After years of intense haggling and political infighting — and millions of dollars in lost convention business — Philadelphia officials hope that the new labor union agreement at the Pennsylvania Convention Center will mark the dawn of a new era for the beleaguered center.
The 10-year labor agreement, struck in July between the center's board and the six unions at the facility, funnels all labor needs through a third-party broker and reduces the number of distinct jurisdictions from six to four. City authorities believe the agreement will make using the facility easier and less expensive, and they hope it will have an immediate impact on the fortunes not only of the convention center but the entire downtown area.
“The relaunching of the building [following the labor agreement] is the relaunching of Philadelphia as a first-tier convention city,” says Jack Ferguson, vice president of convention sales at the Philadelphia Convention and Visitors Bureau. The agreement also clears the way for reconsideration of the long-discussed plans to expand the building. (Earlier this year, state officials effectively halted expansion talks until the problems at the convention center were fixed.) “It's not a question of if but when,” Ferguson asserts, adding that the expansion would no doubt precipitate more hotel construction in the downtown area.
With the new labor contract, Ferguson expects Philadelphia to be much more competitive with nearby cities. A 2.3-million-square-foot convention center opened this year in Washington, D.C., and Boston will open its new convention center next year.
Already, news of a deal has re-upped one customer, the American College of Rheumatology, which recently booked its 2009 annual meeting at the Pennsylvania Convention Center. Atlanta-based ACR held its annual meeting in Philadelphia in 2000. The group was pleased with the city, the center and its downtown location, and the CVB, reports Ron Olejko, ACR director of conferences and meetings. But the high cost of labor and the difficulties involved in working with six different unions outweighed all the positive arguments for heading back to Philadelphia, he says.
“We probably wouldn't have gone back to Philadelphia without the agreement,” Olejko admits.
The center's long-existing labor problems came to a head in late 2002 when 240,000 room nights were canceled in lost convention business. “The PCVB was coming off its best year ever in 2002,” says Ferguson, when a record 27 shows brought 277 million delegates to the city. In 2003, the center will host just 18 shows, which are expected to attract 170 million visitors.
Looking ahead, the slide down the slippery slope continues with 15 shows booked at present for 2004, 14 for 2005, and 12 in 2006. From 2002 to 2004, the booking rate declined from 82 percent to 55 percent. Overall, the re-booking rate at the facility is just 17 percent, compared to an industry average of about 51 percent.
Last year, the consulting company Econsult was commissioned by the board of directors of the Pennsylvania Convention Center Authority to assess the Pennsylvania Convention Center's competitiveness and to recommend ways to improve it. Econsult's findings were released in June 2002.
When an agreement had failed to materialize a year later, Pennsylvania Governor Ed Rendell threatened to resolve the dispute by having the state take over the convention center, consolidating the six unions to one, and making the workers state employees. The idea never got off the ground, but the announcement seemed to help prod the signing of an agreement in July.
Changing long-entrenched labor practices policies has never been easy, especially in traditional union cities like New York, Chicago, and Philadelphia. Like Philadelphia, New York and Chicago reached their labor reforms only after intense political arm-wrestling.
The most dramatic scenario played out in New York City in 1995, when Governor Pataki and a force of 200 state troopers seized the Jacob K. Javits Convention Center in order to wrest the unions from mob influence. Javits took control of the center's labor force, with workers at the facility becoming state employees.
In Chicago, labor reforms were enacted in 1999 after high-profile show organizers complained bitterly about the archaic, costly work rules at McCormick Place. McCormick officials eliminated the problems by folding four unions into two, and by easing work rules.
David Crawford, president of Econsult Corp., the firm that recommended the agreed-upon labor solution in Philadelphia, says the McCormick and Javits' models were considered, but ultimately, the team settled on a different solution.
While Econsult found the labor supplier model to be the best for Philadelphia, the firm recommended against the idea of the state acting as labor supplier. In such a scenario, the state becomes a profit center, which would drive up costs, according to Crawford. The state would also have to pay pension benefits. Under the terms of the new agreement, Philadelphia instead retains an outside labor broker, Elliott Lewis Corp., a Philadelphia-based facilities management company.
The labor model in Philadelphia creates a unified workforce, Ferguson explains. “Customers no longer have to deal with six unions, six different rules and regulations, and six different under-bosses. For meeting planners, there is now one-stop shopping for all their needs,” he adds.
Econsult's Crawford says the problem in Philadelphia has not been with unionization, but with organization. “Labor issues were coming about because of structural problems in the way the show was organized,” he says. Jurisdictional disputes would erupt, often on the show floor, in front of customers and exhibitors. Exhibitors would be dragged into the disputes as the issues would go unresolved. Often, jurisdictional issues would arise between unions and exhibitors over things like the use of hand tools and plugging in computers.
Crawford says the answer lay in creating a unified workforce under one common jurisdiction — a labor supplier — while protecting each of the six unions' legitimate claims to work. The labor supplier is the only point of contact for exhibitors and show managers, and it sells labor to the show contractors.
No other major convention destination in the country has to deal with six unions — not even New York and Chicago, he adds. Most cities' convention bureaus work with one, maybe two, unions, so the labor supplier solution isn't necessary anywhere outside of places like Philadelphia, according to Crawford.
The new agreement also calls for an expansion of the rights of customers, show managers, and exhibitors. For example, disputes and complaints get reported directly to the labor supplier, and are dealt with promptly without the threat of work stoppage. Also, exhibitors now have the ability to perform seemingly minor tasks, such as using hand-held tools in their booths, and plugging in personal computers and laptops without an electrician. Exhibitors can also bring in pre-strung drape, which was a no-no under the old rules. Contractors can request all of their journeymen by name, and there will be no stand-by labor unless called for by Elliott-Lewis. Both these measures can mean significant cost savings.
Perhaps one of the most important new developments is the eight-hour straight-time rule, which means that show managers pay overtime only if workers work more than 8 hours. Previously, 7:30 a.m. to 3:30 p.m. was straight time and any hours worked outside that block were considered overtime. Now, straight time is any stretch of 8 straight hours during the workweek, be it 7:30 a.m. to 3:30 p.m., 9 a.m. to 5 p.m., or noon to 8 p.m.
Another unique aspect of the agreement allows the labor supplier, and thus the meeting planner, to know exactly what their labor costs will be. “Most meeting planners don't know what they're paying out,” says Crawford. “It gives meeting planners useful information in dealing with contractors.”
Crawford believes some of these regulations will have a ripple effect throughout the industry, particularly the eight-hour straight time directive.
Looking at the broader perspective, Doug Ducate, CMP, president and chief executive officer of the Center For Exhibition Industry Research, notes that stipulations such as the eight-hour straight time rule, which increase productivity and reduce labor costs, are more important now than they were just five or 10 years ago.
From 1986 to 2000, the exhibition industry grew 7.4 percent annually, he says, so cost issues and labor issues weren't a major concern for exhibitors. “People threw money at everything,” Ducate says. “In today's economy [where many shows are not growing], there's much more of an effort to look at what everything is costing.”
Ferguson knows the battle to resuscitate the convention center is just beginning. “Now that we have the agreement, it's time to deliver on what it promises,” he says. At press time, Ferguson counts 1.5 million “tentatives,” which are groups that are taking a “wait and see” approach before committing to a future show in Philadelphia.
The first big test for the “new” Pennsylvania Convention Center comes October 21 when the International Association of Chiefs of Police brings its 15,000 delegates to Philadelphia for its annual meeting. IACP booked the Pennsylvania Convention Center last year. The association is well aware of the labor issues that have hampered the facility, and voices many of the same concerns that others have articulated.
“Even though we're the guinea pigs, we've been assured by the top people that things will go right for us,” says Chrissy Hart, IACP conference manager. “If they can implement what they laid out, it will be great for us and beneficial for everyone who uses the convention center.”
Labor reports to an independent labor broker, who “sells” labor to general contractors at cost. The broker is paid a set fee by the center's management.
Six union jurisdictions have been combined into four: Teamsters, carpenters, and laborers; riggers; electricians; and stagehands.
Workers earn overtime eight hours after the start of their shift, regardless of when that shift starts.
Conflict resolution rules are spelled out, including when binding arbitration is necessary.
Rules have been simplified and expanded, allowing exhibitors to perform some of the work themselves.