The Breakdown

Explaining Southern California's economy

LA ports: Labor strife and what it means to you

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The potential for a major work stoppage looms over the Ports of Los Angeles and Long Beach, and more than a hundred truck drivers for three companies that move cargo in and out of the ports have gone on strike indefinitely.  

That's a small number: As many as 12,000 truck drivers serve the two ports at a given time.

But there's always the possibility that unionized dockworkers at the two ports could choose to honor the drivers' picket lines. That happened briefly on Tuesday morning, when members of the International Longshore and Warehouse Workers Union walked off the job in response to the striking truck drivers' pickets for two hours. 

That shut down two terminals at the Port of L.A. and one in Long Beach, at least until a federal mediator stepped in and said the longshore workers had to return to work under the terms of their contract with the Pacific Maritime Association. 

That contract expires on Friday.  If it's not extended, the dockworkers would be free to walk off the job again in support of the truck drivers.

The ILWU represents some 10,000 workers at the Ports of L.A. and Long Beach. If they all stopped loading and unloading cargo from container ships, that would disrupt traffic at a port complex that handles roughly 40 percent of the goods imported to the U.S.  

So what's at stake?

Would imported goods become hard to find on store shelves?

Probably not for a while. A strike or lockout of a couple of days would have little if any impact on store shelves, said international Trade Economist Jock O'Connell.  

"There'll be enough goods in inventory supply chains to keep stores stocked with merchandise," O'Connell told KPCC. "Wal-Mart is not going to run out of clothing. Home Depot is not going to run out of housing repair equipment."

But if the strike were to last for three weeks or more, O'Connell said consumers might begin to see some store shelves empty out, particularly of goods imported from Asia.

"The important thing to realize is that we're entering peak season for importing goods for the entire back-to-school through Christmas holiday shopping season," he said. "This is a critical time for merchandisers to get their goods into the United States, into distribution centers and warehouses. So this is the worst possible time for any port closure to occur."

The labor uncertainty at ports on the U.S. West Coast has retailers jittery. The National Retail Federation joined with the National Association of Manufacturers to commission a report on the potential national impact of a work stoppage at West Coast ports. The report estimates that a 20-day work stoppage could cost the U.S. economy $2.5 billion per day. 

The National Retail Federation has also reported that retailers have begun to bring holiday merchandise into the U.S. early to protect against potential supply chain disruption. 

Would imported goods start to cost more?

Again, with a longer strike or lockout, they could. O'Connell said that if goods get held up, the goods that do make it to market will likely increase in value. 

"It's an opportune time for retailers to say, 'Well, we're not going to get the 100,000 items of this brand new toy that's going to be in fabulous demand at Christmas; we're only going to get 50,000 of it.' So the price of those will be at a premium," O'Connell said. "It's Economics 101: With high demand and low supply, retailers are inclined to up the price."

Where else, other than stores, would a strike's impact be felt?

Manufacturers who use foreign materials or foreign-made components in their products could feel the pinch.

For example, many cars made in U.S. factories contain foreign parts.

"If those supply chains are interrupted, then it's likely that those facilities will either have to slow down or suspend operations," O'Connell said. "People could be temporarily laid off if they don't have anything to do." 

There are plenty of other American companies that need to export their goods to foreign customers. They could also be affected.

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