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Labor dispute gets Obama's attention as port seeks new shipper



Photo Credit: TRIBUNE PHOTO: JONATHAN HOUSE - Furniture importer David Kahl sits on the Capisco ergonomic office chair, one of the affected goods from the port slowdown.Even if President Obama can end the labor dispute that has crippled shipping at West Coast ports, peace will come too late for many big and small Oregon businesses.

Obama has sent U.S. Labor Secretary Thomas Perez to negotiate a settlement between the International Longshore and Warehouse Union and the Pacific Maritime Association, a coalition of 29 West Coast terminal operators, but the intervention comes too late to prevent Hanjin Shipping from stopping service to the Port of Portland on March 9.

In the unlikely event the two sides agree to a new contract in the near future, the local ILWU chapter also is fighting with International Container Terminal Services Inc., a Philippines-based company that has a long-term lease with the port to operate Terminal 6. That dispute has led to work slowdowns that caused Hanjin to announce its departure.

The loss of Hanjin will be devastating for David Kahl, who said he may be forced to move his small furniture business out of Portland. Kahl owns Ergo Depot, which sells ergonomic office furniture online and through a showroom in Southeast Portland.

The company gets most of its height-adjustable desks and chairs from China. After March 9, Hanjin will deliver the shipments to Seattle — the closest port it will still serve — and Kahn will have to pay extra to have them delivered to Portland.

“My shipping costs will increase from $3,100 to $4,000 a container. I just can’t remain economically competitive if my shipping costs increase about 30 percent,” Kahl said.

Ironically, Kahl moved to Portland after falling in love with the city just a few years ago. He moved his company’s distribution center from New Orleans to Swan Island a short time later. Now he is considering moving the entire business back to New Orleans or another location where shipping costs are lower — eliminating 20 local jobs.

“I can’t believe nobody can stop what’s happening at the port,” Kahl said.

Bigger businesses also will be hurt by Hanjin’s departure because it handles 80 percent of the shipments at Terminal 6, Oregon’s only deep-water port. The state’s $5.4 billion agricultural industrial will be especially affected because 40 percent of its products are exported throughout the world, and most of it flows through the Portland port.

But the situation already is so critical that a bipartisan group of West Coast U.S. representatives has called on Obama to invoke the federal Taft-Hartley Act, which gives him the power to force an end to the contract dispute. It was used by President Bush in 2002 to stop the lockout of longshore workers by West Coast port operators.

“It is time for the Pacific Maritime Association and the ILWU to recognize that the consequences of their actions reverberate far beyond their own personal concerns,” said Oregon U.S. Rep. Kurt Schrader, who is part of the coalition. “They need to immediately conclude their negotiations before they do any further harm to the economy.”

Oregon U.S. Sens. Ron Wyden and Jeff Merkley also wrote to the heads of the ILWU and PMA on Friday, calling on them to settle their differences. They sent a similar letter two months ago but did not get a reply from either side.

Plenty of blame

Port officials say they did everything possible to prevent Hanjin from leaving, including face to face meetings with officials in South Korea and New Jersey, an independent review of operations at Terminal 6, and a recent change to the crane maintenance service provider.

“At this point, Hanjin’s decision to withdraw service from Portland has been made. While we would never say never, it is highly unlikely that any eleventh-hour actions would prevent their withdrawal at this point,” said port spokesman Josh Thomas, who estimates it could take up to three years to find a replacement with the same trans-Pacific capabilities.

The ILWU and ICTSI publicly blame each other for Hanjin’s departure.

Jennifer Sargent, a local ILWU spokeswoman, says ICTSI is anti-union and only concerned about its bottom line.

“Hanjin’s stated departure from Portland rests solely on ICTSI’s inherent refusal and failure to nurture customer relations. ICTSI’s only interest is to leverage its regional monopoly for maximum short term and unit company profit. Its customers are secondary. ICTSI’s disrespect for its customers’ interests parallels labor relations with its work force. Their approach has been ‘this is what ICTSI wants. Take it or leave it,’” Sargent said.

But ICTSI says the union is solely to blame.

“Hanjin’s decision to leave the Port of Portland on March 9, 2015, due to the sustained and deliberate actions of ILWU workers is a significant blow to the regional economy and will cause substantial disruption to many local businesses, workers and consumers,” ICTSI said in a statement issued after Hanjin’s announcement.

Despite the dueling accusations, when independent third parties have been asked to assess blame, they have sided with ICTSI. Two National Labor Relations Board judges have ruled the ILWU has violated federal labor laws at the port. And U.S. District Judge Michael Simon has issued an injunction against continuation of ILWU’s conduct. Simon also found the union in contempt of court on Dec. 16, 2014.

Boost or bust?

Hanjin’s departure threatens a long-range plan to boost the state’s economy by increasing the export of goods and services. The Greater Portland Export Initiative calls for increasing the value of the state’s exports from $33 billion in 2012 to $42 billion within a few years.

The plan was prepared by a private-public partnership that includes Greater Portland Inc., Business Oregon, the Portland Development Commission, the City of Hillsboro and the U.S. Export Assistance Center in Portland. Export-related jobs are considered critical to economic growth because they pay higher-than-average wages.

“GPI is concerned about the impact that the loss of the Hanjin container service will have for our region’s small and medium-size exporters — especially given that these firms have less ability to withstand the additional costs of shipping to and from alternative container ports,” said Sheila Muckridge, the organization’s vice president of marketing and communications.

Hanjin’s departure will not affect all port operations. According to Thomas, the port has four marine terminals that also handle automobiles, grain, minerals, steel, project cargo and bulk liquids, and they will not be impacted by the decision.

Thomas said that when Hanjin leaves, port officials will work with all parties on short-term plans to reroute cargo and long-term plans to recruit another trans-Pacific shipper. Although two other shippers serve Terminal 6 — Hapag-Lloyd and Westwood Shipping — neither handle the same volume of shipments as Hanjin. It averaged 1,500 containers a week, provided an estimated 657 direct jobs, paid $33 million in annual personal wages, supported $83 million in business revenue, and generated $12 million in state and local taxes.

“Hundreds of businesses use Terminal 6 to get their goods to and from international markets, including a multitude of inland agricultural exporters. Over 88 percent of Oregon exporters are small and medium-size businesses. When Portland isn’t an option, companies must use other ports outside of Oregon, often at a steep premium,” Thomas said.

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