Supply chains under threat once again
The International Longshoremen’s Association (ILA) is set to begin striking tomorrow, Tuesday, October 1st. In what will be the first walk-off by the ILA since 1977, the entire Eastern Seaboard—from Maine to Texas—will be affected by the strike. With a total of 36 major ports impacted, the flow of goods coming from and going to Europe, South America, and beyond will grind to a halt if a last-minute deal isn’t reached. No one expects one to be reached in time.
The clock strikes 12, and with it, untold chaos
Over 45,000 ILA workers are set to begin striking as soon as the clock strikes midnight tonight, and leadership promises they will not return to work unless their demands for pay raises are met. Both sides have accused the other of refusing to come to the negotiating table.
Over half of the nation’s shipping in and out will be affected, and it is hard to fully grasp the impact it would have on the economy, even if a deal is reached soon after the strike begins. Reuters reported that insiders claim no meetings have been held or scheduled since June regarding union demands, and even if last-minute negotiations are opened up, it may be too little, too late.
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“I’ll cripple you. I will cripple you” says ILA President Harold Daggett
The ILA’s YouTube account posted an interview with their President three weeks ago, in which he laid out the case for the strike and the intended impact he hopes it will have. As the nation enters the final stretch of a turbulent election season, where the economy will play a key role in voters’ decision-making, and as the frantic Christmas shopping season looms, putting pressure on supply chains at the best of times, this strike couldn’t come at a more critical moment.
For instance, the Port of Brunswick, GA alone handled a record 775,000 cars and heavy machinery, on-loaded and off-loaded, last year, as reported by the ABC affiliate affiliate.
In total, the U.S. has averaged between 6 and 7 million cars imported annually over the last seven years, with data only available as recently as 2020. Exports in 2021 are estimated at 1.6 million.
Your next car might not be home for Christmas
Daggett’s message called out automakers, dealers, and buyers specifically, stating that in as few as two to three weeks, cars might not be arriving at lots due to the strike. Even if this is an overly enthusiastic estimate, it is still likely that not only the supply of finished cars but also the many components in the supply chain used to manufacture them will be severely disrupted if the strike isn’t concluded quickly.
With things still not truly back to normal after the pandemic lockdowns and the supply chain shortages they caused, this decision to strike could destabilize and undo the gains made in the last few years.
President Biden may be able to intervene, but has stated he will not
There is a law in place designed to help in situations where a critical strike seems unavoidable. Called the Taft-Hartley Act, the 1947 labor law empowers the President to impose a ‘cooling-off period’ of 80 days by way of an injunction. However, it also requires the planned strike to be considered a ‘national emergency’ and puts President Biden in the impossible position of balancing his pro-labor stance with a pro-economy stance.
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Even if enacted, however, Daggett was adamant that it would not change the ILA’s negotiation position, bluntly stating that those forced to work would do so at a reduced efficiency that would still bottleneck the flow of goods, costing the port owners more than they would make from it.
Final Thoughts
Regardless of whether one is more inclined to take the side of the dock workers fighting for more share of the money their efforts make, or the port owners looking to maximize profits for their investors, it is worrying that no headway seems to have been made in finding a solution that keeps the country running smoothly.
Costs of doing business are already high thanks to inflation and the rising prices they inflict. The rise of ‘just in time’ manufacturers means plans to hit quotas are heavily dependent on timely and reliable deliveries. Forget about the election optics and partisan games; the last thing this country’s economy needs going into the biggest retail season of the year after several rough patches the previous years is for supply shortages to leave money on the table, and goods out of the hands of those willing to buy them.
Sometimes it seems like the economy just can’t catch a break.
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