By Zack Colman - 12/28/12 05:18 PM EST
Unionized dockworkers and their employers reached a deal Friday to avert a strike at East and Gulf Coast ports that business and agriculture groups say could have cost the economy billions of dollars.
The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance struck a deal in principle, subject to sealing a new collective bargaining agreement.
Those groups had urged President Obama to invoke the Taft-Hartley Act to break the strike, should it occur. Whether Obama would have tried to buck a union base that supported his reelection campaign was unclear.
It appears Obama will not be confronted with that choice. As a result of federal mediation, the union and shippers will have until Jan. 28 to hammer out a new deal.
“I am extremely pleased to announce that the parties have reached the agreements set forth below as a result of a mediation session,” George H. Cohen, director of the Federal Mediation and Conciliation Service, said in a Friday statement.
The arrangement settles the main sticking point between the two groups — a royalty paid by the Maritime Alliance to the dockworkers — though details were not disclosed.
The longshoremen wanted to keep the fee, which has been in place since the 1960s. The fee was implemented to help offset wages that were lost as the shipping industry transitioned to larger containers and fewer ships.
The Maritime Alliance wanted to cap the fees, calling them too generous in light of the industry’s smaller workforce.
Cohen said he was confident the sides could close on a new collective bargaining deal within the 30-day extension, calling the resolved royalty issue “a major positive step.”
“While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period,” Cohen said.
Jim McNamara, spokesman for the ILA, said the union would not comment on the preliminary deal.
Several business groups weighed in on the agreement, praising both sides for avoiding a work stoppage while urging them to cement a long-term contract.
"We are relieved that the parties have come together to keep what would have been a very disruptive strike from occurring," Marc Freedman, executive director of labor law policy with the U.S. Chamber of Commerce, said in a Friday statement.
Matthew Shay, chief executive of the National Retail Federation, remained cautious. He said the 30-day extension was not ideal, but still represented progress.
“While a contract extension does not provide the level of certainty that retailers and other industries were looking for, it is a much better result than an East and Gulf Coast port strike that would have shut down 14 container ports from Maine to Texas," Shay said in a Friday statement.
Robyn Boerstling, director of transportation and infrastructure policy with the National Association of Manufacturers, said the extension was a positive development, but that the lack of an overall deal would cost manufacturers in the meantime.
"Due to the complex nature of manufacturing supply chains, manufacturers must plan far ahead, and the continued potential for a strike in 30 days will result in additional costs to minimize the impacts of any port disruptions," she said in a Friday statement.
— This story was updated at 1:45 p.m.