Seattle stevedoring firm is a spark in the port battles
The slowdown, an effort to bring employers to terms on a contract that expired Sept. 1, has thrust a little-known Seattle firm to the center of the dispute that holds billions of dollars of freight hostage and threatens the economy's fragile recovery.
SSA is by far the largest marine- and rail-cargo handler on the West Coast and in the United States and ranks among the top four in the world. It employs 10,000 workers and does an estimated $1 billion in business a year, making it roughly half the size of Alaska Airlines, with global reach greater than Starbucks or Amazon.
Yet despite its vast scope and clout, virtually nothing is known about SSA's finances or operations. That's because SSA is owned by a single Seattle family and isn't obligated to report profits or other details publicly.
Its chief executive, Jon Hemingway, isn't a colorful figure on the corporate scene like Jeff Bezos or Howard Schultz. Its headquarters is a bland two-story building on Harbor Island. If you drove by, you wouldn't know it was there.
A powerful force
But if the front door is plain, the influence behind it is legendary. SSA holds a 30-year lease on one of the largest terminals in the publicly owned Port of Seattle. Similar leases along the rest of the West Coast give SSA access to more ships than most of its competitors, even those affiliated with big shipping lines.
SSA also is a big force at the Pacific Maritime Association (PMA), the organization that pays wages to the longshore workers and acts as a trade association for shipping lines and stevedoring companies.
Hemingway, grandson of SSA founder Frederick Smith, sits on PMA's 10-member board. His deputies hold chairmanships of several PMA working groups, including three steering committees.
By virtue of numerous subsidiaries, SSA holds 12 memberships to the PMA that appear to give it more votes than any other single member.
SSA's large cargo volumes also weigh in the company's favor, since members receive additional voting power according to the tonnage they handle, the PMA says.
Union workers say SSA lobbied to install Joseph Miniace as PMA president in 1996. Miniace was known as a cost-cutter in his prior post at New York University Medical Center. At PMA he has pushed for changes like automating job assignments which, while improving efficiency, would reduce workers' power to control the docks.
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"SSA is not only the biggest (terminal operator) on the West Coast and the U.S., but in the world," he says. "They do have influence and they're listened to."
History of growth
SSA officials declined to be interviewed for this article, citing the sensitive nature of the talks.
While some SSA acquisitions have roots back to 1899, the company's modern lineage began in 1949, when Frederick Smith founded Bellingham Stevedoring. Old union hands remember the firm changing its name to Seattle Stevedoring, or "Seattle Steve," a few years later, when it moved south.
Ricky Smith, current chairman and son of the founder, knew the men on the docks as his father had. They worked hard for him, helping it grow.
In the 1980s and 1990s, it grew a lot. "Seattle Steve" changed its name again, reached out along both U.S. coasts and overseas, and absorbed smaller competitors.
"If they've died, SSA has taken their work," Olson says. "If they were acquired or merged, SSA has their work."
It now has more than 150 operations handling everything from cars to fruit to cruise passengers in 11 countries from Chile to Vietnam. Along the way, it let dock relationships at home wither away, workers say.
At the same time, SSA has taken steps to eliminate union jobs. In the mid-1990s, SSA moved a number of clerk positions from the port of Los Angeles to Salt Lake City, rankling the union. Nonunion planners in Utah now organize cargoes loaded on ships in Los Angeles, workers say.
SSA also uses nonunion drivers and has set up off-dock container centers to handle tasks with nonunion workers. That has drawn the ire of Los Angeles longshoremen, and helps explain why SSA was singled out for the slowdowns when they started.
Last month, shortages of International Longshore and Warehouse Union (ILWU) workers slowed only SSA terminals, the PMA said. The union has blamed high freight volume for worker shortages. But it has singled out SSA as "the main roadblock" in contract talks and contended the company has sought to move work away from organized labor.
"They are very, very anti-union," says Jerry Martin, a representative for the ILWU in Los Angeles.
SSA has taken on unions abroad, too. In 1998, it abruptly shut down operations at six ports in New Zealand, throwing hundreds of unionized "wharfies" and administrative staff out of work. Because liquidators found the units were in debt, workers lost millions of dollars in severance and back pay owed under their contracts.
Within days, however, other companies were picking up SSA's work and hiring laborers as "casuals" without union terms. It soon became apparent the new companies were headed by the same directors as the failed group: Hemingway, Smith and SSA senior vice presidents Charles Sadoski and Claude Stritmatter.
The matter ignited outrage in Parliament and prompted New Zealand to consider tightening its bankruptcy laws.
Tough competitors
The changes at SSA have been propelled by the same forces driving its competitors. In a business where labor and terminal costs are generally fixed, profit accrues to companies that can operate most efficiently. Any inefficiency on the dock, such as the system of hiring different crews out of the union hall, slows freight, raises costs and cuts into profits.
It's the chief reason technology is at the core of the labor standoff. Unions say they'll accept new technology but want to stop the erosion of their work force. Longshore-union employment has fallen to 10,500 today from 100,000 in 1960, even as the volume of cargo has soared.
But employers see no alternative to catching up to ports around the world that already use nonunion labor and computer tracking to speed cargo.
The Sept. 11, 2001, attacks and economic downturn have only made the situation more urgent, says PMA president Miniace. "It has become essential to adopt existing work practices and to implement existing technologies that will thrust our terminals into the lead over competitors, nationally and around the world," he wrote in PMA's latest annual report.
Indeed, the West Coast isn't just facing competition abroad. Foreign-owned shipping lines now lease space on U.S. docks, buy stevedoring companies and compete with SSA.
Steamship lines operating cargo-handling facilities have an advantage. Since their docks and shipping are integrated, people at the port can dictate how a ship gets loaded to maximize efficiency when it unloads.
"SSA doesn't have that authority to plan the ship," says George Osborn, who heads Husky Terminal and Stevedoring in Tacoma, which is owned by Kawasaki Kisen Kaisha steamship line. "It's an extremely, extremely competitive business," he adds. "By having their own lease on land and equipment, the shipping lines don't have to pay SSA."
That helps explain why SSA is pushing so hard for change: It feels pressure, too. Trade with Asia is expected to double in a decade, and already port space is scarce. Trucks idle in line waiting for cargo to come off ships that carry 5,000 containers, more than double what they held 20 years ago. And labor costs aren't going down.
SSA has been quick to adapt, ambitious in moving to new ports and has tried to foster good relations with workers, says Olson, of the University of Washington. At the same time, it has chafed at not being able to make changes.
"It's a sophisticated company," Olson says. "They're always at the forefront of technology."
Except here at home.
Alwyn Scott: 206-464-3329 or ascott@seattletimes.com