ILA Talks at a Standstill Over Royalties

“I think we’ll be on strike,” ILA President Harold Daggett said after federally mediated negotiations broke off amid disagreements over carrier-paid container royalties that provide annual payouts to ILA workers.

The current contract, already extended once past its original Sept. 30 expiration, is set to expire Dec. 29. ILA wage-scale delegates voted last week to authorize Daggett to call a strike if there was no agreement by Dec. 29.

Daggett said last week he would call off a threatened strike if negotiators could work out a deal on carrier-paid container royalties, which provide annual payouts to ILA members.

Dave Adam, executive vice president of USMX, said employers agreed Tuesday to a federal mediator’s proposal that the parties return Jan. 7 after the holidays to begin two weeks of intensive negotiations.

The ILA proposed a contract extension to Feb. 1 — but insisted that USMX maintain the status quo on container royalties, something employers said was unacceptable.

At that point, the negotiations broke off.

“I told them they have until Dec. 29 to call me, and we’ll talk,” Daggett said. “Otherwise, at one minute past midnight on the (night of the) 29^th, we’ll be on strike. The ball’s in their court.”

The ILA and USMX have negotiating off and on since March for a six-year contract covering about 15,000 ILA members handling containerized and roll-on, roll-off cargo in East and Gulf Coast ports.

Negotiators agreed last summer on ILA demands for payment of workers displaced by automation, and for guarantees of ILA jurisdiction over chassis repairs. Top remaining issues are container royalties and local work rules.

Complete coverage of ILA-USMX negotiations

Daggett said the ILA will not accept caps on carriers’ per-ton payments of container royalties, a program established in the 1960s to compensate ILA workers for the loss of jobs to automation. USMX said carriers paid $211 million, or $10 per man-hour, in royalties last year.

USMX wants to freeze royalty payouts at current levels, and eliminate them for new hires. However,  the employer group is proposing to use future growth in royalties for other ILA benefits, and has offered to guarantee that current workers continue receiving royalties at current levels for the next 25 years.

Royalty payments to workers — Daggett said they are “wage supplements,” not bonuses — averaged $15,500 per worker last year. They ranged from a few thousand dollars in ports such as Jacksonville and New Orleans to $36,000 in Savannah and more than $20,000 in New York-New Jersey.

“Container royalties are the bloodline for the ILA members, for the international and for the districts,” he said. Ten percent of carriers’ royalty payments go to the ILA treasury.

Until there’s a breakthrough on the royalty issue, the negotiations are at a standstill. Tuesday’s meeting produced no movement on the issue.

“They absolutely refused to talk about royalties, and for us the term that’s been used in discussions is ‘a runaway train,’ ” Adam said. Carriers’ royalty costs have soared by $180 million since royalty caps were eliminated three years ago. “It has cost the carriers dearly, with no measurable increase in productivity,” he said.

Besides royalties, contract issues include management proposals to provide local negotiators with flexibility to address work rules such as relief-staffing requirements for that allow many workers to be paid when they’re not working at the Port of New York and New Jersey.

Tuesday’s breakdown of negotiations leaves forces shippers to accelerate strike contingency plans. Their limited options include diverting cargo to Canada, Mexico or the West Coast, or waiting and hoping their stockpiles are sufficient to ride out a strike.

“USMX and its members are disappointed with the breakdown of negotiations and the inflexible stance that the union’s leaders have maintained over the nine-month course of these talks,” said James A. Capo, USMX chairman and CEO. " It is especially disheartening given the history of cooperation that in the past has characterized negotiations with the ILA and, since 1977, has resulted in nine new agreements without a single strike or coastwide work stoppage.”

Sixty-eight trade associations last week urged the ILA and USMX to “stay at the negotiating table until a deal is reached even if this extends beyond the current deadline of Dec. 29.

After negotiations broke off Tuesday, the National Retail Federation renewed its call for President Obama to seek an injunction under the Taft-Hartley Act if necessary to keep East and Gulf ports open.

“The last thing the economy needs right now is another strike, which would impact all international trade and commerce at the nation’s East and Gulf Coast container ports. This is truly a ‘container cliff’ in the making,” said Jonathan Gold, the federation’s vice president for supply chain and customs policy.

“The retail industry, once again, calls on President Obama to engage directly in the negotiations. The resident should utilize all available tools, including Taft-Hartley, to eliminate even the threat of a strike or lockout,” Gold said.

An ILA coastwide strike would affect container and roll-on, roll-off cargo covered by the master contract. The ILA said it would continue to work breakbulk, cruise and military ships covered by local agreements. The union said it also would work perishables, but refrigerated and military containers moving on container ships idled by the strike would be affected.

In addition to the coastwide negotiations between the ILA and USMX, a Dec. 31 expiration looms for the ILA’s contract with the Metropolitan Marine Maintenance Contractors’ Association, which represents New York-New Jersey equipment maintenance and repair companies. The Metro association’s contract is not part of the coastwide master agreement, and a strike against the repair companies would idle the port.

The New York Shipping Association was disappointed by the failure of  Tuesday's ILA-USMX negotiations, NYSA President Joseph Curto said. He  said the NYSA is anxious to negotiate port-specific issues for NewYork-New Jersey under its local contract, which supplements the  coastwide contract. But he said that until the master contract talks  resume, " Unfortunately, negotiating on New York issues will likely be  placed on hold."