How do you Plan for a Union Strike?

The U.S. economy is still weak and U.S. port strikes are not helping matters. The LA/Long Beach clerical union strike that lasted 8 days in late November-early December, 2012 shutdown a total of 10 container terminals, and caused a vessel and container backlog that showed its affects 2 weeks after the strike ended. The strike cost companies an estimated $1 billion in lost revenue per day of the strike. At a time when the last of the holiday imports are arriving to the U.S. and as stores are trying to make last minute sales, product/parts delays of any kind limit those U.S. sales.

On December 29, 2012 we may see a U.S. East Coast union strike, costing companies billions more in lost revenue since import/export containers will be delayed at the ports. As stated in the article, “Potential US East and Gulf Coast Port Labor Strike Could Further Destabilize International Trade”, in the maritime-executive, “Those not prepared for such disruption could face adverse operational and economic impacts including increased expenses, decreased revenues, loss of market share, and reputational damage due to their profit-driven strategy of keeping inventory levels low and the sudden and severe backlog and rerouting pressures caused by a work stoppage”. So those companies who were trying to limit carrying costs of inventory and who have moved production overseas, now may see a disadvantage of this strategy as potential port strikes become a reality.

Now many companies are looking at options to build up inventories and keep imports moving into the U.S. Since the issues on the West Coast are cleaned up and the strike has ended, some importers have moved vessels to the West Coast instead of the East Coast, causing extra transportation costs and shipment delays. Some U.S. companies have been building supplies of inventory in their warehouses, at the possibility that a strike could happen. A major factor in limiting supply chain delays will be increased visibility throughout the companies supply chain. Perhaps in the future companies will invest in warehousing at multiple port locations in order to create options in case of strikes or even use this as a reason to either keep factories in the U.S. or this will make a company think twice before outsourcing production overseas.

In the end union strikes are difficult to plan for, especially as there are extra costs in order to manage these possible risks. However, by having proper risk management in place and being ready for this type of situation a prepared company can take market share from those who are not prepared.




An East Coast Port Strike Could Have Devastating Impact

California Ports Strike Disrupts Holiday-Shopping Cargos

L.A. Port Workers Reach Agreement to End Eight-Day Strike

Potential US East and Gulf Coast Port Labor Strike Could Further Destabilize International Trade

Worries mount about possible East Coast port strike

4 thoughts on “How do you Plan for a Union Strike?

  1. My first job upon graduation was as a recruiting director for a high-risk staffing agency. Around the time that I took the position, there was a massive grocery strike in California. Because food is perishable, a strike can cause even greater damage to the grocery industry. My company provided “strike insurance” to their clients. This insurance was very costly, but it could also prevent major losses if implementation was necessary. If a strike were to occur, our company would call our bank of temporary employees (truck drivers, fork lift drivers, machinists, etc.) and they would immediately fly to the location in order to fill in for the striking workers. Due to the nature of the job, they were paid very high wages and per diem. These workers were known as “scabs” to members of the union. This position proved to be very taxing on multiple levels. I did not know this industry existed prior to applying for the position.

  2. This is a very informative post. I never realized how expensive and detrimental union strikes could be. Companies need better risk management to prevent themselves from being subject to these strikes.

  3. I believe even thought many companies might have a strategy input into these situation but they aren’t completely covered. This situation reminds me of Japan during the tsunami where they didn’t expect the nuclear bomp to go off. Also so much of the manufacturing is done there it stopped production and impacted many counties beyond Japan. After this effect many business thought to deploy the work in various cities so an occurrence of this mass never occurs again. Same thing with risk management try as much as possible to prevent as much damage as possible. I didn’t know a company like that existed as w13kristen responded but i think its a very good thing to have even thought it might cost a lot, but lost in delivering to sales is even more costly.

  4. This is a very interesting post. I am in a union at my job and I’m not sure as to how a company should effectively plan for a union strike. I have done research on the PATCO strike back int the 1980’s where the entire air traffic controller force went on strike and President Reagan at the time fired more than 11,000 controllers. I believe the stance was for better pay, working conditions, and a better work week to sum it up. The workforce may have thought they had the upper hand as this job takes years to train for and safely perform the appropriate tasks and thought that may have worked in their behalf. As we know now it didn’t. I think with the proper communication and fair negotiations companies can prevent events like this from occurring. Proper management relations and a better understanding of the worker’s psyche are a must.

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