Show Organizers React to MPEA Announcement – Still Wait and See

RENEE DIIULIO, SENIOR EDITOR
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Chicago, IL – Following much anticipation, the Metropolitan Pier and Exposition Authority (MPEA) released information yesterday regarding its plans to effect change in the Chicago convention market and specifically labor at McCormick Place. Unfortunately, its announcement, while summarizing major points of proposed legislation, continued to leave many questions in show organizers’ minds. Few have had time to digest all the information in the 74-page document which comprises Amendment to Senate Bill 1369.

The International Association of Exhibitions and Events (IAEE) notes in its response to the MPEA announcement, “The current legislative proposal unfortunately does little to address this volatile issue. In fact, it is entirely likely that over time, the inflexibility of a legislatively imposed solution will only serve to drive rates even higher and to do so with very little prospect for eventual relief.” [For the full statement from IAEE, please see below.]

Show organizers would rather see the utility open to the market. “The free marketplace has been proven time and time again to be the most effective remedy to unreasonably high prices. If you encourage competition among providers, the rest always takes care of itself,” says Steven Hacker, CAE, IAEE president.

Past requests for this competition, however, have met resistance, and organizers have expressed surprise that the issue has not been addressed forcefully. Some attribute this to the revenue the service brings to the center – revenue that would have to be made up if lost. Show organizers and service providers are pushing to be part of the discussions in Chicago so that they can help find a workable solution.

“How can you be against reform?” asks one show organizer, a sentiment echoed by many. Another comments, “Chicago has improved so much over the past few years, but there is still room for improvement. We would like to do this with MPEA in order to make sure it’s successful.”

Success is everyone’s goal, including McCormick Place, Navy Pier and the city of Chicago, which generates high revenues from trade shows and conventions. In 2008, the city hosted 45.6 million domestic and overseas visitors, including 11.7 million domestic business travelers, 32.4 million domestic leisure travelers and 1.3 million overseas visitors. Together they contributed more than $11.8 billion to Chicago’s economy, with $5.7 billion of that attributed to domestic business travelers, according to the Chicago Convention and Tourism Bureau.

 

The Process
Show organizers do not necessarily want to leave Chicago. Some have chosen the city because it is central to the industry they serve. But they would like a say in the final solution, and they would like more details as to how the new system will function.

IAEE has expressed concerns about the legislative aspect, saying, “Seeking legislative relief for marketplace issues always has the potential to be troubling.” Issues can arise with revisions (which are “difficult to make once passed”), bargaining (compromise can “dilute real solutions”) and unintended consequences, particularly with the urgency of the situation.

The organization is urging a summit meeting of key players, including convention leaders, customers, contractors and exhibitors. Show organizers agree. Peter Eelman, vice president of exhibitions and communications for The Association for Manufacturing Technology (AMT), is happy to see action on the subject, though he would like to see a better cost structure.

“We all recognize there have to be changes in the way business is conducted. I think this is the first iteration of what could be a number of iterations to end up in the place where customers are getting better value. As a customer, I’m always in favor of that,” says Eelman. Regarding his customers – who are exhibitors in the IMTS/The International Manufacturing Technology Show, he adds, “I think most exhibitors would agree to wait and see where it leads.”

Reach Peter Eelman, AMT, at (703) 827-5264 or peelman@amtonline.org; Steven Hacker, IAEE, at (972) 458-8002 or shacker@iaee.com

 

Full Statement from the International Association of Exhibitions & Events (IAEE):

Today’s announcement by the Metropolitan Pier and Exposition Authority (MPEA) of its intention to seek legislation to resolve labor issues at its facilities, McCormick Place and Navy Pier raises very serious concerns.

First, and fundamentally, seeking legislative relief for marketplace issues always has the potential to be troubling. Proposed remedies that are embedded into state or federal statutes can be difficult, and often impossible, to revise later. The legislative process itself is a “give and take” procedure that is always ripe with opportunities for trade-offs that may be necessary to secure votes but that can dilute real solutions. Furthermore, the uncertainties of the legislative process make it impossible to predict what unintended consequences may arise along the way.

The urgency with which the legislative remedies are being sought is also concerning. It is bad enough to be taking matters that are best resolved in the commercial marketplace to the legislature but trying to rush a solution through the law-making process only invites new, unpredictable and potentially destructive legislative actions.

At the core of customers’ concerns has been the extraordinarily high electrical labor costs at MPEA facilities. This has been the key issue that has given many exhibition and event organizers and their customers such cause for concern. It has, no doubt, also served to recently convince several major events to seek alternative venues to those in Chicago. The current legislative proposal unfortunately does little to address this volatile issue. In fact, it is entirely likely that over time the inflexibility of a legislatively imposed solution will only serve to drive rates even higher and to do so with very little prospect for eventual relief.

Creating several layers of government involvement in the exhibition and events industry clearly cannot be viewed as a practical solution. The experience in those few venues that have chosen similar legislated solutions only proves this.

Prior to seeking legislative release, we urge the MPEA to convene a summit meeting of the task force of convention leaders, key customers, contractors and exhibitors in order to fashion together solutions that can, and must, remain beyond the grasp of the legislature. Based on statements made by the MPEA about the creation of this task force, we support this long-term initiative to address customers’ concerns. Opening the doors of MPEA facilities to electrical service contractors who can then compete against each other for the business of organizers and exhibitors seems inherently favorable to any legislated solution and is only one element that can immediately bring costs down.

We believe there is far too much at stake to risk future success on the presumption that elected officials can fix a marketplace issue that needs remedy.