SAN FRANCISCO — According to USA Today, the impact of the West Coast ports shutdown is spreading to firms nationwide, threatening an already weak economy.
Federal mediators met Thursday with port employers and unions representing 10,500 dockworkers to end the management lockout that has shut 29 ports from Seattle to San Diego since Sunday.
The lockout led Thursday to the shutdown of a 5,000-employee auto factory run by General Motors and Toyota in Fremont, Calif., and has forced companies to make alternate shipping plans. Nissan Motor is considering airlifts to get parts to the USA.
CEOs at major companies grew more concerned Thursday. ”It’s worrisome,” says Carly Fiorina of computer giant Hewlett-Packard, who says the lockout has yet to affect her company.
The lockout, which by some estimates is costing the U.S. economy as much as $1 billion a day in lost wages, productivity and spoiled goods, first hit West Coast shipping companies. Next came truckers and railroads. Now, the impact is leading to:
* Shrinking payrolls. In La Porte, Ind., corrugated box maker Packaging Logic has shifted many of its 48 employees indefinitely to a 32-hour week from 40 hours.
Half the 50 workers at AmeriPak Industries in Santa Ana, Calif., were furloughed Monday. The packaging company relies on Asian-made goods.
AmeriPak usually gets about 15 semi-truck-size containers of shoes, electronics and other consumer goods daily, which it repackages for sale in the USA.
The factory is running at about 40% capacity, and will be down to 25% at the end of next week if shipments don’t resume, says owner Matt Bays. That could lead to more furloughs.
* Missing goods. Scharffen Berger Chocolate Maker is worried that a critical chocolate-making machine ordered from a Swiss manufacturer might be stuck in transit. The machine, expected late this month, is needed so the fast-growing company in Berkeley, Calif., can meet fourth-quarter sales goals.
President John Scharffenberger, saying he was ”panicking,” and was trying Thursday to intercept the machine before it was loaded on a ship for West Coast delivery. He wants it shipped to an East Coast port, where it could be loaded on a truck or train for Berkeley. That would raise shipping costs and add as much as 10 days to delivery. But that’s better than having the machine stuck on a cargo boat indefinitely.
Ten containers of chairs, tables and other furniture bound for a trade show that starts Thursday in High Point, N.C., are stuck on a cargo ship at the Los Angeles port. Ordinarily, it takes a week to shift the goods via rail to Norfolk, Va., where they are put on trucks for the 250-mile trip to High Point, says Ison International, which arranges for the transport. That’s unlikely to happen now, so the Indonesian manufacturer stands to lose valuable sales.
* Higher costs. Game and toy maker Patch Products shifted production to its factory in Beloit, Wis., from Asia. That means paying overtime — a cost that can’t be passed to Target, Toys R Us and other customers, says CEO Fran Patch.
The timing could not be worse. The holiday-packed fourth quarter drives 30% of Patch’s annual $30 million in revenue. Even if the lockout is settled in a few days, it would take Patch a week to shift production back to Asia.
Clockmaker Howard Miller in Zeeland, Mich., with more than 1,500 workers, might be forced in a week to pay the higher cost of importing Asian-made parts by air.
The company’s chairman, Philip Miller, pleaded for President Bush ( news – web sites) to invoke the Taft-Hartley Act, which would force a reopening of the ports and an 80-day cooling off period. Bush has said he is worried about the lockout, but has not committed publicly to invoking the law.
Miller says his company’s dependence on foreign markets, and the U.S. ports that serve them, reflects the growing dependence of all companies — including small ones such as his — on global trade. ”There are very few companies that are not international by one definition or another,” he says.