About three days after 45,000 dockworkers at 36 ports from Maine to Texas initiated a strike, the International Longshoremen's Association and U.S. Maritime Alliance, representing the ports, announced a tentative wage agreement. As a result, the union has suspended the strike until January 15.
The dockworkers are demanding a wage increase and a total ban on automation, and reports said the ports' most recent offer features a 62% pay boost over six years. The parties will now focus on negotiating automation terms.
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Industry analysts estimate that each day of a port strike requires four to six days for recovery and added that a short strike likely will not have a significant negative affect on the supply chain. However, if the two sides cannot agree on a new deal by next year, an extended strike could change the landscape of American manufacturing.
In this Q&A, Aaron Lober, the vice president of marketing at software development company CADDi, explained the potential consequences manufacturers face.
Nolan Beilstein (NB): What will be the biggest impacts of the strike on manufacturing?
Aaron Lober (AL): The immediate impact will be that many manufacturers will have their intake of component parts and materials disrupted, as well as their distribution and sales overseas.
However, just as impactful will be the knock-on effect as manufacturers strategize to avoid being so susceptible to such a strike again via finding local suppliers and customers. This will profoundly change the landscape of American manufacturing, as more opportunities open up for business within the continent.
NB: Which effects do you think will catch manufacturers by surprise?
AL: Overseas customers depending on goods shipped from America will be left scrambling to find replacements. American manufacturers might be caught by surprise if these customers decide to stick with these replacements long term. It will require swift pivoting to alternate revenue, whether from finding new customers or offering new products.
NB: How will this strike exacerbate other strikes in the automotive and aerospace industries?
AL: The longshoremen strike proves to other manufacturer unions that such a strike is indeed disruptive and must be addressed. Regardless of the outcome of the strike, we may expect other unions to be emboldened to wield the power of striking and make an opportunity to renegotiate.
Due to creating downstream disruptions in manufacturing industries such as automotive and aerospace – that is, preventing the component parts from coming in to the manufacturers – this strike actually creates a condition for insecurity for those workers. Workers may want contracted protection from losing their jobs in the event that another strike stops their ability to work.
NB: How will the strike affect the industry’s economic outlook?
AL: Already the industry is facing a very bleak outlook, with the vast majority of manufacturing leaders that responded to our survey (84%) predicting a recession in the next two years. This strike will have an immediate negative impact as productivity is diminished.
Then, it may have a downstream chilling effect on investment in manufacturing, as this sort of disruption causes cautious investors to be wary. However, in the longer term, manufacturing requires skilled and devoted workers in America to flourish.
The rights, securities and benefits that could be gained from this strike and other strikes may draw more people into the profession, leading to long term stimulation and growth of the manufacturing industry.
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