Port Dispute Causes Auto Industry Damage
Several automakers are being forced to adjust their operations as a result of the ongoing West Coast labor dispute.
The nine month labor dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union has prompted economic concern across the board, and now the auto industry is feeling the pressure. The dispute has been blamed for port slowdowns, congestion and even some shutdowns. The problems have affected many industries reliant on importing and exporting goods.
Mark Morrison, a spokesman for Honda, detailed that plants in Ohio, Indiana and Ontario, Canada will have to slow production because of a shortage of parts starting Monday.
“We do not have a sufficient supply of several critical parts to keep the production lines running smoothly and efficiently,” Morrison told Reuters. “These parts include a small number of critical parts such as electronics, and some larger assemblies such as transmissions.”
Honda and other car makers have tried to work around the dispute by importing parts by airplane. As Kurt Salmon, a global management consulting firm, detailed in a press release, importing goods by air has already been used by other industries. However, using airplanes as an alternative is more expensive, which has been reflected in the cost of goods.
Nissan also expects to be impacted by the port dispute, but is optimistic because many of the parts they need come from local sources.
“However, since about 85 percent of Nissan’s U.S. sales volume is from vehicles manufactured at plants in North America, and the localization rate of parts in the region is high, we believe there will be minimal impact on Nissan’s operations,” Nissan spokesman David Reuter told Reuters.
Toyota has also had to adjust operations because of the labor dispute. Spokesman Mike Gross told Reuters Toyota has had to reduce overtime at some factories in North America.
With the recent failure to resolve the dispute by a federal mediator, President Obama is stepping up pressure. Over the weekend, the president sent U.S. Labor Secretary Tom Perez to California to help the two sides reach a deal. Perez is planning to meet with both sides Tuesday, a Department of Labor spokeswoman told the Los Angeles Times.
The PMA has argued that the union is making unreasonable demands which are preventing them from reaching a deal. Last week, the PMA offered a “comprehensive contract offer” in the hopes of ending the dispute once and for all. The offer would raise ILWU wages by 14 percent over 5 years, maintain an employer-paid health care plan and increase the ILWU pension to as much as $88,800 per year.
The proposed wage increase and benefits would be included in the current average full-time wages for longshore workers of $147,000 per year. The union however rejected the deal, arguing that it still doesn’t address some key issues and that they have already sacrificed a lot in an attempt to reach the PMA halfway.
“We’re this close,” ILWU President Robert McEllrath said in a statement. “We’ve dropped almost all of our remaining issues to help get this settled – and the few issues that remain can be easily resolved.”
On Sunday morning 34 container ships, tankers and other cargo vessels were waiting to dock at the ports of Los Angeles and Long Beach Lee Peterson, a spokesman for the port of Long Beach, told Hellenic Shipping News.
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