A July 1 deadline looms for a new contract agreement covering 13,600 dockworkers at 30 ports stretching from San Diego to Bellingham, Wash. And a new study by the National Association of Manufacturers (NAM) and the National Retail Federation (NRF), reports that the U.S. economy could lose as much as $2.5 billion a day if a prolonged West Coast port shutdown occurs.
“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” said Matthew Shay, NRF president and CEO. “Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade, stymie supply chains and hurt domestic employment and consumer spending.”
Tire manufacturers have kept a careful watch on these negotiations, and hope that the ports do not close. However, there has been no indication that the parties will reach an agreement by the deadline, leaving tire manufacturers with the decision as to how they will mitigate the damage caused by a West Coast port shutdown.
Toyo Tire USA Corp. is working on a contingency plan to ensure adequate inventory should the shutdown take place.
“Over the last several months we have increased our production orders from overseas and as a result we are now carrying heavier inventories in passenger, light truck and TBR products,” said a spokesperson from Toyo.
China Manufacturers Alliance has paid close attention to these negotiations and hopes a contract is completed without any port strikes or delays, according to Aaron Murphy, CMA’s vice president.
“We began transitioning shipments and inventory early in the second quarter of 2014 to help us better manage through any issues that may arise due to the port workers negotiations.
“While the west coast ports many times provide the most efficient shipping lanes for much of CMA’s imported products, we have and will use other lanes, including East Coast ports, to supplement the transportation of goods into the U.S. At this point it’s a wait and see position,” said Murphy.
Tire manufacturer Kumho Tire USA Inc. also hopes that the shutdown does not come to pass.
“Most of our tires do in fact come through West coast ports,” said Jay Song, Kumho’s procurement manager.
“Since we’ve been aware of this potential shutdown, we have come up with alternative solutions to ensure business will not be affected, but we’re hoping it does not come to this,” said a spokesperson from Kumho.
The last major West Coast port disruption occurred in 2002, when management locked out dockworkers for 10 days until then-President George Bush ordered the two sides back to work under the Taft-Hartley Act.