MPEA Recommends Scrapping McCormick Place’s FOCUS One

HIL ANDERSON, SENIOR EDITOR
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Chicago, IL – The interim board of directors of the Metropolitan Pier and Exposition Authority (MPEA) voted April 21 to recommend the elimination of FOCUS One, which would allow trade show organizers to seek outside bids for services currently provided by the facility’s entrenched unions.

The proposals will be sent to the Illinois General Assembly. They include making union workers employees of the MPEA; reorganizing the unions into three labor units; and giving the MPEA the authority to review and verify contractor billing statements to ensure cost savings are passed along to the customers. Trade Show Executive (TSE) will provide additional information and analysis on the MPEA plan as it becomes available.

The full slate of recommendations includes:

  • Restructuring the MPEA capital debt and providing the agency with a subsidy from sales tax revenues of $20 million to $25 million.
  • Prohibiting strikes by union workers by making them MPEA employees. The MPEA would have the power to renegotiate all union contracts.
  • Organizing labor into units handling: (1) Move-in and move-out; (2) Assembly and disassembly; and (3) Electrical and production.
  • Allowing MPEA to review and verify contractor bills.
  • Instituting an “exhibitor rights” policy.
  • Closing FOCUS One as early as possible and stop providing utility services.
  • Cancelling existing food services contracts and allow exhibitors to order packaged food from outside restaurants. An RFP would be issued for fixed-fee food service with no profit margin for the MPEA.
  • Re-directing convention-related marketing funds to the MPEA.

“The recommendations are bold, but necessary to put our customers first and keep Chicago as the premier destination for conventions and trade shows,” said John Gates, Jr., chairman of the MPEA interim board. “But I want to be clear: the interim board is not recommending new taxes or operating subsidies for McCormick Place. Its approach is to reallocate projected savings from debt restructuring to cut costs to customers and balance the MPEA budget,” he said.

The findings and the recommendations of the MPEA interim board were based on independent analyses by PriceWaterhouseCoopers and CH Johnson and Associates. The two organizations benchmarked McCormick Place’s performance and operations against competing venues and provided an in-depth review of its financial structure.

Moving forward, the interim board plans to continue to implement cost savings by scaling back the use of the Lakeside Center. It also plans to realize more savings in the central office and to continue to develop the revenue potentials of the Lakeside Center, the McCormick Place Hyatt Hotel and the Energy Center.

In addition, the interim board plans to conduct a strategic analysis of Navy Pier to develop the venue within the next three to five years as a major international tourist destination and to generate new revenue.

The recommendations now go to a special committee of the legislature. Media reports from Springfield have said the committee was expected to feel free to make any adjustments it considers necessary.

If adopted by the legislature, pulling the plug on FOCUS One would require show organizers to seek outside bids for electrical and other utility services needed to make exhibit halls function, particularly those featuring operating machinery. Currently, such services must be obtained through FOCUS One and use unionized labor.

“Any time competition exists, it’s better for the customer,” said Aaron Bludworth, COO of George Fern Company and immediate past president of the board of directors of the Exhibition Services & Contractors Association (ESCA). “Chicago had a double whammy on electrical. It has a difficult labor environment and work rules to begin with, and that was compounded by the exclusivity.”

Scuttling FOCUS One was a top priority of show organizers and service contractors. Industry executives singled out the program as a major driver of costs that were passed on to exhibitors, some of whom complained loudly about high electrical bills and onerous work rules they claimed forced them to summon a union work crew to perform simple tasks.

Bludworth told TSE that overhauling electrical service at McCormick Place was an excellent start, although significant changes to outdated union work rules at McCormick Place would still be required to improve Chicago’s ability to compete nationally for convention and trade show business. “This is probably 20% of the solution,” he said. “But it is 20% that we didn’t have before.”

Margit Weisgal, president & CEO of the Trade Show Exhibitors Association (TSEA), said the majority of the recommendations would likely benefit show exhibitors, although doing away with FOCUS One entirely might be premature since there were no guarantees that rates charged by private contractors would be significantly lower. “In general, they are trying to do what’s right by the exhibitors,” she said.

Weisgal added that Chicago has long been a popular convention city known for drawing large, quality crowds. Those crowds had justified the higher exhibitor costs until the recession threw a wrench into that strategy.

David Causton, general manager of McCormick Place, could not be immediately reached for comment. McCormick Place is the largest convention center in North America with 2.6 million square feet of prime exhibit space. It tops the TSE’s 2009 World’s Top Convention Centers rankings.

To access the full list of recommendations from the MPEA interim board, click on the link above.

Reach Juan Ochoa, MPEA CEO, at (312) 791-7500 or jochoa@mpea.org; Aaron Bludworth at (513) 562-0432 or abludworth@georgefern.com