Transportation strike may paralyze Hollywood

In two weeks, Hollywood might be stranded by the side of the road.

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A labor drama playing out behind closed doors could lead to an Aug. 1 strike by thousands of transportation workers, which could shut down most television and film productions in Los Angeles and possibly elsewhere.

If it seems unlikely, think again: The Teamsters' contract with the studios expires at the end of July, and negotiations appear to be at an impasse. Sources close to both the union and the producers say neither side will budge.

"If they're counting on the producers caving, that's the wrong strategy," a studio-side source said. "A strike is entirely possible."

The low-profile Teamsters Local 399 represents several thousand drivers who move everything from production equipment to star trailers and electrical generators. No drivers means no equipment, and no equipment means no film or TV production.

The Teamsters also represent casting directors and others, and the negotiations also include craft workers such as electricians. A walkout would idle these key workers as well as drivers.

A strike would be the third Hollywood work stoppage in less than three years, following a WGA strike in 2007-08 and a SAG stalemate in 2008-09 that led to a suspension of most movie production. It would be the first Teamsters action since a series of strikes during the 1980s. Unless the producers hire replacement workers -- a contingency they already are preparing for -- production would grind to a halt.

The hang-up is a single issue: Will the Teamsters' annual raise be 2% or 3%? That 1% difference amounts to tens of millions of dollars per year, according to a management-side source -- not insignificant to an industry reeling from the recession, collapsing DVD revenue and uncertain new-media business models.

Management has offered the union a two-year agreement, as requested (the studios usually prefer three years), increased contributions to the union health plan, increased pension payments and no rollbacks.

A studio-side source called the proposal "a solid, very respectable" deal. But the union wants the same 3% annual raise that IATSE members got in their most recent deal. IATSE represents below-the-line workers such as cinematographers and editors. There is no love lost between the two unions, though a recent meeting between 399 leader Leo Reed and IATSE head Matthew Loeb might have mended some fences.

In any case, that disunity is one reason for percentage envy.

The studios argue that the IATSE deal was negotiated in April 2008, before the economic meltdown. More recent agreements, such as AFTRA's one-year extension of its daytime deal, have featured annual raises of 2% or less. Offering the Teamsters a better deal "could make AFTRA look foolish," said a source.

Another concern for management is the upcoming SAG and AFTRA primetime negotiations, which begin in two months. A 3% raise for the Teamsters could embolden SAG and AFTRA to insist on the same. The DGA, negotiating in mid-November, likely would accept no less, and the WGA next year would want 3% as well. That ripple effect -- so-called "pattern bargaining" -- could multiply the cost of a Teamsters raise dramatically. Even a compromise at 2.5% would be costly.

A strike would be costly as well.

The 100-day WGA walkout was estimated to have drained the Los Angeles economy of $25 million a day.Whether a Teamsters work stoppage would have that kind of effect is unclear, but August represents the height of fall television production. Preproduction and production already are at full tilt, which one longtime union member said indicates that the studios don't anticipate a strike. In the 1980s strikes, this person said, the studios began shutting down production in advance of a work stoppage.

In any case, a management-side source indicated that a 2.5% raise is not a possibility without some concession from the Teamsters.

Union members have equally weighty concerns, pointing to a series of past rollbacks on such matters as overtime pay and discounted fees for work on cable shows. At what point, they ask, is a new compromise one too many?

In addition, both sides' leaders have personal reasons not to yield.

The Alliance of Motion Picture and Television Producers, controlled by the major studios and networks, is headed by a new president, Carol Lombardini. The Teamsters negotiation is one of Lombardini's first solo outings, meaning she is under enormous pressure to avoid a strike or an overly compromised deal.

On the other side of the table, Reed faces a bitter challenge from an insurgent slate for the first time in 10 years. The election takes place in two months; a deal perceived as weak, or a strike perceived as unnecessary, could provide ample ammo for the insurgents.

Reed, the AMPTP and other Hollywood unions and guilds declined to comment for this report.

Time is running out: Another negotiating session is scheduled for Friday, and two days later comes the union's meeting to either ratify the deal or vote for a strike authorization.

That authorization is not actually a strike, but without an eleventh-hour resolution, a walkout would be likely a week later, on Aug. 1.

Jonathan Handel is an entertainment attorney at Troy Gould and a frequent commentator on entertainment labor matters.