Contract tension may force Oakland closure
Escalating tension over contract negotiations for about 250 workers could disrupt, or even shut down, operations this fall at the Port of Oakland, the fifth-largest container shipping facility in the US.
The Port of Oakland must rein in rapidly increasing compensation costs. While it projects revenues will increase nine percent from 2011 to 2015, it forecasts personnel expenditures to climb 30 percent if no action is taken, reported San Jose Mercury News.
Moreover, the agency's pension and retiree health care programmes are under-funded by at least US$269 million, a staggering sum equal to 51/2 years of payroll. It's a debt that must be paid from future revenues.
Leaders of the Service Employees International Union Local 1021 don't care. They are not only unwilling to make concessions, they want raises tied to inflation.
Union spokesman Steve Gilbert dismisses concerns about the retirement debt. "That's something anyone could throw out at any time," he told me. And, "we're not impressed when they talk about these things."
So far, the agency's seven commissioners, nominated by the mayor and appointed by the City Council, have held tough. The two sides reached a tentative agreement in March, but workers rejected it. Now, more than a year after the last contract expired, the standoff has moved to mediation. If that fails, new state law requires a fact-finding proceeding before the agency can impose a new contract.
The dispute involves more than half the employees working directly for the Port of Oakland. Most are janitorial, maintenance and security employees at the airport, but if they strike, they will probably be supported by private-sector dock workers at the maritime facility. Health care and retirement benefits are key because of their huge costs. For every dollar of payroll, the agency pays another 74 cents for those benefits.
Meanwhile, the California Public Employees Retirement System, which administers the plan, has not required adequate contributions. As a result, the agency's pension plan is only 64 percent funded, with a $159 million shortfall.
The union claims the Port of Oakland can afford higher salaries by using cash on hand and expected profits. The agency points out that the cash must go toward large debt payments coming due later this year, and the profits are really the money needed for capital costs to keep facilities properly maintained and upgraded.
Moreover, the union completely ignores the huge retirement shortfall that must be paid off. There's no excess money here.
Until both sides agree that the Port of Oakland has a critical financial problem, these labour negotiations are doomed. Thus far, the union has simply ignored reality.