6/26/14 9:21 AM EDT
The U.S. economy could lose as much as $2.5 billion a day if West Coast ports shut down because contract negotiations covering 13,600 dockworkers fail to reach a new labor deal by Monday, according to a study by the National Association of Manufacturers and the National Retail Federation.
“Manufacturers depend on the ability of West Coast ports to efficiently move cargo valued at 12.5 percent of U.S. GDP,” NAM President and CEO Jay Timmons said in a statement.
“A shutdown would erode that figure and inflict long-term damage to our competitiveness as manufacturers and as a nation. The parties must come to an agreement before the current contract expires,” Timmons said.
The Pacific Maritime Association is representing West Coast port operators in the negotiations with the International Longshore and Warehouse Union, whose current contract expires at midnight on June 30. The two sides have been negotiating in secrecy since May 12 on a new labor deal.
The last major West Coast port disruption occurred in 2002, when management locked out dockworkers for 10 days until then-President George W. Bush ordered the two sides back to work under the Taft-Hartley Act.
That shutdown was estimated to cost the U.S. economy several billion dollars, the manufacturing and retail groups said.
The study, conducted with economists at the University of Maryland’s Interindustry Forecasting Project, found that the economic repercussions of a port closure would grow over time.
According to the study, a five-day stoppage would reduce gross domestic product $1.9 billion a day, disrupt 73,000 jobs and cost the average household $81 in purchasing power.
A 10-day stoppage would reduce GDP by $2.1 billion a day, disrupt 169,000 jobs and cost the average household $170 in purchasing power.
A 20-day stoppage would reduce GDP $2.5 billion a day, disrupt 405,000 jobs and cost the average household $366 in purchasing power.
“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” NRF President and CEO Matthew Shay said. “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.”Tags: navigation, ports, trade