AT the U.S. Meat Export Federation's (USMEF) recent Strategic Planning Conference, James McKenna, president and chief executive officer of the Pacific Maritime Assn. (PMA), addressed key issues affecting the movement of meat exports through West Coast ports, including the increasingly scrutinized process of labor contract negotiations.
McKenna had just completed the first round of talks with representatives of the International Longshore & Warehouse Union (ILWU) on a possible extension of their port labor contract, which currently runs through July 1, 2019.
After the first meeting, McKenna said he "was encouraged by it. It was professional; it was positive. This is all an evolution from the last three contracts. Where do we go from here? Well, we have other meetings scheduled."
However, McKenna made one thing clear: It will not be a long, drawn-out process as it is just an extension and not a contract renegotiation. "I'm cautiously optimistic that we'll get there, but again, only time will tell," he added.
The U.S. meat industry's interest in PMA-ILWU relations has heightened as a result of the shipping disruptions and severe port congestion that occurred when their contract negotiations stalled in late 2014 and early 2015.
McKenna said there were no major issues on the table in 2014 — just "a lot of little, tiny issues that nobody could get over."
He said there was new blood, so it was very splintered. "Nothing got done. We started dealing with little, tiny port issues that had nothing to do with the coast contract, and it just kind of spun out of control," he explained.
The real breaking point was when the groups finally allowed a federal mediator to come in after seven months. McKenna said the mediator expected that he would be done in a couple of weeks, but it took him four months.
The issue that ended up being the cornerstone of the negotiations was about the arbitration process, which McKenna said was very archaic. There were two union arbitrators and two employer arbitrators in each section of the West Coast, and each favored their own party. However, the caveat to it all was that getting rid of an arbitrator required an agreement from both parties, McKenna said, adding, "The system was not objective at all." Now, there is one employer arbitrator, one union arbitrator and one neutral arbitrator.
Negotiations were long and painful, but they were concluded, McKenna said. "We got there by exacting a heavy price on the shipping industry, the economy and the industry," he noted.
Even after the new labor contract agreement was reached, clearing the shipping backlog and returning port traffic to normal levels took several months. McKenna noted that many industries felt similar pain during the disruption, and it led to much greater scrutiny of the negotiating process by members of Congress and other government officials.
Since the contract was ratified, McKenna said there has been a flurry of activity in Washington, D.C., calling for maritime legislation that attempts to mitigate or stave off future disruptions. Sponsors of the legislation believe that the current negotiating process is not responsible.
McKenna said he agrees. "It's clear to me that the challenges that both management and the union face is the need for predictability and reliability, and to that end, it is incumbent upon us to find a better path forward," he said.
Nearly 130 agricultural, trade and transportation organizations have also been pressuring ILWU and PMA to begin early negotiations on a new labor contract in hopes of avoiding the trade disruptions that occurred during the last negotiations.
U.S. exporters of agricultural products lost approximately $1.75 billion each month during the disruption. The North American Meat Institute and the National Pork Producers Council estimated that the West Coast delays cost each industry $40 million per week.
McKenna said since the end of the negotiations in 2015, he hears from the U.S. labor secretary and other parties about every 60 days. "People are engaged now in a way that they never were before, and we brought it on ourselves. There is a lot more interest, a lot more involvement, and I think it's only going to become greater," he said.
However, McKenna said he can guarantee that if negotiations are ever drawn out again like in 2014-15, the issue will become "front and center" a lot sooner than nine months.
As for the involvement of groups and government officials, McKenna said while everyone is engaged, "I just don't really think they know what to do with being engaged." He said he thinks the avenue to a result needs to be clearer.
"Right now, there is a lot of activity, but there's no real path forward," he said. "I think the fact that we're sitting down with the union even discussing a contract extension is unbelievable; (it has) never happened before."
McKenna added that there is so much at stake with this negotiation that "the level of interest — the level of pressure — has raised on both parties, as it should." That pressure needs to stay there, he stated.