NFI Industries faces loss of Wilmington warehouse after L.A. City Council vote

 Drivers and workers protest NFI outside its Wilmington site (Photo: Teamsters)

Drivers and workers protest NFI outside its Wilmington site (Photo: Teamsters)

Logistics company argues that it has improved conditions at warehouse one year after its purchase.

Third-party logistics firm NFI Industries is fighting to keep hold of one of its largest Southern California transloading warehouses after a Los Angeles City Council committee voted to revoke a lease for the site on Tuesday.

The dispute between New Jersey-based NFI and the City of Los Angeles is an offshoot of the ongoing strife between logistics firms and California-based drayage drivers, who have lodged multiple complaints with state and national agencies over wage and classification disputes.

The issue is again in focus as local drivers and employees for NFI and XPO Logistics (NYSE: XPO) stage walk-offs and pickets throughout Southern California through Wednesday.

Last night, a Los Angeles City Council committee voted to overturn a permit issued by the Port of Los Angeles for NFI-owned California Transload Services to operate a transloading and truck staging facility in Wilmington, California.

The site, which employs 700 people, has been one of the targets in this week’s protests, with an estimated 20 employees taking part in protests at the site.

In his motion to assert jurisdiction over the Port’s decision to approve the NFI permit, Los Councilmember Joe Buscaino said the facility has been the site of “various violations of, and current investigation into, labor, employment, health and safety, and tax laws.”

Although the drayage driver dispute was not mentioned specifically, Buscaino said at yesterday’s council meeting “these ongoing disruptions poorly reflect on our operations and, in general, I don’t know how this is any different than other work stoppages or slowdowns at the port complex.”

Buscaino held out the possibility that NFI could still operate the facility. But any new lease with California Transload would have to include provisions “include provisions that will end work stoppages.”

“There is no way in good conscience that I can support (the Port’s) recommendation” to continue the lease with California Transload, Buscaino said.

California Cartage Companies owned and operated the 600,000 square-foot warehouse at the site for many years. The warehouse sits on an 85-acre site owned by the Port of Los Angeles.

The Wilmington warehouse is the largest of the nine warehouses that California Cartage owned in Southern California, prior to the company being bought by NFI last year.

NFI operates 41 million square feet of warehouse space and has a fleet of 4,000 tractors.

The Port of Los Angeles says 700 containers move through the facility daily, just over 2% of the containers moving through the port, representing $6 billion in merchandise value annually.

The Port of Los Angeles terminated Cal Cartage’s lease for the site in 2013 as it planned to turn the land over to BNSF for its proposed Southern California International Gateway project.

But with that project now on hold, the Port’s Board of Harbor Commissioners last month issued a new lease to allow California Transload to continue to occupy the site until a new plan for the Gateway is drawn up.

Ike Brown, co-owner of NFI and the head of its intermodal unit, said the company has invested $1 million in upgrades for Wilmington warehouse since its purchase. He says the City Council’s move to revoke the lease stems from the Teamsters unsuccessful efforts to unionize employees at the facility.

“We bring new leadership and a different way of running the company than the previous ownership. We do not mistreat our employees and its unfair for the city to make us pay for offenses that predate our ownership.”

The Wilmington facility employs about 700 people, many of whom spoke up in favor of allowing NFI to continue operating the warehouse. NFI representatives at the meeting estimated about 20 employees took part in the strikes this week.

In a statement, NFI said it was “very disappointed” by the vote. It said the vote reflects “the agendas of some very specific special interests, namely the Teamsters, instead of following the will of the people directly affected.”

Fred Potter, director of the Teamsters’ port division, said NFI’s track record with respect to labor disputes and worker safety violations dictated that Los Angeles revoke the lease.

“We are opposed to it,” Potter said. “We think good companies that uphold the law will be welcome at the Port of Los Angeles.”