US manufacturers feel the pain of port dispute

Why port backup could cost billions

A total shutdown of West Coast ports could cost the U.S. economy about $2 billion a day as the effects ripple through related industries, the president and CEO of the National Association of Manufacturers told CNBC on Wednesday.

"We're already seeing a slowdown in wages here in this country. Many of our manufacturers are having to cut back on overtime, and eliminate it altogether sometimes. We're losing orders," Jay Timmons said in a "Squawk Box" interview.

A contract dispute between union leaders representing dockworkers and shipping executives has resulted in disruptions at 29 West Coast ports, leaving some ships unable to dock and containers stranded on docks.

Read More Dispute should be resolved soon: Long Beach port CEO

On Tuesday, U.S. Labor Secretary Tom Perez met separately with the International Longshore and Warehouse Union, which represents 20,000 workers, and the Pacific Maritime Association, which is negotiating for the shippers.

The two sides are stalemated on a union demand to change the system for arbitrating disputes. They have reached tentative agreements on health benefits and what jobs the union can retain in the future, and their wage proposals are not far apart.

Thousands of the country's manufacturers move their products through the ports. The cargo handled at the ports has an economic value of 12.5 percent of U.S. GDP.

Timmons said foreign customers have canceled orders from U.S. paper manufacturers and kitchen appliance makers over concerns the American businesses will not be able to meet their obligations.

Meanwhile, food is rotting while waiting to be unloaded, and importers still have Halloween products sitting on ships in the water, he added.

The top imports at the Long Beach and Los Angeles ports in 2014 included manufactured goods, machinery and appliances, textiles, vehicles and automotive parts.

Read More Honda to slow US output due to West Coast ports dispute

There is not only a dispute over the current contract, but how future contracts will be resolved. Timmons said the parties need to focus on forging a new contract so the rest of the supply chain can get back to business as usual.

"Ultimately it's not only lost wages, it's lost jobs here in this country and we need to see a resolution pretty quickly," he said.

CNBC's Lori Ann Larocco and The Associated Press contributed reporting to this story.