

On the Sunday morning following the conclusion of the agreement between the dockers and their employers, the number of ships at anchor waiting to get into the ports of Los Angeles and Long Beach had increased to 31 from 27 on the Friday, with dozens more either nearby or en route. Those who choose to re-route to the East Coast ports face longer transit times; Shanghai to the West Coast via the Pacific takes 12 days while the same route through the Pacific to the East Coast takes 25 days. The route through the Indian and the Atlantic Oceans takes 32 days, with all the increase in costs that a longer journey entails.

As the White House lets out a long sigh of relief and congratulates its secretary of labour for his part in the negotiations, it is to be hoped that the countries bullied by imperialism will also be taking note of just how easily and quickly these bloodsuckers can be hit back by the peoples who produce for the imperialists’ home markets. It may not be long before, as well as imperialists threatening sanctions against those they wish to dominate and destroy, we also start to see those threatened using their economic power more strategically in defence of their own interests – interests that are objectively anti-imperialist.