The major contract governing longshore employees on the West Coast will expire on July 1, but talks on a new pact have yet to get under way. Instead, the International Longshore and Warehouse Union (ILWU), which represents about 42,000 workers, has filed an unfair labor-practice complaint against the Pacific Maritime Association (PMA), the organization that represents carriers, stevedores and other port employers.

The union charges that the PMA has failed to provide information about proposed new technology and work-rule changes, which negotiators will need before they can begin talks. Steve Stallone, communications director for the ILWU, says the union will be prepared to start negotiations by mid-April but warns that a lack of information from the PMA will pose an obstacle to any discussions.

Both sides are also preparing financially for a possible strike by workers or a lockout by management. The union has begun assembling a strike fund, which Stallone says was initiated in response to news stories that PMA members had established a $200 million line of credit to see themselves through a strike.

None of that means that the union intends to shut down West Coast ports in July. The ILWU, in fact, has not called a strike for the entire West Coast in 30 years. But it does suggest that the union will take a tough negotiating stance when talks finally begin.

If a walkout does occur, it could have important consequences stretching far beyond the U.S. economy, says Steven S. Cohen, professor of regional planning at the University of California at Berkeley. In a recent paper on that subject, Cohen writes, "A contentious shutdown of the West Coast docks carries the very real risk of triggering a sudden crisis in international financial markets."

Such a strike would also put the U.S., Asian and Mexican economies at risk, Cohen continues. That's because supply chain strategies that have sharply reduced inventories in both manufacturing and retailing have made those businesses vulnerable to supply disruptions. Both industry segments rely disproportionately on imports that flow through West Coast ports. Only a small portion of those imports could be diverted to the East Coast—and then only with difficulty, Cohen argues. A strike this summer, moreover, could come at the worst possible time for economies that are just emerging from a recession. "[T]he shutdown would brake the recovery momentum," Cohen predicts.

To no one's surprise, the two sides have different priorities for the upcoming talks. Joseph Miniace, president and CEO of the PMA, says that at the top of the employers' list are contract changes that would allow the introduction of new technology to improve productivity. "We need to start doing something to improve throughput," he says. "The issue is fast approaching us: We're running out of land."

The employers will also seek changes in the way workers are assigned to jobs. They want to see a shift away from traditional union-hall dispatching toward a scheduled workforce. In addition, employers would like to see changes in the current arbitration process.

The union, meanwhile, has its own agenda. It would like to gain an agreement to maintain the union's benefits package, with a focus on health care coverage. The union also will seek increases in pension benefits for both retired members and current workers.

A potentially more contentious subject will be the union's desire to reassert its jurisdiction over work on and near the docks. Says Stallone: "We want to make sure that work that is traditionally and contractually the work of the ILWU remains the work of the ILWU," regardless of whether it is traditional work, such as moving containers between terminals, or it involves the use of new technology, such as the electronic preparation of stowage plans.

"We understand we're going to lose some jobs to technology and labor-saving devices," he says. "We want to determine how that's done. But if some of this other [traditional] work is brought back to us, we won't lose that many jobs. That's why technology and jurisdiction are so intertwined."