On the waterfront: possible strike by longshoremen threatens L.A.'s economy.

In Elia Kazan's 1954 classic film On the Waterfront," one of the dockworkers says to the sympathetic priest portrayed by Karl Malden: "It's different here on the waterfront, father. It's not like the rest of America."

The same might be said about L.A.'s docks in 1999.

At a time when the nation's once-mighty industrial unions are languishing from the effects of globalization, one union is as strong as ever: the International Longshore and Warehouse Union, which represents some 10,000 dockworkers up and down the West Coast.

In an age and a city where low-skilled, workers are fighting hard just to earn a "living wage, longshoremen command six-figure salaries and receive generous pension benefits upon retirement.

While service-employee unions struggle to organize low-wage workers such as janitors and housekeepers, would-be longies clamor for a spot in the union hall on the rare occasions that such positions become available.

And while many of the nation's industrial employers have been able to wrest concessions from their workers, or bypass labor unions entirely, the ILWU has been able to negotiate ever more lucrative contracts from the world's shipping lines.

"Among workers who work with their hands in America, there is probably nobody paid better than the longshoremen," says University of Michigan labor expert Howard Kimeldorf. "In terms of economic muscle, it may be the strongest union in the country."

That strength will be put to the test in the months ahead, as the ILWU prepares to negotiate a new contract with its waterfront employers: the international shipping lines operating the massive steamships that carry billions of dollars worth of cargo each year between the United States and Asia.

The ILWU's current three-year contract is not set to expire until June 30, and negotiations between the union and the Pacific Maritime Association, which represents the 110 shipping companies and terminal operators up and down the West Coast, will not begin until early April.

But the upcoming talks are attracting increasing scrutiny from many in the trade community. A quarter of the nation's waterborne cargo moves through the ports of Los Angeles and Long Beach - a steady stream of millions of cargo containers that carry toys, clothing, and electronics to U.S. retailers, while sending U.S. raw materials to the manufacturing plants of Asia.

Relations between labor and management on the waterfront have been tense since their last contract was inked in 1996. As a result, many traders are bracing for the worst - a series of work slowdowns and stoppages once negotiations begin, or even a full-blown strike if the parties are unable to reach an agreement before the current contract expires.

"People are very concerned about this, and they are already planning contingencies," said Robin W. Lanier, senior vice president of industry affairs for the International Mass Retail Association in Arlington, Va., which represents 200 high-volume, low-cost retail chains, including K-Mart and Wal-Mart, whose shelves are stocked with imports from Asia. "Every day that they miss having a product on the shelf is money out of their pocket. If a port starts getting a bad reputation, (retailers) are going to do what it takes to get the merchandise in."

That means moving cargo to other ports. Already, Lanier said, logistics managers who long have depended on Los Angeles and Long Beach as the entry point for their Asian cargo are exploring alternatives at East Coast seaports such as Savannah, Ga., Baltimore and New York-New Jersey. Others are looking into moving merchandise via air, an even pricier alternative.

The specter of widespread cargo diversion sends shivers through the spines of local trade and economic development officials. Global trade, after all, has been one of the most reliable segments of the region's economy, capable of generating jobs and tax revenues even during the depths of the recession in the early '90s. Currently, an estimated 400,000 people in Southern California are directly employed in the region's international trade sector.

While no one is panicking yet, local trade officials clearly are nervous.

"Both L.A. and Long Beach have invested upwards of a billion dollars to create infrastructure for the growing trade. We've got debt service to pay, and that is paid by the continuation of boxes coming in and ships docked at our berths," said Richard D. Steinke, executive director of the Port of Long Beach, the nation's busiest seaport. "Hopefully, we'll get a new contract without any major problems. But I am concerned. We've got a great situation here, with booming ports and booming trade, and we'd like to keep it that way."

Union and industry officials, of course, say the same thing. And there have been some signs of goodwill between the parties. The Pacific Maritime Association, for example, recently agreed to drop a lawsuit over alleged illegal work stoppages it had filed against the ILWU. And industry and union representatives earlier this year took a cooperative "technology tour" of ports on the East Coast and in Europe.

But a number of issues still separate the parties. And whether they will be able to bridge that gap remains an open question.

If one thing is certain, it is that the upcoming negotiations will be taking place in a labor climate that bears scant resemblance to any other in the nation.

While many U.S. workers fret about stagnant wages and declining job security, the West Coast's dockworkers have been able to harvest the benefits of the same global economic forces that have left other blue-collar unions languishing.

"You can't move a port offshore," says U.C. Berkeley political scientist Robert Kagan. "You can ship a steel mill to Korea, but you still need the American ports."

In fact, the trend by American manufacturers to move production overseas - thus reducing jobs for blue-collar workers in this country - has only increased the need for dockworkers to handle that foreign-made merchandise when it is shipped to the United States.

That gives the ILWU, which effectively controls the supply of labor at every West Coast port, tremendous clout. And the union has not been shy about exercising that muscle, capitalizing on the Asian trade explosion of the past decade to negotiate increasingly lucrative contracts with the world's shipping lines.

In 1998, a longshoreman who worked more than 2,000 hours (the equivalent of 40 hours a week with two weeks vacation) earned an average of $99,000, compared to about $74,000 in 1992 - an increase of 34 percent, according to the Pacific Maritime Association. The more highly paid marine clerks, who are responsible for managing the flow of container traffic on the terminals, had an average salary of more than $117,000 in 1998, compared to just under $89,000 in 1992, a 31 percent jump.

A unionized electrician, by contrast, earned just over $40,000 in 1997, according to the Bureau of National Affairs, a research organization in Washington. A union construction supervisor earned almost $50,000 and a union machinist brought home about $36,000.

Longshoremen say their wages are justified by the central role they play in the movement of cargo. The work also is dangerous. Injuries, ranging from severe muscle pain to life-threatening industrial accidents, are a fact of life.

Still, they will acknowledge occupying an unusually lofty place in the American workplace.

"We are the aristocrats of labor," said Mike Puliselich, secretary-treasurer of ILWU Local 13, the largest local on the West Coast, which represents about 3,900 crane operators, fork-lift drivers and other waterfront laborers.

Shippers, by contrast, are not feeling quite so well-off. Squeezed by tough competition and suffering from the severe imbalance of trade flows due to the Asian economic crisis, few steamship companies are making money these days, said analyst Jon S. Helmick, director of the logistics and intermodal transportation programs at the U.S. Merchant Marine Academy in King's Point, N.Y.

"You have too many ships and too much capacity fighting for cargo. There has been a destructive pattern of competition in the industry," Helmick said.

The average return on investment among the world's top 22 steamship lines, according to Helmick, has fallen from 3.1 percent in 1994 to a loss of 0.5 percent today. "This is not an industry to think about getting rich quick," he said.

Shipping lines anticipate that a proposed rate increase of $900 a container, scheduled to take effect in May, will help ease those bottom-line pressures. Another way to address the problem is to boost efficiency on the docks - which is emerging as the central issue in the upcoming contract negotiations.

Waterfront employers complain that worker productivity has not kept pace with wage increases. In fact, productivity has fallen some 20 percent over the course of the current contract, according to Joseph N. Miniace, the PMA's president and chief executive. Real labor costs, as a result, are 36 percent higher than under the previous three-year contract. "We're paying a lot more for the same amount, or maybe just a little bit more, of containers," Miniace said.

Union officials vehemently deny that assertion. "Production isn't down. Miniace is just playing with the numbers" in an effort to strengthen his hand in the upcoming contract talks, said Peter Peyton, a member of ILWU Local 63, which represents about 950 marine clerks.

Such tactics won't work, Peyton added. "We take a lot of pride in what we do," he said. "It really gets our guys fired up. He couldn't be any more hated down here."

A newcomer to the maritime industry who took over the PMA two and a half years ago, Miniace said he has been shocked by some of the work practices around the waterfront. Particularly irksome, he said, are illegal side deals struck between dockworkers and shipping terminals, in which operators agree to pay overtime rates during normal weekday hours, or pay a worker for hours not actually worked. In many cases, terminal operators say they have little choice but to strike such deals to prevent costly delays in unloading ships.

"If you're getting paid for 10 hours, I'd like you to work for 10 hours," Miniace said.

Such side deals were explicitly outlawed in the current contract, and union officials deny they exist. "Everyone is paid according to the contract," said Mike Mitre, a crane operator and member of ILWU Local 13. "There really is no such thing as a side deal."

But industry officials say they are a fact of life, another cost exacted by the peculiar economics of the shipping industry. It costs a shipping company more than $2,000 an hour, every hour a ship sits at the dock, said Robert Kleist, corporate advisor at Evergreen America Corp., the large Taiwanese steamship line.

"If it's the difference between paying a guy 10 hours for working five and a ship remaining overnight and having the whole crew go back to work the next morning, there are times when it is really worth it." Kleist said.

Puliselich of Local 13 also denied that such deals take place. However, he quickly added, "If a company wants to pay a guy more, it's their business."

Such arrangements, according to Miniace, whittle the industry's margins even further and must be stopped if the lines are to return to health. "We are demanding more accountability," he said. "But my intention is to fix these things over time. I have no intention of blowing up the waterfront."

But what if the waterfront did explode with labor unrest? It would not take long for the effects to be felt far from Southern California, said Charles Wolf Jr., senior economic advisor at the Rand Corp. in Santa Monica. A slowdown in trade flows, Wolf said, could ignite inflationary pressures, which have been kept at bay largely because of the flood of inexpensive Asian imports.

"It could be quite serious for the U.S. economy," he said.

A drop in imports triggered by a prolonged period of unrest also could ripple through the fragile economies of Asia, which are just beginning to recover, said Gregory Fager, head of the Asia department of the Institute for International Finance in Washington. "This would be an impediment," Fager said.

Will it happen? Even the most pessimistic in the harbor community doubt that a full-blown strike will occur. The stakes for both sides are simply too high.

Then there is the fact that the world's shipping companies are a far-flung bunch, with headquarters in more than a dozen foreign countries, often with disparate economic agendas. Steamship lines based in Asia, for example, are unlikely to risk interrupting the flow of exports they need to rebuild their hobbled economies.

"It's harder to develop unity among the steamship operators than it is among the members of the same union," said Evergreen's Kleist.

And the ILWU, forged during the bitter coast-wide strike of 1934, remains one of the most tightly knit and activist unions in the country. There has not been a full-blown strike since 1971, when picketing longshoremen shut down the ports for three months. But the ILWU, the PMA alleges, has engaged in some 150 temporary slowdowns or stoppages since 1996, most of them in Los Angeles and Long Beach.

"When (ILWU) leaders threaten to go on strike, they can count on the rank and file to be there," said University of Michigan's Kimeldorf. "That's not true of other unions."

The likely scenario, says Ted Prince, former chief operating officer of K-Line America Inc. and currently a Virginia-based trade consultant, is a new contract that preserves the status quo, setting the stage for more flare-ups in the future.

"It's going to be inertia or catastrophe," he said.

Fun Facts

Economic Impacts

* No. of Southern Carolina jobs dependent on port complex: 519,000 (one out of every 12 jobs)

* Wages generated annually: $16.1 billion ($1 out of every $12)

* Annual tax revenues generated: $2.6 billion

* U.S. Customs revenue generated: $3.7 billion

Largest tenants

* Long Beach: Hanjin Shipping Co., Korea (170 acres)

* L.A.: American President Lines Ltd., Oakland (262 acres)

* Length of annual L.A.-Long Beach container volume if placed in a single-file line: 28,318 miles.

* Circumference of earth at the equator: 24,902 miles

Minimum annual rent

Long Beach: $100,000 per acre L.A.: $100,000 per acre

Biggest domestic product, by weight

Long Beach: Alaskan crude L.A.: Coal from Colorado and Utah

Unusual 1998 cargo/Port of Long Beach

Judo/karate equipment imports: 500 tons Fire-fighting equipment exports: 1,100 tons

Fresh fish/Port of L.A. (metric tons)

Amount handled in fiscal 1998: 212,000 Amount handled in fiscal 1997: 158,000 Reason for increase: El Nino

Top agricultural import

L.A. Bananas (483,000 tons(*)) Long Beach Bananas (257,000 tons(*))

* For 1997

Union workforce at L.A.-L.B. port complex

Worker type        1999      1989      increase

Longshore         3,882     2,912         33.3%
Marine clerks       946       691         36.9
Foremen             359       264         36.0

Source: Pacific Maritime Association
Top Trading Partners (Annual cargo value in billion)

L.A.                Long Beach

Japan ($20.9)       Japan ($23.0)
China (18.9)        China (20.4)
Taiwan (6.2)        Taiwan (8.0)
Korea (2.4)         Korea (7.8)

Primary source of import growth: China Primary source of export growth: China

Average 1998 Pay(*)

Longshore: $99,016 Marine clerk: $117,617 Foreman: $156,251

* based on 40-hour work week for West Coast workers.

Source: Pacific Maritime Association

Port of L.A. 1998 cruise ship operations

Volume: 961,187 passengers Ranking: No. 1 on West Coast, No. 4 nationally