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The Honolulu Advertiser
Updated at 10:21 a.m., Wednesday, September 4, 2002

Hawai'i importers making plans for dockworkers strike

West Coast contract faces major hurdles

Longshore workers on the West Coast have walked out of contract talks with their employers in the Pacific Maritime Association, which represents shipping companies.

Both sides have blamed the impasse on major disagreements between the International Longshore & Warehouse Union and the companies. Among the issues:

• Technology: Members of the Pacific Maritime Association want to use new technology, such as computerized cargo-tracking systems, to speed cargo flow through West Coast ports. The association says this will result in the loss of several hundred jobs, but it has proposed to continue paying union members who lose their jobs because of the upgrades.

The ILWU says it welcomes the new technology and sees the need. But the sticking point is outsourcing: The ILWU says it wants assurances that any jobs created through the new technology will be union jobs.

• Arbitration: The sides disagree on whether a neutral outsider should decide job-related technology issues. If employees are to lose their jobs because of technology upgrades, the union wants final approval of the upgrades to go through a committee with equal union and employer representation.

The Pacific Maritime Association, concerned that such a committee could deadlock on many issues, wants a neutral arbitrator.

• Health benefits: Employers are proposing to maintain 100 percent health benefits for union members, one of the key points sought by the ILWU.

But in exchange, the Pacific Maritime Association wants the union to agree to its neutral-arbitrator proposal.

 •  Strike looms for hotels

By Mike Gordon and John Duchemin
Advertiser Staff Writer

Shipping companies kept a close watch on the flow of goods out of West Coast ports today, wary of a possible slowdown by dockworkers who walked out of contract negotiations earlier this week.

Operations were reported to be smooth today.

“Right now, things are status quo — no reported slowdowns yet,” said Jason Greenwald, a spokesman for the Pacific Maritime Association, which represents carriers.

Officials at Matson Navigation Co., and CSX Lines also reported operations were smooth. The two shipping lines are responsible for brigning in nearly 90 percent of Hawai‘i’s goods.

But with West Coast dockworkers and shipping companies at their worst contract impasse in years, Hawai‘i businesses have begun bracing for a possible work slowdown or strike that could negatively affect the flow of goods into the Islands.

Members of the International Longshore & Warehouse Union walked out of negotiations Sunday without extending their contract.

By not extending their contract, the union may legally stage a work slowdown or strike at any time.

And with no date set for new talks, some in Hawai‘i have become concerned about a possible repeat of the 1999 dockworker slowdown that led to delays, price increases and a scarcity of imported staples such as rice, milk and paper.

“In terms of impact, it really would depend on how long it lasts and how prepared people are,” said Pearl Imada Iboshi, the state’s chief economist. “But it is a great concern, especially now in a period when we’re not growing as rapidly as we would like to be. Overall, we are just really recovering from the impact of 9/11. Any negative impact would set us back.”

Hawai‘i imports about $10 billion worth of merchandise per year, including $1 billion in food, according to the Department of Business, Economic Development and Tourism. Nearly two thirds of the state’s food supply is imported, Imada Iboshi said.

A dock strike could affect everything from laundry at hotels to the meals consumers will be able to order at restaurants.

Businesses, already stressed by a year of slow economic activity in the wake of the Sept. 11 attacks, are doing what they can to minimize any impact. Many retailers and wholesalers have stocked up on inventory since late June, when the contract for Hawai‘i dockworkers expired in a prelude to the West Coast crisis.

The ILWU Local 142 in Hawai‘i has agreed to extend its contract until the West Coast dispute is resolved. But with those talks bogged down over issues such as health benefits, outsourcing and technology upgrades, most businesses are hanging onto their supplies.

As a rule, retailers should have six weeks of excess inventory, said Jan Oshiro, general manager of Hawaiian Islands Freight Association Inc.

Brian Christensen, Hawai‘i president for food distributor Fleming Foods, said the wholesaler had built up its supplies of rice, toilet paper and canned goods to last a few weeks. Fleming supplies retailers, such as supermarkets.

“We’re limited by space,” Christensen said. “We just hope it gets settled.”

Distributor Y. Hata & Co., which supplies restaurants, hotels, hospitals and other nonretail food service outlets, has built up a “safety stock” to handle a work slowdown of a few days, said Glenn Lum, the company’s administration director.

A shipping slowdown is of particular worry to food suppliers, who deal in perishable goods, said Kelvin Shigemura, vice president of Armstrong Produce.

A slowdown would create problems if the delays lasted longer than two to three days, Shigemura said. Armstrong Produce has a two-week stock of potatoes and onions, which last longer than perishables, he said.

“In June there was an increase in freight in anticipation of potential problems. But I don’t think people have reacted to recent developments just yet,” said Jeff Hull, spokesman for Matson, a division of Honolulu-based Alexander & Baldwin Inc.

Hull downplayed the risk of a strike and its possible effects.

“Obviously, disruption of service isn’t a good thing, but it wouldn’t necessarily have a noticeable impact on inventories,” he said. “In 1999, we did experience a prolonged slowdown for a month or two, but the delays were usually hours as opposed to days.”

Still, some businesses are turning to air cargo, which is far more expensive.

“If you’re a big-box retailer and run a national ad campaign for a product, you need to have it on the shelf in your Hawai‘i store too,” said Mark Brower, Hawai‘i district manager for Lynden Air Freight Inc., which specializes in offshore air cargo. Brower said many customers had called to make sure their accounts were current in case they suddenly needed to ship.

Norma Acob, managing director for Commodity Forwarders Inc., which arranges perishable shipments, said a few Hawai‘i wholesale restaurant-supply customers were leery enough last week to forego surface transportation altogether. She said the company’s San Francisco and Los Angeles offices were booking extra space on cargo planes in anticipation of a run.

David Carey, president and chief executive of Outrigger Enterprises, said the potential impact on the state’s largest lodging company is “serious,” compounded by an already sharp decline in hotel business as the anniversary of the Sept. 11 terrorist strikes looms.

“Given the magnitude of our operations, there’s not a whole lot we can do if (the strike) is going to be of any size or length,” Carey said.

He said most guests were oblivious to the potential impact of a dock strike or slowdown, because they are so accustomed to supplies arriving by truck.

Starwood Hotels is working to make sure vendors are prepared to fly in supplies and deliver on their original agreements, said Keith Vieira, senior vice president of Starwood Hotels and Resorts.

Others are doing the same.

“We’ve been in contact with our suppliers; they’re all aware of what our needs are and what our estimated consumptions are,” said Gary Ettinger, executive vice president of operations for Aston Hotels & Resorts. “We’re trying not to hoard or overbuy or panic-buy. There’s no value in that.”

Advertiser staff writers Andrew Gomes and Katherine Nichols contributed to this report.