US port dispute 'threatens economy'

29 West Coast ports are at a standstill

The labour dispute which has shut down key US west coast ports could begin to hurt parts of the economy, the US Labour Secretary Elaine Chao has said.

Her comments came as unions and management prepared to resume talks on Friday to try to settle the dispute.

"We continue to be very concerned about the situation on the west coast," Ms Chao told reporters.

"There's no question that the port shutdown, if it continues will be hurting specific sectors of the economy."

US federal mediators brought together port authorities and the longshoremen's union on Thursday but have so far failed to end the lockout.

The dispute centres on pay, pensions and new technology and has shut down 29 ports.

The dispute is halting imports worth about $1bn a day, and has begun to hit Asian exporters.

Airlifts

Asian car makers have begun to ship parts by air, adding to production costs, and have threatened to step up temporary lay-offs and production curbs at US plants.

Japanese car maker Honda began to airlift parts on Thursday, a company spokesman told the Bloomberg news agency.

Toyota is considering whether to begin flying in parts next week and has laid off at least 40 workers at a parts plant and distribution centre in California.

Production of trucks and sports utility vehicles at a Toyota plant in Indiana may also have be scaled down.

An airlift would be "expensive, but we think it may the only way to keep the other [operations] open," said Jim Wiseman, Toyota vice-president of manufacturing for North America.

For Nissan, spokesman Gerry Spahn said: "We will have to halt production at our plants as early as next week if the dispute continues."

Recession fears

The US west coast ports are vital for exports from Asia Pacific countries, many of which have only recently shaken off recession.

Economists have warned that, if it lasted for more than a further three weeks, the dispute risked tipping Asian economies back into recession.

The trend towards just-in-time production techniques and minimum stockpiling of goods within the car industry has added to the Asian exporters' problems, industry analysts said.

Meanwhile, the dispute has brought business to Asian airlines, lifting some of the gloom in the airline industry.

Both Taiwan's China Airlines and Korean firm Asiana said they were laying on extra cargo flights to Los Angeles, while a Korean Air official said the firm's cargo space was fully booked.