The contribution that employers of dockworkers pay to fund the port of Baltimore's guaranteed-annual-income program has been increased, Maurice C. Byan, the head of the Steamship Trade Association of Baltimore Inc., said yesterday.
That increase effectively adds a $1 to the hourly cost of employing a longshoreman in Baltimore.
Paul F. Connor, president of John S. Connor Inc., steamship agents and freight forwarders, said the increased cost of labor because of the higher GAI assessment could hurt Baltimore's ability to compete with other ports. "It can't help. Any time you increase your costs, it has to increase your product cost," he said. "We've been trying to be as attractive in all ways possible. This has to hurt some of our past marketing efforts."
Lorenzo di Casagrande, the top official in Baltimore for Mediterranean Shipping Co., said the higher assessment will add about 2 percent to what it costs his steamship line to move a container across the docks here.
"It costs us quite a big increase," he said, but he expressed confidence that his line will be able to adjust to the higher cost. He said he expects Baltimore to remain competitive despite the increase because of the greater efficiencies his line expects to realize at Seagirt Marine Terminal. Mediterranean was the first to sign a lease at the $250 million facility, which opened in September.
The guaranteed-income was a central issue in the just-completed negotiations between waterfront employers in Baltimore and the International Longshoremen's Association.
The GAI pays benefits to eligible longshoremen who are unable to find work on the docks. To finance the program, employers had been paying $2.75 for each hour a longshoreman worked on the docks. That assessment has been increased to $3.75 effective Dec. 1, the first day of the new contract.
With the more liberal eligibility rules in the old contract, benefits paid out were running far ahead of the money coming in from the assessment. In the past year, the fund incurred a deficit of about $3.5 million, Mr. Byan said.
Paradoxically, the assessment will go up even though the strict eligibility rules should mean a reduction in the amount of benefits employers will be obligated to pay out.
The previous assessment was not adequate to cover the full costs of the benefits employers were obligated to pay under the contract. The increase is designed to bring the fund's income into balance with the contractual obligations.
Had the new contract not tightened the GAI rules, employers would have faced a much more dramatic increase in the assessment. "It could have gone up to between $5 and $6 dollars," Mr. Byan said.
William A. Romberger, president of Baltimore International Warehousing, said he doesn't think the increase will have a dramatic impact on the port. "I don't see people stopping to do business in Baltimore because of a dollar," he said. "I don't think it's that important an issue."
Of greater concern to him is the effect this week's two-day strike by ILA clerks had in reinforcing Baltimore's reputation for labor problems. "We have to get over the labor perception thing," he said.
Mr. Romberger said that though management had hoped to make greater reductions in the GAI, "I think the STA did as good a job as could be expected" in the talks.