THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, October 6, 1996 TAG: 9610050668
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 114 lines
The port of Hampton Roads has many advantages compared to other East Coast ports: a naturally deep harbor, ready access to the open ocean and good rail connections inland.
Hampton Roads, now the second largest general cargo port on the East Coast, also has a growing labor advantage.
While union workers at some East Coast ports walked out on strike Wednesday, the 2,000 members of the International Longshoremen's Association in Hampton Roads approved new contracts that will make the port even more competitive. They also accepted a deal that makes dockside labor less expensive than on the West Coast, which could bring more trade from Asia.
Hampton Roads is simply going to be a less expensive port in which to load and unload cargo, port officials say.
``It's a good contract for both sides,'' said Joseph A. Dorto, chief executive and general manager of Virginia International Terminals Inc., which operates the state-owned marine cargo terminals in Portsmouth, Newport News and Norfolk. ``Labor got something good out of it and management got something good out of it.''
Labor and management have a history of getting along in this port. There hasn't been a strike in the region since the 1970s and negotiators for both sides speak highly of each other.
The master contract sets wage rates and work rules for handling containers - the truck-sized steel boxes used to ship most cargo - for ports from Maine to Texas.
The contract comes down to this: current ILA members will get $4 an hour in raises over the next five years but the ``gangs'' that unload and load ships will shrink by three people to 15.
The deal lowers the costs to shipping lines over the life of the contract ``tremendously,'' Dorto said.
``Taking out two men today and one in 1998 puts the gang at the minimum you need to work any ship,'' said Roger Giesinger, president and chief negotiator for the Hampton Roads Shipping Association, which represents port terminals, shipping lines and other employers of ILA labor.
The stevedoring companies that load and unload ships can add more workers as they need them on a job-by-job basis, Giesinger said.
The reduction in gang-size won't put any men out of work, said Edward L. Brown, ILA vice president in Norfolk.
``I believe the reason the contract passed here is we've got a lot of work in Hampton Roads,'' Dorto said. ``Cutting those men out of the gang here just means we'll be getting better productivity. Those men will still get on gangs and get their hours. There should be plenty of work to go around.''
So much work, Dorto said, that the ILA is adding new members.
Under the master agreement, ILA members will get an immediate $2-an-hour raise but members hired after Oct. 1 will earn a lower hourly wage - $13 an hour compared to $17, $22 or $23 an hour for veteran members.
Still ILA members are among the best paid blue-collar workers in Hampton Roads, Brown said. They also have unmatched benefits, he said.
Besides giving shipping lines less expensive, more productive labor, the contract's five-year term means the carriers can count on five years of stability in Hampton Roads.
``They can plan out for five years,'' Giesinger said. ``They know all the labor costs associated with it.''
That helps the lines plan rates and sign customers to long-term shipping contracts, Dorto said.
The fact that both the master contract and a local contracts passed handily in Hampton Roads is also a boon.
``Our people voted in both the local and the master contract whereas Philadelphia, Boston and Baltimore rejected the local contract,'' Dorto said. ``That sends a message that we've got labor stability and they've got labor problems.''
Longshoremen were on strike Thursday and Friday in Boston and at some terminals in Philadelphia after rejecting their local contracts.
The port of Hampton Roads could reap immediate dividends from the disruption in other ports. Not only will some cargos be shifted from ports suffering strikes, but some lines may move to avoid any future instability.
It's not the ILA's intention to take cargo away from other ILA ports, but that's often the consequence when workers at one port accept a contract rejected elsewhere, Dorto said.
``Short-term, in the next 90 days, you're going to see some shifting of cargo from Philly and Baltimore,'' Dorto said.
The new contract may also help redirect some of the $216 billion in trade with Asia that now flows through West Coast ports, according to James Brennan, a principal of Mercer Management Consulting, a transportation advisory firm in Lexington, Mass.
The reason: dockside labor is now cheaper on the East Coast than it is under a recently approved contract on the West Coast.
About $4 billion in trade could be diverted as a result, Brennan said.
As the center of manufacturing in Asia shifts from nations like Japan to Southeast Asian countries like Indonesia, it's beginning to make more sense to ship to the East Coast via Egypt's Suez Canal, Dorto said.
The new contract tips the scale ``in favor of the all-water Suez route,'' Dorto said. ``That's only true from Southeast Asia though. You wouldn't do that from Japan.''
The master contract also calls for the establishment of a managed health care program by 1999 to replace a traditional insurance program now provided ILA members and their dependents. That plan will help control rising health care costs for the port, the shipping lines and other employers, Giesinger said.
The local contract hammered out at the last minute and approved by Hampton Roads dockworkers includes several measures that will reduce or control costs for the ILA employers, Giesinger said.
The contract should also help the port regain its footing in the break-bulk cargo market - cargo shipped on pallets or in bins, like cocoa beans and rubber, or piece by piece, like steel and machinery.
Hampton Roads has lost a lot of break-bulk cargo in recent years to ports with cheaper labor.
The new contract keeps a lid on break-bulk wages and benefits, while shrinking gang sizes, making Hampton Roads less expensive than ports to the northeast and more competitive with ports to the south, Dorto said.
``We'll be in a most competitive position to be able to recover break-bulk cargo that we lost,'' the ILA's Brown said. MEMO: Bloomberg Business News contributed to this report. by CNB