Association News
Governor and Mayor join MPEA
- Governor and Mayor join MPEA in proposing
sweeping legislation to put customers first at McCormick Place
- Labor reforms, cost transparency and debt restructuring are critical
for Chicago to compete for conventions and trade shows
 CHICAGO – Illinois Governor Pat Quinn and Chicago Mayor Richard M. Daley joined officials of the Metropolitan Pier and Exposition Authority (MPEA) on Jan. 11 in announcing plans for MPEA to introduce legislation in the Illinois General Assembly to reform labor rules and contractor practices that have hindered Chicago’s ability to win and retain major convention and trade show business.
Officials say these measures are needed to preserve jobs and allow Chicago to match its convention competition.
“This is a jobs bill,” said John S. Gates, Jr., Chairman of MPEA. “By modernizing the work rules for a few hundred workers in one building, cutting management and increasing transparency, we can preserve and expand the 65,000 jobs that our industry supports.”
Conventions and trade shows at McCormick Place are a vital economic resource for Illinois, generating more than 65,000 jobs and $8 billion in economic impact for the state.
 While new legislation is critical, other action undertaken by MPEA is also meant to better serve customers. MPEA is cutting costs by dramatically streamlining our internal operations. An early retirement program, along with further force reductions in 2010, will leave MPEA with more than 40 percent fewer employees than in 2007 (a reduction from 700 employees to approximately 400), despite the addition of new facilities. This reorganization is focused both on ensuring we have a talented pool of individuals who will provide excellent customer service, and on reducing our operational costs.
“This proposed legislation will be a major step in meeting the dual goals of making MPEA selfsustaining and ensuring the highest levels of customer satisfaction at McCormick Place,” said Gates.
“Time is of the essence. We need our stakeholders to step up in order to save jobs and put our customers first.”
The legislation would establish MPEA as a public employer under the Illinois Public Labor Relations Act (IPLRA). This would allow MPEA to negotiate contracts with all “show labor,” including workers employed by contractors, as well as prohibit strikes and provide MPEA with the authority to audit all contracts and agreements to ensure that employee costs are accurately represented and passed through to customers. Labor will have the recourse of binding arbitration, like other public employees.
“Convention business in Chicago is at a crossroads. The many stakeholders in Chicago’s vitally important convention industry must do what it takes to stay competitive and provide better value to customers. The choice is clear. We can do what it takes, pass this legislation to modernize our business model, create new jobs and growth… or we can continue to operate at a competitive disadvantage and watch the steady decline of one of our state’s most important economic resources,” Gates said.
The proposed legislation would have the following impact:
- Affirmatively establish that MPEA is a public employer under the IPLRA.
- Bring all “show labor” – contractor employees that perform duties related to the move-in, setup, service, breakdown and move-out of shows – under the oversight of MPEA and covered by the IPLRA.
- Reduce the number of bargaining units and work jurisdictions. Currently, there are five unions representing MPEA and show employees: Teamsters Local 714, which handles work on the docks, moving freight and some machinery and “outside” forklift operations; the Riggers Local 136, moving all machinery, booth work involving machinery, and “inside” fork lift operations; the District Council of Carpenters, in charge of crating, assembly and carpeting; the Steelworkers Local 17 (Decorators) handling draping, skirting, signage and flooring; electricians represented by IBEW Local 134 work directly for MPEA. We must organize these bargaining units into three functional categories (units) to operate more efficiently and transparently for customers:
- Move-in/Move-out Unit: employees to handle dock work, moving all freight and machinery, booth work related to machinery.
- Assembly/Disassembly Unit: workers for crating, assembly, flooring,
carpeting, draping, skirting and signage.
- IBEW Local 134 electricians unit.
- Free the MPEA from “area” bargaining agreements negotiated separately between contractors and show labor unions. The MPEA must have a clean slate to negotiate show labor agreements with new value, transparency and flexibility for the customer.
- Give MPEA substantial oversight of the methods, means and personnel by which operations are conducted, ending cumbersome and inefficient work rules that add costs, confound and infuriate customers. MPEA must have control over all work rules, which are now agreed upon between contractors and show labor unions.
- Provide MPEA authority to audit contracts among show management, contractors and exhibitors to ensure that labor costs are accurately represented and appropriately “passedthrough” to customers.
“We have the most skilled work force in the nation. Often times, our labor is used by venues in other cities. But, today, we all need to focus on customer satisfaction and value,” Gates said.
Labor reform is just one of the actions MPEA is taking to change its business model. The other key component is debt restructuring. Unlike its primary competitors in Las Vegas and Orlando, MPEA receives no operating subsidies. Las Vegas and Orlando receive government subsidies for their operating costs. Tax revenue received by MPEA is reserved exclusively to service capital debt from the construction of the new buildings. MPEA will seek General Assembly approval in 2010 to restructure capital expansion debt because of the impact of the recession on tax revenue generated by convention and tourism related spending. Convention business overall has declined by at least 20 percent nationally, including in Las Vegas and Orlando.
The decline in Authority tax collections after 9/11 has been exacerbated by the current economic crisis.
This has resulted in a draw on the State sales taxes backing MPEA Expansion debt in FY 2009 and, if nothing is done, it is projected that such draws will continue for the foreseeable future. Restructuring MPEA’s debt is paramount in restoring the Authority’s financial strength and relieving a potential draw on State resources during a time when the State’s finances are strained. MPEA is asking to restructure existing debt to take advantage of lower interest rates. Restructuring MPEA’s debt is paramount in restoring the Authority’s financial strength as well as in relieving a potential draw on State resources during a time when the State’s finances are strained.
“There is much to be done to ensure Chicago’s status as a preeminent convention destination. It will require commitment and cooperation from all stakeholders. Bold legislation and a streamlined organization are important steps to ensure that customers come first,” said Gates.
IAEE RESPONDS
Beware of the legislative fix!
By: Steven Hacker,
IAEE President, CAE
 When it was recently announced that the governing authority of McCormick Place in Chicago (MPEA), joined by the Mayor and the Governor, would turn to the Illinois Legislature to help solve some complex and very serious financial and operational issues IAEE urged caution pointing out the often-unintended and all-too-common consequences of legislative involvement in the affairs of business. Legislation, we said, should always be the last remedy.
While that's still sound advice, it may be that a real solution to what ails McCormick Place may only be possible with the assistance of public policy officials in Springfield. Nevertheless, customers of McCormick Place, exhibition and event organizers, exhibitors and service contractors, are rightfully concerned about a state "takeover" of the facility's labor pool.
The fact is two earlier state takeovers elsewhere of exhibition facilities did not do anything to lower customers' costs. Over time and as the original architects of those plans moved on or retired costs have continued to climb despite the original intentions.
In fairness to McCormick Place, however, the only way to substantially reduce costs in the end may be a threefold approach that involves the restructuring of the facilities long-term debt — something that can only be achieved with the sanction of state lawmakers - and addressing the matter of labor rates and work rules.
The plan is to convert labor to the status of state employees thus depriving the unions of the inherent threat of strike while opening the door to recalibrating the current work rules that drive customers' costs sky-high. And third, out-sourcing electrical which will almost immediately bring down those costs which have served as the lightning rod for some many unhappy customers. Nothing like free competition among providers controls costs better and no where is it needed more than electrical costs.
Is this a perfect solution? Not by any means. But the fact remains the extraordinary challenges now facing the nation's largest exhibition facility may defy conventional solutions. Absent some unexpected legislative mischief, and if management of McCormick Place steadfastly refuses to view labor as a new profit center, let's hope a legislatively assisted fix will succeed in restoring McCormick Place to the competitive place it deserves in our marketplace.
Oh, and one more thing, a way must be found to codify whatever cost-reduction fixes are put into place in order to prevent the same kind of cost creep that has undone earlier state takeovers elsewhere. |
