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Impact from West Coast port dispute felt here

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Local manufacturers, retailers and suppliers are feeling the impact of the West Coast dock workers strike, the Dayton Daily News has discovered in its reporting. Count on us to continue our in-depth coverage of the local business community.

A timeline of significant developments in the West Coast seaport labor dispute between the International Longshore and Warehouse Union, which represents dockworkers, and the Pacific Maritime Association, which represents the terminal operators and shipping lines that employ them:

Early 2014 — West Coast seaports begin to have trouble moving cargo due to factors including a shortage of truck beds that carry containers from dockside yards to distribution warehouses.

Mid-May — Negotiations begin on a new contract that will cover workers at 29 ports.

July 1 — The prior, six-year contract expires. Longshoremen keep working.

Aug. 26 — Negotiators reach a deal on health benefits, a tricky issue in the talks.

Early November — Employers begin alleging that dockworkers are intentionally slowing their work to gain leverage at the bargaining table.

Early January — Employers begin cutting night work crews. A federal mediator agrees to intervene in contract talks.

Jan. 26 — Negotiators reach a deal on another key sticking point. Longshoremen will maintain and repair truck beds used to haul containers off the docks.

Early February — Employers make what they call their best, “all in” contract offer. Companies also begin partial shutdowns on weekends and holidays, cutting work crews that would move containers on and off ships.

Monday — The nation’s top labor official, U.S. Secretary of Labor Thomas Perez, flew to California in an attempt to resolve a damaging contract dispute between West Coast dockworkers and their employers.

Source: The Associated Press

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The West Coast port dispute that has snarled deliveries and the free flow of trade across the country could have wide ranging impact on state and local economies in Ohio, experts said.

For the past several months, labor disputes between unions and employers have led to work slowdowns and a partial shutdown of 29 West Coast ports that handle more than 70 percent of U.S. imports from Asia.

Resulting supply chain disruptions have already hit local retailers, manufacturers, auto parts suppliers and other businesses whose warehouses and store shelves may be missing some products due to the labor crisis.

“This is a huge issue for our members here in Ohio,” said Gordon Gough, president and CEO of the Ohio Council of Retail Merchants. “We’re already seeing delays in our spring merchandise, including Easter, which is a big holiday for us. In addition to clothing, furniture and other hard goods are languishing in port right now and not able to get through.”

Earlier this week, President Barack Obama sent U.S. Secretary of Labor Thomas Perez to California to try to resolve the dispute, which has led some local merchants to divert their orders through alternative shipping channels — even flying in merchandise — to stock their shelves and build up inventories.

“Our freight expediters regularly ship much of our goods through the LA port. Because the amount of goods that come through there, we began diverting a lot of our shipments to go through the state of Washington, and some of it through the Panama Canal to the east coast or go to Canada for receiving,” said Larry Klaban, CEO of Morris Furniture Co., which has 15 Morris Home Furnishings and Ashley Furniture Home Stores in Dayton, Cincinnati and Columbus. “We’ve been able to mitigate a lot of the slowdown that way, but we have had some containers that were already in transit, and it has slowed that whole shipment coming through LA.”

Brent Sheerer, president of Urbana-based Ultra-met Carbide Technologies — a maker of custom-molded tungsten carbide products — said he’s still haunted by the 10-day West Coast port shutdown in 2002 that was estimated to have cost the U.S. economy $1 billion a day. A recent report from the National Retail Federation showed the latest dispute could cost the U.S. economy as much as $2.5 billion a day.

“We have diversified some time ago on imported material vendors to add one who brings their material in through other ports in the U.S.,” Sheerer said. “We went through this the last time there was a strike, so we made that switch some time ago. The one importer who brings things into the West Coast has provisions to use Baja, Mexico although that is more difficult and we are not reliant on them. We have alternatives.”

The West Coast port situation has already had a major impact on local auto parts suppliers, including St. Paris-based KTH Parts Industries, which has 926 full-time employees and more than 200 temporary workers. The company manufactures auto body frames, and its production schedule is designed to make parts just in time for Honda production.

But a parts shortage stemming from port slowdown has stalled production at Honda facilities in Marysville, East Liberty and Anna, as well as in Greensburg, Ind., and Canada.

“It’s devastating,” said Art Liming, executive vice president and plant manager at KTH. “Anything that happens there immediately affects us.”

Said Honda Spokesman Chris Abbruzzese: “Based on what we know now, we anticipate that each plant will need to adjust production on multiple days between Feb. 16 and Feb. 23.”

Honda is one of the region’s largest employers, with more than 13,000 workers in Ohio, including more than 1,450 employees from Clark and Champaign counties.

Workers have been notified, and the company will assign duties for those who wish to show up for work, Abbruzzese said. Workers can also use paid vacation time or take time off without pay depending on the duration of the shortage. Most of the missing parts include electronics and some larger assemblies like transmissions.

Production at Honda’s Ohio facilities will be shut down on Feb. 23 and will run at only about 50 percent through this Friday, Abbruzzese said.

Honda’s slowdown is the result of a labor dispute between port operators and the International Longshore and Warehouse Union. Officials from the ILWU declined comment because a federal mediator asked both sides to refrain from discussing the case.

“The union remains focused on reaching a settlement as quickly as possible with employers,” said an ILWU statement on its website earlier this month. “Talks to resolve the few remaining issues between the Longshore Union and Pacific Maritime Association are ongoing.”

The labor dispute has stretched on since negotiations that began in mid-May, said Wade Gates, a spokesman for the Pacific Maritime Association, which represents the port operators. The sides are negotiating a single contract that covers more than 13,000 longshoremen.

The maritime association has agreed with union workers on issues like health care and pensions, but has accused dock workers of slowing work as the negotiations stretched on, Gates said. The most significant issue remaining, he said, is a dispute over how an arbitration system that is used along all of the ports should operate.

“We’re still at the table and working hard, but our primary concern has always been avoiding any disruptions at the ports.” Gates said. “When the union began their slowdowns four months ago it really began to hurt a lot of companies.”

KTH hasn’t seen a similar slowdown in production since an earthquake and tsunami hammered Japan, damaging that country’s auto industry in 2011, Liming said. The slowdown at KTH is expected to last at least through this week. Workers at KTH were given the option to work or take time off.

“We’ll be facing that again most days this week because the volumes are about half,” Liming said. “Next Monday will be the same and we’ll just wait to hear whether the situation gets better or worse.”

In the meantime, Honda has been using a combination of air cargo and special truck shipments to obtain key parts, company officials said.