While tire and auto parts manufacturers are happy about the tentative agreement reached between West Coast longshoremen and shipping companies, they have yet to see their supply chains return to normal after the October work stoppage.
``It was a long enough stoppage so that the backlog would take a long time to work through,'' said David Cole, director for the Center of Automotive Research at Altarum International in Ann Arbor, Mich. ``Docks are staffed to handle a certain capacity, so if you have a work stoppage of a week, that means you suddenly have seven times the usual loads to deal with. Also, you're suddenly overloading the available land transportation.
``This takes literally weeks to work down, so this disruption is not a surprise,'' Mr. Cole added.
Port owners locked out the 10,500 members of the International Longshore and Warehouse Union at 29 West Coast ports for 11 days, beginning at the end of September. At issue were not only wages and benefits, but also management's desire to incorporate new technologies in the service of offloading freight. Such modernization, the union feared, would cut jobs on the docks.
President Bush invoked the Taft-Hartley Act Oct. 8 to bring a temporary end to the strike, and a federal judge ordered the longshoremen back to work and labor and management back to the negotiating table the next day.
The agreement reached Nov. 24 granted workers substantial pay and benefit increases while giving shipping companies access to the new technologies they wanted. The union rank and file was expected to vote on the package shortly after Thanksgiving.
If approved, the agreement will considerably enhance the efficiency and productivity at West Coast ports, according to Mr. Cole.
``They were in the 19th century as far as technology was concerned,'' he said. Adoption of the modernizations will cost the union a lot of jobs, he added, but most of these will be brought down through attrition.
But joy at the end of the labor dispute is still tempered with worries over the slowdown in filling orders, according to Far East manufacturers.
``We consider the problem over with, at least until 2007,'' said Earl Knoper, senior vice president of sales and marketing for Toyo Tire (U.S.A.) Corp. of Cypress, Calif. ``But our backlog still exists.''
It took until the week of Nov. 18-more than a month after the government ordered longshoremen back to work-for deliveries of Toyo tire containers from West Coast ports to exceed the new shipments the company was getting, Mr. Knoper said.
``We don't expect our backlog to be resolved for at least the next few weeks,'' he said. ``Our customers are suffering from shortages, but they're being very patient with us. They understand the problems we're having.''
Falken Tire Corp. of Rancho Cucamonga, Calif., is suffering from a ``pretty ugly'' shipping and distribution situation right now, according to Richard Smallwood, Falken vice president of sales and marketing.
``It's getting better, but it's still really bad,'' Mr. Smallwood said. ``We had full containers that were dropped off in Panama until we could arrange to bring them back up here.''
Compounding the problem is a shortage of shipping containers in Japan for the tires Ohtsu Tire & Rubber Co., Falken's parent firm, is building now, Mr. Smallwood said.
``Those tires are just piling up in warehouses in Japan,'' he said. ``We're in the worst inventory situation we've had in years.''
Several importers exhibiting at the recent SEMA/ITE trade show in Las Vegas said they had been hit with surcharges of up to $1,000 per container to ensure that their goods got shipped. They also confirmed that shipments will be disrupted for months to come because of the delays in getting containers returned to factories in Asia.
One company benefiting from the strike was East Bay Tire Co., which was able to move hundreds of units of Asian-made Goodyear bias-ply truck tires to customers that had switched to lower cost Chinese products, according to President George Pehanick.