Change Management: Dock Workers vs. IT

It sounds straightforward. A business process shows room for improvement. Technology tools appear useful. Management endorses an IT project to improve productivity. Implementation is set to begin.

But this is not just another industry. The business of loading and unloading ships is a heavily unionized workplace, where workers have banded together for job security and better wages for decades. And this fall, a drama that had serious implications for a weakened economy was playing out on the docks of West Coast ports.

Specifically, the International Longshore and Warehouse Union (ILWU), which represents 42,000 dock workers from San Diego to Seattle (including 10,500 affected by this dispute), staged a work slowdown in September, refusing a contract extension and holding out for a new three-year deal.

In response, the Pacific Maritime Association (PMA), which manages maritime labor agreements for all the ship operators, stevedores and terminal companies that operate in California, Oregon and Washington ports, instituted an 11-day lockout at 29 Pacific ports, costing the U.S. economy an estimated $1 billion a day.

The dispute is over who will control the new IT. The PMA says the West Coast waterfront, despite the fact that it contains some of the largest ports in the world, is stuck “in a time warp” and needs to implement new technology such as bar code scanners and other cargo-tracking systems to accommodate expected trade growth from Asia. The union says it has no problem with the introduction of more IT in the ports (the Pacific Coast Longshore Contract allows the PMA to use labor-saving devices).

But the union does take issue with its employers outsourcing work on the new systems, and it is holding out for a new contract that would give it control over any jobs that come with the new technology.

Before Oct. 8, when President Bush invoked the Taft-Hartley Act that ordered dock workers back to the waterfront and forced the parties into federally mediated talks, the implications of a stalemate were clear. Containers clogged ports with everything from toys and consumer electronics to fruit and meat. Retailers worried about stocking in-demand gifts as the holidays approached. Farmers feared crops would rot before getting to market.

The hope now is that the required 80-day cooling-off period will give ship operators time to clear the docks of gridlock during their peak season. (Shortly after reopening, the PMA reported that worker productivity was down 25 percent compared with preshutdown levels. The union said management should hire more union workers to move the cargo.)

It’s the kind of showdown we’ve seen in other industries in the past, from textiles to the auto industry to the railroads, says Anthony Townsend, an associate professor of MIS at Iowa State University. “Any time there’s a confrontation between a labor organization and an employer over technology, it’s always due to [workers’] fear that IT will eliminate jobs.”

Stevedores and dock clerks will likely see a loss of jobs as new bar code scanners, robotics and other systems enter the workplace. But the resulting work will be more rewarding, Townsend says. “The employees that remain will have a higher skill level, not be as easily replaced and have even more bargaining power.” That’s already happened to some extent, with workers down at the docks now earning as much as six figures — $82,895 for class A longshore workers, $118,444 for clerks and $157,352 for foremen.

Whatever happens, Townsend says, it’s clear that the longshoremen won’t be able to avoid the effects of IT and outsourcing forever, even if workers’ concerns about outsourcing costing them jobs are justified.

“The trend has been for American businesses to outsource things they don’t do well” to provide needed expertise, he adds. “This is a necessity for the ports to remain competitive. They’re not doing anything every other business hasn’t already done. They’re just doing it 15 years later.”