Port strike poses threat to small businesses: 'Could very well just shut us down'
An Austin, Texas, cafe owner says a prolonged strike could shut the business down for good
Michael Lee Strategy founder Michael Lee explains the impact of the port strikes on the market and the economy and weighs in on the upcoming vice presidential debate.
Small business owners are gripped with concerns that a prolonged port strike could force them to take a significant hit in profits. Some worry about being forced to close down entirely.
Dockworkers at dozens of ports from Maine to Texas went on strike Tuesday for the first time in nearly 50 years over better wages and the use of automation. The strike at the ports, which collectively handle about half of the country's seaborne imports, is believed to have a "detrimental effect on small businesses," according to Wocstar Capital CEO Gayle Jennings-O'Byrne.
"While there are legitimate arguments on both sides of the strike, everyone is negatively impacted by it, particularly small business owners who are already facing supply shortages of necessities," Jennings-O'Byrne said.
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Unlike larger brands, these business owners have lean operations. Cash on hand is tight along with profit margins, payroll and inventory, which means even small disruptions can have a major negative ripple effect, Jennings-O'Byrne said.
Kale Me Crazy, in Austin, Texas. (Kale Me Crazy)
Nicole Tomaszewski, owner of Austin, Texas-based superfood cafe Kale Me Crazy, is one of the many businesses worried about the effects, telling FOX Business that a prolonged strike "could very well just shut us down, and we'd be out of business."
Tomaszewski opened her cafe in 2020, and recalled barely surviving the impact of the COVID-19 pandemic. Now, she's worried about the longevity of her business again, because the majority of her dishes include ingredients that are imported from other countries, such as acai, bananas and avocados.
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Nearly all the menu items would be impacted in some form if there are product shortages and subsequent price hikes, she said.
The situation reminds her of the temporary avocado shortage in 2022, when prices skyrocketed from $38 to about $120 per case within a matter of weeks.
"I can't even imagine what a long strike would do to the prices of products like that… it would just be unaffordable," said Tomaszewski.
Paulina Nava started her Share the Blossom jewelry business in May. (Paulina Nava)
She said the business may have to look into using alternative ingredients or even scrapping items from the menu entirely.
Paulina Nava, owner of Austin-based jewelry business Share the Blossom, told FOX Business that the current situation is similar to what occurred when port operations were disrupted during the pandemic.
Paulina Nava's Share the Blossom jewelry business. (Paulina Nava)
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"It's all happening again," she said, noting that it comes at a time when she has several deadlines to meet with independent distributors and boutiques.
Nava, who started the brand in May, said if she doesn't deliver her product on time, then all of her distributors will cancel their orders. They need their merchandise this month in order to showcase the products at Christmas markets over the next few months, she added.
"The boutiques, in particular, cancel their orders easily because there's so much out there for them. They're not going to wait," said Nava.