SEMINARS ON THE CONTAINER REVOLUTION

MONDAY, NOVEMBER 13, 1967

VI. LABOR NEGOTIATORS LOOK AT THE CONTAINER REVOLUTION

(By Mr. Harry Bridges, President, International Longshoremen's and Warehousemen's Union)

Mr. SCHMELTZER. Good evening. Tonight I think we should have one of the most stimulating of our seminar sessions. We have with us two of the men who did fundamental work in assuring the movement of commerce through West Coast ports.

One I don't have to introduce. He is Harry Bridges, President of the International Longshoremen's and Warehousemen's Union. You all read the newspapers, so I don't have to say anything more about Mr. Bridges.

The other I think I will have to introduce. Mr. Wayne Horvitz is now Washington Vice President of the Matson Navigation Co., but before he fell upon these sad days he had a fine job with Matson. He was Director and then Vice President for Industrial Relations of Matson. And Mr. Horvitz and a group of people from other lines worked with Mr. Bridges and formulated some of the really fine agreements that we have in this country.

Without further ado, I'll give the floor first to Mr. Horvitz and then to Mr. Bridges.

Mr. HORVITZ. Thank you, Ed.

At lunch today we decided that the best way that we could do this would be for each of us to make a brief statement about some of the issues and some of the things that occurred on the West Coast in a period from approximately 1957 to 1960, and since 1960 when the socalled Mechanization and Modernization Agreement was signed; and I would try to give some of the problems and some of the views that management had as they looked at the situation on the West Coast. Harry would try to give some of the views of the union situation at that time; and then afterward I guess there's sort of a coffee break and we would have questions. And I would expect that Harry will be somewhat more embattled than I; but I feel that, if I have to say something, I will.

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I think I would like to say something at the outset in a very serious vein-which may not mean much to you people, but I think that both Harry and I would want to have it said-and that is that the person who really should be doing the talking here tonight, instead of me, J. Paul St. Sure. And Paul was a close personal friend of both of ours and the guy who really provided the catalyst-who really was the catalyst for bringing the employers together in a cohesive force on the West Coast. And without that cohesion, we would not

have been able to put ourselves in a posture where we could have negotiated with the union on an issue of this kind. Unfortunately, Paul is no longer with us, but he really deserves the principal credit for being the architect of the philosophy; and he's the guy around whom the companies were able to polarize in order to be in a position to strike a bargain on an issue as sensitive as automation.

I'm going to handle the employer's views in the following way: I'm going to enumerate a number of situations in the sense of saying, "This is what was going on and these were the problems and here's how we met them", in a kind of an outline form.

As early as 1957, the employers on the west coast recognized that there had to be a drastic change in the method of operation as well as in the relationships with the Longshoremen's Union if there was going to be any profitable operation on the West Coast. My company in particular was just beginning to feel out the area of the potential of containerization; and we realized that the principal barrier to the successful operation of any kind of innovation, such as containerization, was clearly going to be the problem that was posed by the long history of labor resistance to technological change.

Harry is the author of a number of enterprising ideas, but he didn't invent sabotage; he only refined it slightly.

Sabotage, as I'm sure all of you educated people know, has its origin in the French word "sabot." In the early days of the industrial revolution the French workers put shoes into the machines to break the machines.

Nonetheless, the International Longshoremen's Union, both on the West Coast and elsewhere, by 1957 had developed subtle forms of sabotage to a degree almost unbelievable until you experienced it. These kinds of activities, loosely called featherbedding, had raised costs to the employers to the extent where it was not uncommon to hear shippers refer to the fact, even in the eastern part of the United States, that if there was any way they could avoid a West Coast port they would do so.

The employers on the West Coast don't deserve very much credit for doing anything original; they were forced into it by the sheer economics of their situation. It was a desperate situation.

The union had a somewhat different vision that led them to the same conclusion. And I'm sure Harry will go into this.

As early as 1957, they too were talking about a different philosophy, but with an entirely different motivation. Our motivation was as it should be economic-and we recognized that the elimination or the damping down of the long history of featherbedding work practices of many, many different kinds had to be eliminated, on the one hand, if we were going to survive; and, second, that we would have to find a way to introduce new technology without the classic kinds of resistance which developed in trade unions generally and which, as I said before, the longshoremen had refined rather successfully over a period of 25 years.

Now, a very curious thing happened during this period, and not very many people realize the influence that it had on the employers at that time. I'm sure most of you will recall that in late 1958 and early 1959, I think it was, there was a major steel strike in this coun

try; and the issue around which the strike eventually polarized, although it started as a strike on wages, was in fact the issue of the right of the company to change work rules. The steel industry had the so-called contract 3B clause which gave the employers the right to change rules under certain conditions, but they were subject to arbitration. And the arbitrators had historically ruled in favor of the employees and not in favor of the companies as various attempts were made to change work practices in the steel plants.

The companies took the position during that strike that they simply had to have this unfettered right; this clause had to be eliminated. And there was, I believe, a 116-day strike, wasn't there, Harry?-something like that-at the end of which Richard Nixon settled it at the Waldorf, which was kind of an interesting twist for that administration. But the plain fact was they never got rid of the clause. At the same time we were beginning to think and talk about these things. The problem here is that these managements in the steel industry have taken this view that they have a right-and, of course, it comes characteristically under the name of "management rights"-and that these management rights are something that flow from God or someone; and that the basic principle of these management rights is that you have certain rights to run your business in an efficient manner. If the business isn't efficient-if you have three men on a machine and you think you should have two men on a machine-some industrial engineer says so then you have a right to eliminate that man.

Curiously enough, earlier in that period, certain union officials— among them, Arthur Goldberg, who was still then with the steelworkers were beginning to talk about something they called "union property rights"; and we'll hear a good deal about this form Mr. Bridges later on. And these so-called property rights stemmed from the idea that, after a certain period of time, a worker has a vested interest in the way a job is performed too. And this may not be exactly the same concept which the management has for the job.

It was a question as to how the job should be done, but we had to make a choice as we looked at this steel situation at that time. And I can't emphasize this too much because it had a profound effect on us. All these guys had a 116-day strike because they believed they had an unfettered right to change the situation. The union felt they had a very strong vested interest in the situation as it was being performed.

Now we know these longshoremen, and these longshoremen know damn well they have a vested interest in the job as it's being performed. And they planted it there for years and years and years: "We're simply going to have to bargain with these people about this."

Now, how do you go about bargaining on a subject of this kind? They have stolen something from you to which you have an inalienable right. You have to decide that they have certain property rights and you have certain property rights. If you want to get some back, maybe you have to buy them back.

And we struck a sensitive chord in the union there because they are always fond of getting money. And I was asked, one time after the agreement was signed, whether or not we had bribed the Longshoremen's Union and I said, "Well, you choose your words and I'll choose mine."

I think what we did was bargain with the Longshoremen's Union but the plain fact of the matter is, it was a much more fundamental change in management philosophy than most people realize. This change has not yet occurred in 99 percent of the companies in this country, and that is the idea that you do not have some sort of inalienable right to run your business in the most efficient manner as you see it. There are other rights that are involved, and some of these rights may in fact belong to the workers.

The West Coast employers were accused by the Wall Street Journal shortly after this agreement was signed of being communistic, and the justice of this remark was supposed to lie in the fact that we had given up as they viewed it-the basic right to manage the business, because we had agreed to buy back certain rights that we had lost.

This is precisely what we did and this was precisely the philosophy that went into that agreement from a management point of view.

Now, it's always easier to sell a group of guys on doing something by making it profitable for them to do so; and many times these things come about because companies realize that their position is going to be worse if they don't do it. And this was certainly the situation on the West Coast. The costs were going up. All of our cost projections looked to a serious continued rise, plus the fact that we would be expected, as in any collective bargaining situation, to continue to negotiate wages

and benefits.

All right, that's philosophical.

I think, most important, the two things that the management people did: One, we decided that it was absolutely essential that we spend as much time as necessary to accomplish what we were setting out to do in an atmosphere that was not charged with the usual constraints of collective bargaining situations. Chief among these, of course, we had to eliminate the usual factor of a strike deadline. It was impossible to negotiate on issues of this kind involving automation, protection of workers' rights, long-term approaches to these kinds of problems, and in an atmosphere where you're working against a strike deadline.

So in the first year, as I recall-Harry can check me on the history-we found that we did not have enough time; and at the end of the first contract discussion-'59, '58-we signed a one-year agreement and we made a down payment, a good faith down payment, in which we said that that down payment was to keep the discussions going. We also negotiated an increase for that year, certain other fringe benefits and so on. And then we went back to work and started talking some more. And in the end, with the middle of 1960 again approaching a one-year contract deadline, we found ourselves making real progress. We stopped the clock, called a halt, negotiated all other issues in the contract-which you might call the normal issues of collective bargaining. We settled those in June, continued to negotiate and signed the Mechanization Agreement in October.

The point is that you have to do this in an atmosphere that is not in any way the usual kind of collective bargaining atmosphere.

The second thing that the employers did that was absolutely essential was this: There had to be a cohesive control in a centralized fashion of the management position. What do I mean by that? Well, the waterfronts of the country, as you people well know from working

in the Maritime Commission and other related organizations, tend to be a series of competing fiefs. This is true usually of your labor situation. This is certainly true of your shipping companies. It's particularly true of your stevedoring companies. Stevedores, by and large, work on cost-plus. A cost-plus operator has no interest in efficiency. A cost-plus operator wants to charge you as much as possible, put a profit in the charge, and go home with the money. The more efficient you are, the less the cost-plus is attractive to him.

It was necessary to take over the control and relationship-direct relationship that the stevedore has with the worker in order to accomplish this kind of an objective. Therefore, the steamship companies had to take stevedores out of negotiations.

It was the first time in the history of the West Coast that the stevedores did not negotiate the contract with the Longshoremen's Union, but the men who paid the bills took over the direct negotiation with the union. It was absolutely essential to any kind of a cost-cutting

program.

Now, those two things were really very strong historical departures. Let me touch on one other thing, and then I think it's Harry's turn. What's happened? I think that this will come out more perhaps in the discussion, but the chief things that I think we have learned from what has happened are: One, if you could reach this kind of agreement through collective bargaining, it has a much better chance of success than if you attempt to do it any other way, because the realities of the agreement come not with the agreement itself but in making it work. You can read the West Coast Mechanization Agreement and it sounds like the simplest thing in the world, and it is. It's the simplest language in the world. It starts out with a general admonition that there shall be

no unnecessary men.

That's a nice thing. I think you'll see that in no other agreement in the world. But how do you get "no unnecessary men?" It requires a highly centralized control both on the part of the union and the employers. There has to be a unanimity, and that unanimity can only be hammered out by extensive negotiations with the union and, on the management side, by continuous meetings, continuous control of the administration of that agreement. What's in the simplest words of that agreement can be lost in administration.

It has not been lost on the West Coast. Savings of the companies have been enormous. The gains to the union have been equally attractive. There hasn't been a loss of work on the West Coast. There has in Hawaii but there are reasons for that. In fact, there was a net increase, I believe, in the longshore work force on the West Coast. There's much more I could say, but I think it's now time to hear from the union.

Mr. BRIDGES. As Wayne said, we started off-not in 1957, but in 1954 and 1955-and within the union, that is trying to look ahead as best we could and recognizing the handwriting on the wall, where we thought somewhere along the line we would be up against this question of modern machines displacing workers.

Nothing new about that. That's been going on for a long time. Nothing new about building resistance in feelings of workers on this particular matter, for good reason.