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As Negotiating Deadline Looms for West Coast Ports, Economic Trouble on Horizon

A new study shows a shutdown could cost $2.5 billion a day.

As negotiations continue for a new contract agreement covering 13,600 dockworkers at 30 ports stretching from San Diego, Calif., to Bellingham, Wash., a new study shows the U.S. economy could lose as much as $2.5 billion a day if a prolonged West Coast port shutdown occurs. The study, conducted by the National Association of Manufacturers (NAM) and the National Retail Federation (NRF) by economists at the Interindustry Forecasting Project at the University of Maryland, found that the economic repercussions of a port closure would grow with time.

“A protracted dispute between the negotiating parties could lead to reduced or shuttered terminal operations for an extended period,” the joint study warned. “If such disruptions occur, the economic impact would be significant and widespread.”

A 5-day stoppage would:
• Reduce GDP $1.9 billion a day;
• Disrupt 73,000 jobs; and
• Cost the average household $81 in purchasing power.

A 10-day stoppage would:
• Reduce GDP $2.1 billion a day;
• Disrupt 169,000 jobs; and
• Cost the average household $170 in purchasing power.

A 20-day stoppage would:
• Reduce GDP $2.5 billion a day;
• Disrupt 405,000 jobs; and
• Cost the average household $366 in purchasing power.

“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” NRF President and CEO Matthew Shay said. “Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade, stymie supply chains and hurt domestic employment and consumer spending. For retailers and their customers, a port closure would mean a delay in back-to-school and holiday shipments that could significantly drive up consumer prices.”

“Manufacturers depend on the ability of West Coast ports to efficiently move cargo valued at 12.5 percent of U.S. GDP,” NAM President and CEO Jay Timmons said. “A shutdown would erode that figure and inflict long-term damage to our competitiveness as manufacturers and as a nation. The parties must come to an agreement before the current contract expires.”

The last major West Coast port disruption occurred in 2002, when management locked out dockworkers for 10 days until then-President George W. Bush ordered the two sides back to work under the Taft-Hartley Act. That shutdown was estimated to cost the U.S. economy several billion dollars.

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