The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

by Marc Levinson

  Through 1966, West Coast shipping interests paid $29 million into funds that provided early retirement, death, and disability benefits, along with wage supplements to displaced longshoremen. This proved to be a hugely profitable investment. In 1965 alone, by one estimate, the ship lines saved $59.4 million owing to the Mechanization and Modernization agreement, nearly twelve times their annual payment. The improved efficiency, which contributed to a surge in carriers’ profits, came at a time when the container had barely begun to make itself felt in the Pacific ports. Container shipments accounted for a scant 1.5 percent of all general cargo tonnage at Pacific coast ports in 1960 and less than 5 percent in 1963. When the container finally arrived in force, leading to unimagined productivity increases, it brought yet more surprises. The port of Los Angeles, where longshoremen had been so certain that automation would destroy jobs, was to flourish beyond all expectations, while the port of San Francisco, whose longshoremen had been the strongest proponents of the Mechanization and Modernization Agreement, would wither. As they negotiated over automation in 1960, though, neither management nor labor was able to foretell what the container would do. The law of unanticipated consequences prevailed. As Bridges confessed later, “Frankly speaking, the ILWU was caught off guard, as were many shipping companies.”31

  The Mechanization and Modernization Agreement set the rules for the U.S. Pacific coast and was immediately extended to western Canada. In the East, the politics of the fractious International Long-shoremen’s Association would not allow such a sweeping settlement of automation issues. The ILA represented longshoremen from Maine to Texas, but it negotiated separately with different groups of employers up and down the coast. There was no coastwide contract such as there was in the West. Nor was there a Harry Bridges, a union leader trusted and respected enough to win member support for an otherwise suspect deal. The ILA’s headquarters had minimal power over local union leaders, who could do pretty much as they pleased. “It is the only anarchist union,” columnist Murray Kempton wrote aptly in the New York Post.32

  William Bradley, the ILA’s president from 1953 through 1963, was a genial man who took the title “captain” from his days as a tugboat operator. He was named to head the union after longtime president Joseph Ryan was forced out on corruption charges in 1953. Having never worked the docks, Bradley won little respect among longshoremen in Brooklyn and Manhattan, much less those in Houston and Savannah. In 1961, dissidents demanding strict contract enforcement and maintenance of twenty-one-man gangs won union posts at Anthony Anastasia’s Local 1814 in Brooklyn. In the midst of contract negotiations the following year, the choleric Anastasia tried to withdraw his local from the ILA and bargain on independently. Bradley relied on Teddy Gleason, officially the union’s chief organizer and executive vice president, to sort out such internal political complications as well as relations with employers. Gleason, who had once been a pier supervisor—a management job—had the waterfront in his blood; his father and grandfather had both been longshoremen, and he and his twelve siblings had been raised a few blocks from the docks in lower Manhattan. His longshore work, though, had been as a checker counting cargo, not as a holdman physically lifting coffee and cement. The Irishmen among his rank and file were not sure that he was tough enough, and the Italians and blacks, the other main ethnic groups working the docks, were not sure they wanted yet another Irish American leader. This was not an environment in which bargainers could make progress on a subject as emotional as automation.33

  The union’s internal political problems were rooted in unpleasant economic realities. Although the port as a whole was prospering, Manhattan’s piers were not. The number of men hired at the five Manhattan hiring halls fell 20 percent from 1957–58 through 1961—62, while hiring in Brooklyn and New Jersey increased. Urban redevelopment projects, such as the proposed World Trade Center, threatened the removal of piers that would never be replaced, and the congestion along the entire Hudson River waterfront made it obviously unsuitable for new container operations. Brooklyn longshoremen, by contrast, saw no immediate threat to their jobs. Container operations had not even begun in many ports, including Philadelphia and Boston, and therefore were not a priority for local leaders. With these very different situations leading powerful local presidents to stake out differing views, the ILA had great difficulty coming up with a united approach to the container.34

  The arbitrators’ temporary compromise of 1960, protecting jobs but allowing the employers unlimited use of containers and machinery in return for payments into a royalty fund, barely mattered. A royalty board was set up to manage the expected flood of money, but a drop in port traffic during the economic slowdown of 1960—61 meant that there was little by way of royalties. Gleason alleged that other ship lines were trying to evade royalty payments by encouraging shippers to pack their cargo on pallets rather than in containers. “This is a clear-cut threat to our existing collective bargaining agreement and to the royalty program,” he charged in late 1961. Longshore hours worked in December 1961 were down 4 percent from the previous year and down 20 percent from December 1956, but there was still no compensation being paid out to the men whose work had diminished.35

  Job security in the face of automation thus became the overwhelming union concern as contract negotiations began in 1962. Job security, though, played differently in different places. New York leader Frank Field demanded that the ILA negotiate for a portwide seniority system: business at his own Local 858’s docks, in lower Manhattan, was drying up, but the customary pier-specific seniority meant that displaced Manhattan longshoremen could not easily find work on other piers. The leaders of other locals had no desire to reduce their own members’ job security by giving Field’s members priority in hiring.36

  Those internal divisions were all too apparent as the ILA entered negotiations for the 1962 contract. The union opened with demands that all New York longshoremen involved in handling prepacked cargo of any sort receive an extra two dollars per hour, and that all containers be assessed a penalty of two dollars per ton payable to the royalty fund. Anastasia, whose Brooklyn local had seen little impact from containers, publicly criticized his own union’s proposals as ridiculous and again threatened to withdraw from the ILA. The Shipping Association simply ignored the union’s demands, instead proposing that ship lines be allowed to handle containers with eight-man gangs and other cargo with gangs of sixteen, and that crane operators be removed from the union’s jurisdiction. These changes, multiplied by the 560 gangs in the port, would have been cataclysmic for the ILA. Economic consultant Walter Eisenberg warned Gleason that the employers’ proposal would lead to a sharp increase in container traffic and would save employers between $108 million and $144 million over the life of a three-year contract. The union thought that this money rightfully belonged to its members, but the employers considered it the unearned fruits of featherbedding, to which workers had no claim. The talks stalled, even with federal mediation, because Gleason lacked the political strength to agree to any contract that would eliminate work. The union, he pledged to his angry members, would “not sell out jobs like Bridges did.”37

  Neither side was prepared for anything like the Mechanization and Modernization Agreement on the West Coast. After high-level political soundings in Washington, the mediators proposed that the ILA and the New York Shipping Association sign a one-year contract while undertaking a joint study of automation and job security. The Shipping Association agreed reluctantly. The union refused, and a strike closed the entire port at the end of September 1962. President Kennedy ordered the union back to work for an eighty-day “cooling-off period” and named three professors to investigate the dispute. Like the federal mediators a month earlier, the professors suggested a joint labor-management study. The employers refused unless the union agreed not to strike during the year. The ILA wanted no study that might cost jobs in the long run. The mediators’ hint that the employers might eventually reduce the workforce by paying workers to retire made Gleas
on irate. “We don’t want to sell jobs,” he insisted in late October. “The West Coast sold their men out, but here on the East and Gulf Coast, we don’t do that.” The professors withdrew. Two days before Christmas 1962, the cooling-off period expired, and the union walked out once again.38

  Kennedy named three men to try to mediate: Republican senator Wayne Morse, who had formerly worked as a labor mediator; Harvard Business School professor James Healy; and Theodore Kheel, a New York labor lawyer. On January 20, 1963, nearly a month into the strike, they announced a proposal: the union would get a one-year contract with large pay and benefit increases, and the secretary of labor would study the job security issues and make recommendations. The ILA and the Shipping Association would attempt to implement the recommendation, but if they failed, they would select a neutral board to do the job. Superficially, the plan seemed to favor the union; the employers faced a large increase in wage and benefit costs with no assurance of greater productivity. Gleason criticized the proposal, then accepted it, while the Shipping Association futilely objected. The union, seemingly victorious, returned to work.

  The appearance of a union victory was misleading. A separate statement by the mediators could be read in no other way than as a warning to the ILA: “We wish … to emphasize our strong belief that the capacity of this industry to support wages and benefits to which the employees are entitled cannot continue without serious impairment in the absence of marked improvement in manpower utilization.” The implication was that if the union remained unwilling to make a deal on containers, the government stood ready to impose one.39

  As the Labor Department studied port automation through the rest of 1963, the ILA endured yet another internecine feud. Gleason, officially the executive vice president but clearly the union’s most powerful figure, launched a campaign to replace Bradley as president. The hapless Bradley, nominally the boss, accused Gleason of having subjected the union to an “unnecessary strike” over automation. Gleason was not wildly popular, but even his critics acknowledged the need for a strong hand at the helm, and the union convention kicked Bradley into the new post of president emeritus. With Manhattan local leader John Bowers elected to Gleason’s old job over the head of the Negro local in Mobile, George Dixon, the ILA remained under New York Irish domination as it faced the container issue head-on.

  If Gleason’s ascent altered the bargaining environment, so did the continuing decline of New York City’s docks. With containers accounting in 1963 for more than 10 percent of the entire port’s general cargo for the first time, and with Robert Wagner, the mayor who had made the docks a priority, preparing to retire, resolving the container situation became urgent for the New York contingent within the ILA. Fear that automation would destroy the union was the major issue at a conference of the ILA’s southern locals in June 1964. When the Department of Labor released its study of the Port of New York at the start of July, Gleason offered an unexpected response: “The time may well be ripe to institute in this industry a guaranteed annual wage.”40

  The 1964 contract negotiations took on an unusually conciliatory tone. The New York Shipping Association proposed smaller gangs and more flexibility in work assignments, as the Labor Department report urged. In return, it offered increased pensions and early retirement, a guarantee that each man hired would get eight hours’ work, severance pay for men permanently displaced, and an annual income guarantee for regular longshoremen. When the ILA rejected any concessions on gang sizes, federal mediators were requested once more. The mediators named by President Johnson in January 1964 urged that employers fund a guaranteed income for permanent longshoremen who showed their availability for work. In return, the mediators proposed that employers be permitted to transfer workers from hatch to hatch, and from one task to another, and that the size of general-cargo gangs be pared to seventeen men by 1967. Gleason was willing to concede smaller gangs, but the proposal to let workers do multiple jobs sparked outrage among the checkers, who feared that their less strenuous record-keeping jobs might vanish. Against his own desires, Gleason was forced to take the union out on strike again in September 1964.41

  The Johnson administration, increasingly concerned about inflationary labor settlements, ordered the dockers back to work and imposed an eighty-day cooling-off period. This time, the ILA and the New York Shipping Association negotiated without the usual histrionics. In return for a massive wage and benefit increase all along the coast, including three additional paid holidays and a fourth week’s vacation, the union agreed to reduce the gang size for all general cargo, including containers, to seventeen men by 1967. Starting in 1966, employers in New York would pay a royalty on every container passing through the port, with the funds to be used to guarantee qualified longshoremen the equivalent of sixteen hundred hours of work each year so long as they checked in at the hiring hall, even if they rarely got hired. This Guaranteed Annual Income would be paid until retirement age, creating a permanent subsidy for displaced dockers. A union flyer summed up the huge changes that the new contract would bring: “This agreement takes the industry from a completely casual workforce to a stable, secure livelihood.”42

  Where the ILA was concerned, though, nothing was ever simple. Just before Christmas, as the cooling-off period expired, wildcat strikes began in Baltimore, Galveston, and New York. Then, in a secret ballot on January 8, 1965, ILA members in New York shocked the union leadership by rejecting the new contract, income guarantees and all. Gleason scheduled a revote, but not before hiring a public relations firm and, in an extraordinary act for the head of a secretive union, going on the radio to explain the contract. The second time around, ILA members in New York voted yes, but the next day members in Baltimore voted no. A separate dispute broke out in Philadelphia, followed by an unrelated ILA walkout in most ports in the South. Not until March 1965 were new contracts establishing a guaranteed annual income in place in New York and Philadelphia. The way for containerization was clear—in two ports. In most other cities along the East and Gulf coasts, containerization had not even been addressed.43

  The Mechanization and Modernization Agreement on the Pacific coast and the Guaranteed Annual Income in the North Atlantic were among the most unusual, and most controversial, labor arrangements in the history of American business. They were products of a time in which the permanent disappearance of work owing to automation was a matter for thoughtful discussion. The United States government, particularly the Department of Labor, was undertaking serious studies of automation’s impact in hopes of better assisting affected workers, and organizations such as the American Foundation on Automation and Employment were holding much noticed conferences. President Kennedy addressed the issue himself in 1962: “I regard it as the major domestic challenge, really, of the 60s, to maintain full employment, at a time when automation, of course, is replacing men.”44

  For organized labor, automation was a front-burner issue. Two-thirds of the labor leaders responding to a survey identified it as unions’ most serious concern. Automation is “rapidly becoming a curse to this society,” AFL-CIO president George Meany told the labor federation’s annual convention in 1963. The substitution of machinery for manpower was threatening to unions, blurring long-established jurisdictional lines and raising bargaining costs byreducing the number of workers in a plant, and displacement could be devastating to workers. Many workers in the 1960s lacked basic reading and mathematical skills, and education levels were low enough to make retraining problematic: half of U.S. factory production workers had no more than a tenth-grade education.45

  Individual unions and employers tried to grapple with automation in their own ways. New York electricians bargained for a five-hour day in 1963 to spread the available work. The United Auto Workers proposed a flexible workweek, rising to forty-eight hours when the unemployment rate fell below a specified level and falling below forty hours, to save jobs, when unemployment was high; the automakers rejected that plan, but they eventually accepted the union’s proposal fo
r a fund to continue workers’ incomes in the event of layoffs. The Airline Navigators’ Association agreed to surrender jobs at Trans World Airlines in return for up-front cash payments, plus three years of severance pay and health insurance. The United Mine Workers, the International Typographers Union, the International Ladies’ Garment Workers, and the American Federation of Musicians all tried to bargain for contracts that protected their members as employers sought to automate.46

  The longshore agreements were seen as models for addressing these concerns. They by no means resolved all problems. “The union gave up more than it should have,” former ILWU secretary-treasurer Louis Goldblatt insisted in 1978. “It did not get all it was fundamentally entitled to, such as recapturing all work on the water-front.” There were many struggles yet to come over union control as container terminals moved away from the docks. On both coasts, the Teamsters union challenged labor contracts that promised off-dock stuffing and unstuffing work to the longshore unions, disputes that the courts eventually settled in the Teamsters’ favor. The use of ships that carried entire barges loaded with containers posed a novel set of labor-relations challenges, and union representation of the office workers whose computers increasingly controlled container operations would be a source of dispute for decades.47

  More problematic for many longshoremen were the social changes stemming from the disappearance of the timeworn pattern of waterfront work. Traditional skills, such as knowing how to stow cargo aboard a breakbulk ship, lost value. Older men, whose seniority had enabled them to climb from the depths of the hold to less demanding work on the deck, found that smaller gang sizes made deckmen’s jobs too stressful. Fathers could no longer bring their sons into high-paying, albeit dangerous and demanding, waterfront jobs, because the jobs themselves were vanishing. Longshore families, now receiving stable incomes, were free to move from tough waterfront neighborhoods to comfortable suburbs, dealing a blow to the class solidarity that came from isolation. The days of long-established gangs working together, of casual conditions that let men work when they wanted to work and fish when they wanted to fish, would never be regained, as work once marked by independence and freedom from control became a high-paying but highly structured job. “They’re turning this job into a factory job,” complained New York longshoreman Peter Bell. Agreed Sidney Roger, editor of the ILWU newspaper in San Francisco, “I’ve heard so many men say, this is exactly what they said: ‘It’s no fun any longer working on the waterfront. The fun is gone.’ The fun has to do with the men working together, a sense of camaraderie.”48