Monday, April 18, 2011

Chicago’s McCormick Place (MPEA) Takes Hit from Unions Legal Challenge

In February I published an article recapping the exciting labor rules changes at McCormick Place and Navy Pier (MPEA), in Chicago.  These changes, which occurred with legislation passed by Illinois lawmakers, in 2010, were perceived by many in the Meetings and Events industry as game changing.

“As all observers of the convention and trade show business are aware, the implementation of those reforms has, virtually overnight, transformed McCormick Place. Not only were our existing customers convinced to keep their events in Chicago, but new shows have been rapidly signing up,” he said.” — Jim Reilly, MPEA Trustee

Sadly, it now appears that what was once considered a “done deal,” and a huge victory for Chicago Convention Business, is now open for further debate, in the court system.  On March 31, a US District Court Judge, Ronald Guzman, ruled on parallel cases filed by Teamsters Local 727 and by the Chicago Regional Council of Carpenters.  The court’s judgement overturns some key pieces of the labor reform enacted in May.

So what does this mean exactly?  Well, I contacted Dawn Young, of the Chicago Convention and Tourism Bureau (CCTB), for some clarity regarding the latest developments.  According to Dawn, for their part, MPEA and the CCTB both believe the March 31st ruling is faulty.  MPEA filed an appeal recently as well as a “stay of execution.”  The two buildings are operating as they were prior to the judgement, pending further legal action.

What Are Potential Changes From Unions Legal Challenge?

On Monday, April 4th a webinar was hosted by MPEA and CCTB, led by David Causton, General Manager of McCormick Place.  A lot of really helpful information was shared during this event.  For any show organizer holding, or considering holding an event at McCormick Place, or Navy Pier, it is worth viewing the video recap of this event.

What may change with this ruling if it holds up?  Here is a summary, per my communication with Dawn Young, and the information provided on the video:

  • Straight time labor — is currently expanded to apply during the hours of 6am – 10pm.  With the recent ruling it would revert back to a straight eight hour day.
  • Booth Assembly — Exhibitors, regardless of booth size, are currently able to assembly their own booths if simple tools are used.  Simple tools are defined, in this context as ladders, hand tools and cordless tools.  That may revert back to a scenario where any booth larger than 300 sq ft. will require union labor.
  • Exhibitor Vehicles — currently exhibitors are allowed to drive small utility vehicles directly on to exhibit hall docks for convention setups and tear-downs.  This would no longer apply.
  • Labor Crew Size — Carpenters and Teamsters currently require a two-man crew.  This will change back to a three-man crew.  Note:  Effective January 2012 the Teamsters contract will reduce to a two-man crew, regardless of outcome here.

What Will Not Change?

It’s important to note that several aspects of the reforms enacted are not impacted by the aforementioned legal challenges.  These include cost savings programs in the following areas:

  • Catering Food Service Costno building mark-up of pricing.
  • Electrical Services —
    • unionized electrical contractors can now compete with McCormick Place in-house electric service provider… essentially a bidding process, maximizing cost savings.
    • In-house electricians are available at cost + benefits – no building mark up of pricing.
  • Free WiFi Service — MPEA offers organizations complimentary WI FI throughout the convention centers, including common hallways, exhibit halls and meeting rooms.

This legal battle has put both MPEA and CCTB into an awkward position, as they were understandably not shy in publicizing the labor reform, to help draw business to the city.  Many Event Organizers have selected Chicago as their event site based upon the labor reforms.  It will be interesting to see what happens if MPEA is not successful in winning on appeal to these latest rulings.

Question:  Do you have a show scheduled (or considering it) to be held at an MPEA facility in Chicago?  If the unions win this battle will it impact your decision to choose/not choose Chicago as your destination?  Please share your thoughts with us.

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{ 14 comments… read them below or add one }

Brian & Jeannie Santos April 19, 2011 at 8:38 am

I’m a corporate employee who’s lived in Chicago for about 30 years, and I’ve followed (how could I avoid it?) much of what has materialized with this issue for more than a year now. Admittedly, I do have two friends who are union workers, though neither work in the trade show industry or at McCormick Place. With that said, I didn’t need to hold those relationships to form my own opinion that MPEA in particular and the state of Illinois as well have been way out of line with their trampling of collective bargaining rights. I’ve always seen it as pretty unfair that almost without exception media reports always cite new work rules to “cut labor costs,” with the scapegoat as a result being the local worker. It’s important to note that the men and women working these shows don’t see the hourly wage that’s thrown about; those wages include significant contractor markups — markups cited by the judge in the ruling that came down in favor of labor. And these workers are losing their wages and benefits for show hours worked while they’re being given to show eployees that come in and rent convention space. Is that fair? Is that right? Based on everything I’ve read and heard, the judge nailed it: MPEA and the state legislation slammed the union workers while ignoring several other cost-saving opportunities for exhibitors. Don’t think people ignore the fact that Reilly consulted with the contractors in years past. Even an ABC station reported on the potential conflict of interest. It’ll be interesting to see what comes next. As a middle-class working man, I side with the workers here.

I saw that the Carpenters posted a statement on its website: http://www.carpentersunion.org/site/epage/115303_837.htm

P.S. You’re right about MPEA and CCTB not being shy about trumpeting the legislation that had been enacted. They even took out a full-page ad in one of the major rag’s Sunday editions. I can tell you that their attitude has been viewed as over-the-top arrogance by many I know who are familiar with the Chicago convention business.

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Michael M McCurry CMP April 19, 2011 at 9:48 am

Brian,

Thanks for taking time to share your perspective regarding this situation. I don’t pretend to be an expert regarding the intricacies of labor law so it is fascinating to me to hear other peoples thoughts and opinions on this subject.

The information in this article came to me from two sources, MPEA and the CCTB. It was my intention with this article to share the information that is out there for my readers, and I was hopeful there would be conversation inspired by it. Your response validates that, so thank you for adding to the conversation.

It will be interesting to see what other comments are contributed by other folks reading this.

Thanks again,

Mike

Reply

Frank Libby April 19, 2011 at 3:29 pm

Dear Mike:

When a ruling affecting the basic rights of working men and women was handed down March 31, 2011, in federal court, the decision overturned key components of legislation passed last year by the Illinois General Assembly. This hastily enacted legislation in essence disregarded our fundamental collective bargaining rights on key issues such as wages, overtime, work rules and jurisdiction. While we applaud the decision of the judge, we don’t necessarily celebrate it. Mike, when you asked the question of your audience, “If the unions win this battle will it impact your decision to choose/not choose Chicago as your destination?” the “battle” being fought by labor is for both worker rights and exhibitor rights. Our day of celebration will only come when a viable long-term solution to the funding problems at McCormick Place is a reality.

I believe that before we can successfully move forward, we first must review where we’ve been. Over the past 20 years union labor at McCormick Place has made numerous concessions to help reduce costs to our customers, the convention exhibitors. These work-rule and wage concessions—reached through the collective bargaining process—were applauded by the industry at the time of their announcement. Mike, when you cite your communications with MPEA and CCTB, referencing the potential for the definition of “straight-time labor” to revert to a straight eight-hour day under the court’s ruling, it’s important to understand that any reversions would include previously negotiated work rules and past union labor concessions. Labor has never refused to sit down and talk, and we have proven that time and time again. Yet while we strive to build and nurture partnerships, the MPEA leadership continues to attack and label us as “the problem.” We not only strongly disagree, but we believe it’s time to ask the question, What really drives up the costs of doing business at McCormick Place? Are there not other entities that more directly determine the increased cost of services to an exhibitor? What about the show contractors that “mark up” costs—including labor—to exhibitors? Did you know that the carpenters at McCormick Place are only compensated for hours actually worked setting up and dismantling shows? Did you also know that the contractor hits the exhibitor with a substantial markup over what the carpenter actually earns for an hour of work?

In the March 31 court ruling the judge in his decision touched on this markup issue by saying that limiting contractors’ markups wasn’t even considered by MPEA as a potential cost-saving measure, and that the goal of reducing exhibitors’ costs was “left largely to the contractors’ discretion.” Why did MPEA not consider this as an option? Shouldn’t limiting this seemingly excessive markup be considered? The judge added in his decision that a multitude of other exhibitor cost-savings options, some which involve MPEA and CCTB finances and operations, weren’t considered, either. If you read the judge’s decision—not the Carpenters’ decision, labor’s decision or a union decision—it doesn’t appear MPEA was seriously looking at anyone else to share the burden. MPEA—with the help of the legislature—only sought to blame and subsequently fund its cost reductions solely on the backs of labor. The Carpenters and the Teamsters took this to court on behalf of our workers because we knew these men and woman were wronged. Not only did the judge realize that very fact, but he also through his ruling indicated that exhibitors are not getting the cost savings they could if the MPEA and the CCTB considered other sources of savings that were ignored. The privatization of electrical services defined under cost-saving “reforms” are actually now costing exhibitors significantly more than what they were before the new legislative “reforms” were introduced. To reinforce this fact I will share documentation with you under separate cover, which you can relay to your audience.

So are there problems at McCormick Place? Yes, and costs are among them. The heart of the problem is that McCormick Place is at a serious financial disadvantage to our competitors in Las Vegas and Orlando to name just a few. Those convention facilities receive substantial financial commitments from their respective cities and states. Because of those large financial commitments they are better positioned to ensure lower overall costs to exhibitors. This is the number one problem that needs to be addressed and solved. I do know the answer does not lie with attempts to strip away workers’ rights through legislation. Nor will the answer be found through protracted expensive legal maneuverings, escalating rhetoric or by playing the blame game. No matter how many webinars, Chicago Tribune full-page ads and glossy PR spreads in Crain’s are produced, those taking the time to understand the subject and its importance, and those willing to think with objectivity and impartiality, are quick to render an opinion that aligns with that of the court.

I commit today—as I have in the past—that I am ready, willing and available to sit down with the state, the city, the MPEA and all other interested parties to begin a dialogue. A dialogue that must lead to real meaningful solutions to the financial issues at McCormick Place. The cost of failing to do so is too great.

Sincerely yours,

Frank T. Libby
President
Chicago Regional Council of Carpenters

Reply

Michael M McCurry CMP April 20, 2011 at 1:08 pm

Hello Frank,

Thanks so much for your phone call and for your comments to this blog article.

I am of the strong belief that all opinions should be heard, and your perspective and insight regarding this labor reform situation is much appreciated. I especially appreciate your assertion that “Our day of celebration will only come when a viable long-term solution to the funding problems at McCormick Place is a reality.”

This article was born from an interest in getting as much information out there as possible for Event professionals, so they will understand what is truly occurring in Chicago. I am personally passionate about Chicago, as a Convention destination, and it is my hope that through a positive resolution to these issues, our fine city will benefit with a greater market share of convention business.

While I am not a member of a labor union, I still embrace the philosophy that all workers should be treated and compensated fairly. I also believe that organizations holding conventions and conferences should receive fair value for their convention dollars. This includes exhibitors and attendees alike.

I don’t pretend to have the answers as to how this all gets balanced out, in the context of the Chicago Convention market, but it does seem like it starts with strong and collaborative communication amongst all stakeholders. So, I am hopeful this will be resolved in a fair and equitable fashion.

The bottom line is if Chicago can not be competitive in the convention market, it will continue to lose customers and other cities will benefit. That is plain and simple how business works, as we all know.

As you said all interested parties need to sit down and hash this out. Because, ultimately everyone loses if the business goes elsewhere.

Frank, once again, thanks for your contributions to this conversation, as they were significant. I hope other folks will join in.

Mike

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Kyle April 25, 2011 at 2:26 pm

“Many Event Organizers have selected Chicago as their event site based upon the labor reforms.”

And so you all kill the golden goose, rather than enjoying her eggs . . .

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Michael M McCurry CMP April 26, 2011 at 10:39 am

Kyle,

Thanks for commenting on this article. I would love to hear more about how we are killing the golden goose?

Can you elaborate?

Thanks,

Mike

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Doug April 26, 2011 at 2:29 pm

The comments made here by those in favor of the recent ruling to overturn the 2010 decision are typical of those in unionized labor. Overturning this decision will in fact run off a tremendous amount of business from McCormick Place. Then instead of working, you can stay at home.

All this talk about how it isn’t fair to the average joe working at McCormick Place is a bunch of hooey. How about some fairness to those who come to Chicago from all over the world to spend their money in your fine city and expect to be able to exhibit for a reasonable cost? With reasonable treatment?

As the union bosses continue to dismantle their own organizations by demanding money and concessions from what they percieve to be some bottomless source that the rest of us in private business don’t know about, the people who will suffer the most are the very people they claim to serve, the worker who will be out of work.

I work for an organization that has a bi-annual show at McCormick Place. I can assure you that if this ruling is overturned we will immediately look for alternatives along with a great number of our fellow exhibitors from numerous and varied industries.

Reply

Michael M McCurry CMP April 28, 2011 at 12:52 pm

Doug,

Thanks so much for sharing your opinion and perspective regarding this important topic.

I, like you believe, that if this latest ruling is upheld, and McPier reverts to the previous work rules and pricing model, it will be potentially devastating to Chicago convention business. Ironically, if this occurs it will most significantly impact the workers, as if there is less business, there is less work available. It’s a simple fact.

All stakeholders need to get to the table immediately, and resolve this fairly and equitably. Time is not on their side, as it will only get worse if nothing is done.

It saddens me to hear your closing comments, but I certainly understand where you are coming from.

Thanks again for contributing to the discussion.

Mike

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Timothy Arnold, CMP, CMM April 28, 2011 at 9:15 am

I have worked in the meetings and events industry for 15 years. I use union hotels at least as much as I use non union hotels, and have never had an issue with labor at either type of hotel.

I firmly believe that people book business in places that make it easy to come and operate their shows. This is why places like Orlando, New Orleans, and Phoenix are popular destinations for meetings, and why heavily union Las Vegas has taken so much business over the past number of years. They make it easy to do business with them. This is not a hard concept, but one that seems to be difficult for many to grasp. People have choices, and they will take their business to those places that make the most sense.

It is important for the employee to be fairly compensated for the jobs that they do, and I have no issue paying a premium for highly skilled people to do their job. (I am paying some guys quite a bit to come by and trim my trees tomorrow, which keeps me from falling off a ladder or cutting off my arm with a chainsaw). But in the case of many Chicago shows, it does seem that there is a major extra premium being paid, simply because you are operating in a union city. This has caused many of my peers to revaluate where they are taking shows, as there are so many places that actually want the business, rather than acting like they are doing you a favor by allowing you to come to the city. To put on a show in McCormick Place vs. Orange County Convention Center in Orlando could easily cost an organizer much more, simply due to the union rules that exist in each center. This higher cost is passed along to the attendee and to the exhibitor, and very few people can justify the higher cost without a major increase in performance, which simply does not exist today.

An exhibitor who travels to a show 10 times a year, can easily set up their simple booth themselves. Do they really need two or three teamsters to assist them in doing something they have done twice already this month? Unless rigging or complicated electrical is involved, probably not.

Going back to one of the earlier comments, does anyone other than union employees and organizers actually believe union employees be compensated for more hours than they actually work? What about the protection of the working man and woman who are exhibiting at the show?

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Michael M McCurry CMP April 28, 2011 at 12:58 pm

Timothy,

You really hit the nail on the head with your comment that “very few people can justify the higher cost without a major increase in performance, which simply does not exist today.” It is all about value, and if the perceived value does not justify the cost then that is a tough situation.

Clearly, changes were needed at McCormick and Navy Pier, and while the solution that was put into law in May was perhaps not perfect it was a great start. Apparently Judge Guzman does not believe the legislation was done correctly, based upon his latest ruling. As I said above there needs to be dialogue amongst the stakeholders in this challenge, and it needs to happen quickly.

You are correct, in my opinion, that the protection of all working men and women should be considered, not just those of the union workers.

Thanks for contributing to the discussion.

Mike

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Danny Stolczyk June 13, 2011 at 10:33 am

Mike:

Great site, which I stumbled upon simply doing a Google search relating to Chicago trade shows. Keep up the good work.

I noted your articles on Chicago’s McCormick Place and read the string of comments. I also read the post from one of the trade unions. Did you see the investigative article from Crain’s this weekend, “Contractors, Trade Associations Squeeze Convention Exhibitors at McCormick Place”? http://www.chicagobusiness.com/apps/pbcs.dll/article?AID=/20110611/ISSUE01/306119980 — WOW!

I’ve done some blue-collar work in my past, and I’d be ticked off if I was being blamed for the problems in Chicago when it’s these large contractors and the trade associations pointing the finger. No wonder they do: they’re the ones sticking it to the exhibitors! And now in a white-collar job, I’m infuriated seeing what’s going on with these exorbitant you-scratch-my-back I’ll-scratch-yours price markups. The loser is the exhibitor. And according to the article, the Reilly guy in charge at McCormick Place previously consulted for these very exhibitors! What a blatant conflict of interest. Who made THAT decision???

Reply

Michael M McCurry CMP June 13, 2011 at 11:12 am

Hi Danny

Thanks for your positive comments regarding my blog. I am really trying to make this a site worth visiting for folks.

I did read that article in Crain’s over the Weekend and it is very powerful stuff. Without knowing all the facts it does seem as though the contractors and even the organizations holding the events are getting more than their fair share of the revenues being generated through exhibitors.

I also find it very interesting that one can place an event in Rosemont and pay 35% less in labor costs, than Chicago downtown, when both places technically play by the same union rules.

Ultimately this situation is going to police itself, in that if exhibitors begin to boycott Chicago shows then their lack of attendance will force the associations to reconsider 1) Chicago as a venue or 2) force them to reconsider the prices they are charging exhibitors.

I doubt the second will happen as that would disrupt their business models for all shows, not just Chicago shows.

I really see all sides of this problem, and I think it is up to the contractors and unions serving Chicago to figure out how to balance things and keep the business in Chicago. The associations and other organizations holding events in Chicago are not going to change their business models just to make it possible to meet in Chicago. That’s just not realistic.

We shall see….

Thanks for adding to the conversation!

Mike

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