Laying off employees right before the holidays is never something an employer wants to do. But it is exactly what Tom Riggan, CEO of Chelan Fresh, was forced to do when his cold storage was full of fruit and only half of his orders were able to ship through the ports of Seattle and Tacoma.
Chelan Fresh, one of Washington’s major apple and pear exporters and based in Chelan, usually ships 120 containers of fruit through the ports each week. Running at only half speed for almost two months, Riggan could not keep 1,000 full-time employees packing and shipping boxes, he said.
He has sent 250 employees home and reduced 70 from full time to part time.
“To be out of a job during the holidays because of a port slowdown,” Riggan said. “Those workers are the real victims in the deal — it is not the guys at the port.”
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The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) have been in contract negotiations since May and the six-year contract expired in July. Both sides were meeting separately Wednesday and are scheduled to meet together Thursday.
“With next week being Christmas, there is a good possibility that we may not have results until mid-January,” said Blaine Calaway, vice president of sales for Ellensburg-based Calaway Trading, which ships grains, forages and hay products through the Seattle and Tacoma ports destined for Asia mainly as animal feed.
Calaway said he has had to reduce his employees’ hours by half — at a time when his employees usually are working overtime.
Even if the two sides were to agree on a contract this week or next, it does not mean the ports will immediately return to normal. The ILWU members would still have to vote, Calaway said.
Tara Mattina, spokeswoman for the Port of Tacoma, said once the two sides have an agreement, it would take another four to six weeks of normal productivity to work through the backlog.
In the meantime the Washington apple industry is losing out on tens of millions of dollars a week, and businesses across the state fear they will lose business permanently.
Bob Ashmun, vice president of sales at National Frozen Foods in Seattle, said between November and December sales were down 1 million pounds, or about $524,000.
“Either customers aren’t ordering from us right now due to the slowdown or they’re ordering from somewhere else,” he said. “Once they begin to purchase from our competitors — from other countries — it is difficult to get the business back.”
Riggan, with Chelan Fresh, said he is worried about the same thing — specifically competitors buying Red Delicious apples from Italy. One customer in Taiwan has already started supplementing the limited orders it has received from Chelan with Italian apples.
“My fear is — once someone gets their foot in the door, the next year they can be your competition,” he said.
The repercussions from Washington’s exports not making it through the ports are spreading beyond the state.
McDonald’s in Japan began rationing its fries Wednesday morning. It said prolonged labor negotiations with port workers on the West Coast have made it difficult to meet demand despite an emergency airlift of 1,000 tons of processed spuds and an extra shipment from the East Coast by sea.
Matt Harris, director of government affairs with the Washington State Potato Commission, said every potato is contracted before it is grown and shipped.
“If you cannot supply that product, you jeopardize loosing that entire contract,” he said. “So what we see is that long-term impact of possibly not being able to regain that trust with our customers.”