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The high cost of freight handling was widely recognized as a critical problem in the early 1950s, and containers were much discussed as a potential solution. Malcom McLean was not writing on a blank slate. Yet the historians’ debate about precedence misses the transformational nature of McLean’s accomplishment. While many companies had tried putting freight into containers, those early containers did not fundamentally alter the economics of shipping and had no wider consequences.
Matson moved deliberately. Pan-Atlantic, under McLean’s control, was a scrappy upstart building a brand-new business, and it risked little by acting quickly. Matson had no such haste; it had a large existing business to protect, and its directors were tight with the purse strings. After commissioning outside studies for two years—the same two years it took Malcom McLean to move from a concept to a functioning business—Matson created an in-house research department in 1956.
On the New Jersey side, meanwhile, growth exceeded all forecasts. Stevedores and ship lines were complaining of a labor short-age. Forty ship lines were operating from Port Newark and Port Elizabeth in 1973. The new port’s relentless expansion led to a 30 percent increase in hirings between 1963 and 1970, despite the efficiencies of containerization.
The employers offered severance pay for displaced dockers. The union wanted a guarantee of dock-workers’ incomes instead; it dismissed severance pay as impractical because, in an industry where workers were hired by the day, automation was likely to mean less work for everyone rather than total unemployment for some.
The Mechanization and Modernization Agreement brought surprises all around. The initial result, predictably, was a wave of retirements. With incentives encouraging older longshoremen to leave the workforce, the number over age 65 fell from 831 in 1960 to 321 in 1964, and the number between 60 and 65 dropped by one-fifth. Contrary to expectations on both sides, though, income guarantees for active dockers proved unnecessary. Rather than a labor surplus, the docks experienced a labor shortage thanks to an increasing flow of cargo. Large numbers of B-men were admitted as A-men for the first time
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Bizarrely, the parties now switched sides. The union demanded that the employers mechanize faster to eliminate these physical burdens. “We intend to push to make the addition of machines compulsory,” Harry Bridges told management negotiators in 1963. “The days of sweating on these jobs should be gone and that is our objective.” The ship lines were hesitant to spend the money. The ILWU responded by filing grievances against the lack of machinery on docks and in holds.
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.
