The Ripple Effect: How the Dockworkers’ Strike Impacts Michigan Manufacturing

New York City Shipping Port

On October 1, 2024, tens of thousands of dockworkers along the East and Gulf Coasts initiated a historic strike, marking the first such action in nearly five decades. Members of the International Longshoremen’s Association (ILA) walked off the job at 12:01 a.m., effectively shutting down operations at ports from Maine to Texas, including major hubs like the Port Authority of New York and New Jersey.

The strike centers on demands for higher wages and a ban on certain automated equipment that could replace human labor. The dockworkers’ employers, represented by the United States Maritime Alliance (USMX), have been unable to reach an agreement with the union despite last-minute negotiations.

The affected ports account for more than half of the nation’s container imports, handling everything from consumer electronics to raw materials crucial for manufacturing. Key ports impacted include:

  • Port Authority of New York and New Jersey: The third-busiest port in the United States.

  • Port of Savannah, Georgia: A critical gateway for agricultural and manufactured goods.

  • Port of Houston, Texas: A major hub for energy-related products and industrial machinery.

The roots of the strike trace back to longstanding tensions over wages and the introduction of automation in port operations. The ILA argues that while port employers have reaped significant profits—especially during the pandemic-induced trade boom—the wages of dockworkers have not kept pace with inflation.

“They want to make their billion-dollar profits at United States ports, and off the backs of American I.L.A. longshore workers, and take those earnings out of this country,” ILA President Harold Daggett told the New York Times.

Automation has been a particularly contentious issue. The union is pushing back against the implementation of technologies that could reduce the need for human labor, arguing that it threatens job security and the livelihoods of thousands of workers.

What the Sides Are Looking For

  • ILA’s Demands:

    • Wage Increases: The union is seeking a $5-per-hour raise each year over a six-year contract.

    • Job Security: A ban on certain automated equipment to prevent job losses.

    • Better Benefits: Improved pension plans and healthcare benefits.

  • USMX’s Position:

    • Moderate Wage Increases: Offers that the union deems insufficient.

    • Automation Implementation: The alliance wants to modernize port operations to increase efficiency.

As of now, negotiations remain at an impasse. The two sides had barely communicated for months before the strike, and recent talks have failed to bridge the gap. The White House has urged both parties to reach a fair agreement but has stated it will not intervene under the Taft-Hartley Act at this time.

Michigan’s manufacturing sector, a cornerstone of the state’s economy, is particularly vulnerable to the strike’s far-reaching ramifications that extend beyond the coastal states. Relying heavily on a complex web of supply chains that often begin at the now-affected East and Gulf Coast ports, Michigan imports over 40% of its manufacturing inputs from international sources, according to the Michigan Economic Development Corporation. Significant volumes of raw materials and components for key industries such as automotive manufacturing, aerospace, and industrial machinery arrive via these critical entry points. Automotive manufacturers depend on imported components like electronics, transmissions, and specialized steel; the aerospace sector relies on precision parts and materials from international suppliers; and industrial machinery production requires components and raw materials not readily available domestically.

With port operations suspended due to the strike, the flow of goods through these vital channels has effectively come to a halt, leading to a cascade of challenges for Michigan manufacturers. Shipments of raw materials are delayed indefinitely, causing immediate concerns over inventory shortages. Shortages of essential components force manufacturers to reduce or halt production lines, resulting in production slowdowns. Additionally, increased transportation costs become a significant issue as alternatives like air freight or rerouting shipments to West Coast ports are not only significantly more expensive but also more time-consuming. These disruptions collectively pose a serious threat to the stability and productivity of Michigan’s manufacturing industries during the strike.

Timeline of the Strike’s Impact:
Understanding the timeline is crucial for planning and mitigation:
  • Week 1-2: Manufacturers rely on existing inventory and materials in transit.
  • Week 3-4: Inventory levels dwindle. Production schedules are adjusted, and overtime is reduced.
  • Month 2: Severe shortages lead to production halts. Layoffs and furloughs may begin.
  • Beyond Month 2: Long-term contracts are jeopardized. Companies may face financial instability.
Economic Implications for Michigan Manufacturers

A prolonged strike could have dire economic consequences:

  • Revenue Losses: Idle production lines mean lost sales and potential contract penalties.
  • Supply Chain Reconfiguration Costs: Sourcing from new suppliers incurs additional costs and potential quality issues.
  • Investor Confidence: Uncertainty may deter investment in Michigan’s manufacturing sector.
  • Competitive Disadvantages: Global competitors unaffected by the strike may seize market share.
Questions About Automation and Labor Relations

The strike highlights a critical tension between technological advancement and job security—a concern not limited to dockworkers but relevant across all manufacturing sectors.

  • Automation Concerns: The push for automation in ports mirrors similar trends in manufacturing, where robotics and AI are increasingly prevalent.
  • Labor Relations: Proactive engagement with labor unions can prevent disputes and ensure smoother transitions when adopting new technologies.
Strategic Responses for Manufacturers

Manufacturers can take several steps to mitigate the strike’s impact:

  • Assess Inventory Levels: Conduct immediate audits to determine how long operations can continue without resupply.
  • Identify Alternative Suppliers: Explore options not affected by the strike, including domestic suppliers or those accessible via unaffected ports.
  • Communicate with Stakeholders: Keep employees, suppliers, and customers informed about potential impacts and mitigation strategies.
  • Review Contracts: Examine agreements for flexibility in delivery schedules to avoid penalties.
  • Advocate for Resolution: Through industry groups like the Michigan Manufacturers Association, push for a swift resolution.
“When we talk about a two- to three-week strike, that’s when the problem starts to get exponentially worse,” said J. Bruce Chan, a transportation analyst at Stifel, in the New York Times.
Long-Term Considerations

Even after the strike ends, its effects may linger:

  • Supply Chain Resilience: This event underscores the need for diversification and contingency planning.
  • Labor Relations Focus: Investing in positive labor relations can mitigate future disruptions.
  • Technology Adoption: Balancing automation benefits with workforce impacts is essential.
Next Steps:

The dockworkers’ strike along the East and Gulf Coasts presents significant challenges for Michigan’s manufacturing sector. Immediate action and strategic planning are crucial to navigate this complex situation. Manufacturers must assess their vulnerabilities, explore alternatives, and engage proactively with all stakeholders to mitigate risks.

At WSI Recruitment and Staffing, we are committed to providing insights and solutions to help you through these turbulent times. Our expertise in workforce solutions positions us as your partner in overcoming these challenges.

Thursday is the New Friday: The Four-Day Workweek is Coming

rainbow unicorn on a blue couch sitting in a factory----wish you could see this

In the corporate world, particularly in manufacturing, the idea of a four-day workweek can seem as fanciful as a unicorn. But is it really? Let’s dive into this intriguing concept, particularly focusing on the manufacturing sector in America, a realm traditionally resistant to such radical changes due to its nature of work.

The four-day work week has gained traction globally, thanks in part to successful trials in various sectors, and is particularly appealing to younger workers who value a more employee-centered work environment. If forced to return to a five-day week, over 40% of workers indicated they would expect significant raises. This highlights the growing shift towards valuing work-life balance and mental health in the workforce, though the feasibility of a four-day workweek varies significantly across industries.

But manufacturing has been slow on the uptake. Why? The challenges are unique: the physical presence required, the continuous production cycles, and the lack of remote work options. Yet, as a staffing company that ensures our own employees strive to maintain a healthy work-life balance, we see potential in this model, even in our specialty field of manufacturing.

A case in point was made in a recent NPR article about Advanced RV, a luxury motorhome manufacturer in Ohio, which successfully adopted this model. Initially, there was skepticism. Workers like Bill Kowalcic wondered if they could maintain productivity. A year and a half later, the answer is a resounding yes. The key? Finding shortcuts and time savers without compromising quality.

The global trial, led by 4 Day Week Global, suggests that reducing hours while maintaining pay can lead to more energy and efficiency in the workplace. This isn’t about doing less; it’s about maximizing productivity within a compressed timeframe. Advanced RV’s journey illustrates that even in the realm of manufacturing, where the stakes are high and the work physically demanding, this model can work.

The initiative’s success hinges on several factors: a willingness to take risks, trust in the workforce, creativity, and open-mindedness. CEO Mike Neundorfer’s decision to shift to a 32-hour week without pay cuts was a gamble, but it paid off. The company has nearly recovered the initial dip in productivity and has seen a boost in employee satisfaction.

But how does this apply to the wider manufacturing sector, especially larger, more traditional firms? It requires a radical rethinking of operations. We must ask: Are there tools or processes that can be optimized? Can we redistribute tasks based on speed and skill, thereby enhancing efficiency?

The biggest hurdle, however, is cultural. In an industry that often values time spent on the floor over actual output, shifting mindsets is crucial. It’s about quality over quantity and results over hours. This shift can lead to a more motivated, focused workforce, reducing burnout and improving overall well-being.

For larger manufacturers, this might mean a phased approach, perhaps starting with one department or a pilot group. It’s about measuring productivity in outcomes, not hours. The focus should be on what gets done, not how long it takes to do it.  Some have taken to four ten-hour workdays, and bringing in a weekend crew to run three days of twelve-hour shifts on Friday, Saturday, and Sunday.

two young men sitting in a factory in their blue overalls enjoying sandwiches on a break

An article earlier this year highlighted a manufacturing company that had previously tried a four-day workweek a decade ago without success. However, they revisited the idea due to requests from their deskless workers. The management considered shifting to four 10-hour shifts per week, with employees working either Monday to Thursday or Tuesday to Friday. However, several challenges arose:

  1. Unpopularity of Tuesday-Friday Shifts: No one wanted the Tuesday to Friday shift, but the company needed Friday coverage as they ship products five days a week.
  2. Shift Overlap and Equipment Limitations: The day and night shifts overlapped by 10 minutes, and there wasn’t enough equipment to extend shifts by two hours.
  3. Overtime and Safety Concerns: Extending workdays to 10 hours raised safety concerns due to the physical nature of the job. The company was particularly worried about safety in the additional hours, as the work is physically demanding.

After two months, the company, O.C. Tanner, reverted to its previous system. Despite the unsuccessful attempt, the effort demonstrated to workers that the company valued their input and was willing to explore new work arrangements. This approach underscored the company’s willingness to innovate and adapt, key elements in fostering a positive company culture.

A six-month pilot program in the U.S. and Ireland showed promising results for most companies, with 90% not wanting to return to a five-day week. Despite these benefits, which include improved worker health and productivity, some industries, like manufacturing and service, face unique challenges.

American Plastic Toys Inc. tried the four-day workweek by extending work hours across four days but found a decline in productivity beyond the standard 7.5 to 8-hour shift. Company President John Gessert noted the approach led to a net loss in activity per hour and was physically taxing for employees. The need to ship products five days a week and maintain equipment operations in their factories further complicated the transition.

CEO of Dickey’s Barbecue Pit, Laura Rea Dickey pointed out the difficulty of adopting such a schedule amidst staffing shortages and the need for maximized productivity. In such industries, reducing work days can lead to income loss for staff dependent on tips. Some restaurants however, aren’t going to go down that road at all, simply eliminating the human element.

Daniel Hamermesh, professor emeritus of economics at the University of Texas and author of a new study about the rise of the four-day workweek, argues that workers are not 100% productive during each minute of the workday anyway and that there are very few jobs where workers can produce the same amount in total while working 20% less. “If a 32-hour week were widespread, the U.S. would produce less, would have lower GDP, and lower living standards,” Hamermesh told FOX Business. “No problem, if people want more leisure and are willing to forego some income. But we can’t have more leisure time—less work—and keep the same income. We can’t get something for nothing.”

Changing to a four-day workweek isn’t going to be easy, and it’s going to shake things up a bit economically. But let’s face it – manufacturing has got to figure this out. The inevitability of this shift is underscored by the preferences of the younger workforce; without a meaningful work-life balance, we risk seeing a mass exodus from the manufacturing sector in the coming years. As we stand at this crossroads, it’s essential to recognize that adapting to a shorter workweek could be the key to sustaining our industry’s future. They want a life outside of work, and who can blame them? So, maybe it’s time we seriously consider making Thursday the new Friday. It’s not just a catchy phrase; it could be what keeps our factories humming with happy, motivated workers in the years to come.

Ford Pauses Marshall EV Plant: Six Signs It’s Only Temporary

downtown marshall michigan

Ford’s $3.5 billion EV battery plant in Marshall faces uncertainty amid the UAW strike. Despite the recently announced pause, Michigan’s manufacturing industry remains resilient, boasting a skilled workforce, innovation, and a commitment to securing its place in the electric vehicle revolution. Confidence in the state’s future endures.

Continue reading

UAW Strike: An Ace up the Big 3’s Sleeve

workers strike for the uaw

What ace does the Big 3 have up their sleeve to leverage their negotiations? Read our blog to see a quiet threat to Michigan’s economy that could play into the strike.

Continue reading