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With port strikes looming, Maine businesses plan for the worst

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With port strikes looming, Maine businesses plan for the worst

PORTLAND — The union that represents dock workers at East Coast ports, including Portland’s, is threatening to strike if it’s not successful in renegotiating its contract with port operators.

A strike could impact several Maine businesses and produce a ripple effect throughout the state’s economy.

The recent round of negotiations between the International Longshoremen’s Association and the U.S. Maritime Alliance, which represents container carriers and port operators in the negotiations – including Port Americas, which operates the Portland Marine Terminal – broke down last week. No new talks are scheduled, both sides told the Associated Press. The current contract expires at the end of September.

Meanwhile, the ILA chapter at the Port of New York and New Jersey, the East Coast’s busiest port, authorized a strike on Tuesday if the contract deal isn’t reached, according to the AP.

The Portland Marine Terminal handles between 3,000 and 5,000 containers a year, on average, Jack Humeniuk, the ILA’s representative in Portland and an employee of Port Americas, told the Bangor Daily News. There are 45 members in Portland’s ILA chapter, he said.

But it’s not just a disruption of container service in Portland that would impact Maine businesses. A strike at ports in New York, Newark, Baltimore, Philadelphia and other East Coast ports would disrupt the entire nation’s supply chain and create a ripple effect throughout the economy.

If the ILA workers strike, “the worst-case scenario” for Maine businesses, Humeniuk said, “is they’d have to move their stuff through the West Coast.”

The contract in question is a master agreement on container service, so it won’t impact the noncontainerized cargo that moves in and out of Maine, such as wood pulp and lumber and fuel, Humeniuk said.

For those Maine businesses that do receive and ship cargo by container – L.L. Bean, Sappi Fine Paper and White Rock Distilleries – a strike at East Coast ports would disrupt their supply chain and force them to seek alternative routes.

L.L. Bean is “a considerable user” of Portland’s container service, Carolyn Beem, a spokeswoman for the Freeport retailer, told the BDN. “It’s a big part of the mix for us,” she said. “In terms of the looming strikes we are looking at contingency planning and routing more to the West Coast.”

The worst-case scenario would be moving merchandise by air freight, Beem said. “That’s just ridiculous with the costs associated with that.”

Another user of Portland’s container service is White Rock Distilleries, the Lewiston liquor company purchased last year by Beam Inc., the producer of Jim Beam bourbon. It receives raw vodka from France at its Lewiston facility and ships out cases of Pinnacle brand vodka.

“We’re definitely monitoring the situation,” said Paula Erickson, a spokeswoman for Beam Inc., “and we definitely have contingency plans in place if something should occur in terms of a strike or disruption at the ports.”

Shifting supply chains and seeking alternative shipping routes would increase costs for White Rock, which employs more than 150 people, but that would be a secondary consideration, Erickson said. The company’s “No. 1 priority” would be to ensure 100 percent uninterrupted production and shipment of the company’s product.

Sappi’s paper mill in Westbrook is also looking at its options if dock workers strike. “We are aware of a potential longshoreman strike and we are working with our supply chain partners to minimize or avoid any service disruptions through strategic contingency plans,” said Joanna Rieke, Sappi’s manager of corporate communications.

It’s not just Maine’s largest shippers that would be affected. A strike at East Coast ports would be felt throughout Maine’s economy as products get backed up at overburdened West Coast ports and the entire supply chain slows.

“As it goes further down the supply chain it starts to have an impact on everybody,” L.L. Bean’s Beem said.

For all Maine retailers, a prolonged strike could spell trouble, according to Curtis Picard, executive director of the Maine Merchants Association, especially since it would occur just as stores begin to stock up on Christmas-season merchandise.

However, Picard expects the potential for a strike “is not even on the radar screen of small retailers,” he said.

Picard is watching the situation and expects to reach out to his members within the next few weeks. In the meantime, if retailers are worried about how a strike would affect them, they should call their distributor and get a better handle on where their product is coming from and where the distributor is located, Picard said. “If they’re on the West Coast, they may not have an issue,” he said.

Humeniuk was not at last week’s negotiations in Florida, but said the talks broke down over the use of automation at ports that eliminate longshoremen jobs and the question of port operators providing money to retrain longshoremen for other jobs at the ports. Those issues don’t exist in Portland, he said. Automation is something happening at the big ports such as New York and Miami. Portland doesn’t have any particular issues in negotiation at the moment, he said.

Other key issues at the failed talks were overtime rules and container royalties, which are payments dock workers receive based on the weight of the cargo, according to The Associated Press.

While no new negotiations between the ILA and the U.S. Maritime Alliance are scheduled, Humeniuk expects the parties will sit back down together. “If [the issues] get solved, they’re not going to get solved until the 11th hour,” he said. “Unfortunately for shippers, it’s uncomfortable because you don’t know what to do, but that’s the nature of the beast.”

If a strike or lockout did occur, Humeniuk expects it would be “very short-lived” because the economic impact would be so dramatic that President Barack Obama would likely get involved.