SMG is inheriting a labor-union problem at the Pennsylvania Convention Center, according to Tom Ferrick of AxisPhilly.
SMG manages convention centers across the nation and has taken over the management of convention centers in Chicago and Detroit in the past few years. The switch to private management occurred after reports that the newly expanded convention center was not going to book anywhere near the number of large conferences and conventions that expansion advocates originally projected.
Ferrick reported that the convention center was dramatically failing to attract the number of conventions promised at the start of the $780 million expansion citing labor costs as the real problem. While the PCC has 20 major conventions booked this year, the number drops to only eight in 2016. That drop-off also affects the hotel industry: The nights booked for conventioneers goes from 340,000 this year to 237,000 in 2016.
“The expansion brought the facility to national prominence as far as the design and the space and all the amenities that Philadelphia has to offer. Everyone involved realizes it has the potential to be one of the top convention destinations in the country,” Bob McClintock, senior vice president of convention centers at SMG, told Media Trackers. “But the cost of producing in Philadelphia has caused it to lose some of its market share.”
The carpenters union is the real issue, skyrocketing costs for conventioneers, Ferrick wrote. He also noted that a number of large companies had cancelled or postponed return trips to the convention center because of bad labor experiences and higher-than-expected costs. The Customer Satisfaction Agreement between convention-center unions and the PCC, which was intended to deal with labor complaints and prevent surprise expenses, expires in July.
Now, the question everyone is asking: How will privatizing the convention center help with labor issues?
Current convention center CEO Ahmeenah Young admitted that bookings were down, but denied that the unions were the issue: “To my knowledge, every single union in this building is willing to work toward resolving these issues,” she told KYW Newsradio.
And that’s what SMG intends to do: work with the labor unions to provide better service.
Gregg Caren, senior vice president of strategic business development at SMG, told The Philadelphia Tribune that SMG looks at “collective bargaining units around the country as business partners.” The article notes that SMG has dealt with labor unions in Pittsburgh, Providence, Chicago, and Detroit.
“There are two sides to any business relationship and we really need sort of a philosophy of constructive engagement. One of the best things about Philadelphia and about labor is that we have an incredibly skilled and capable workforce here in Philadelphia which is critical to the success of the center,” Caren said. “The key for us will be to really address the factors that will really drive exhibitors and shows back to Philadelphia and give people less reason to consider any obstacles to doing business here. At the end of the day, if the focus is on the customer and running it like a business, then there has got to be a positive way forward for management and labor.”
McClintock pointed out that not only has SMG worked with labor unions in several of the convention centers that they manage but they have also worked with them from the very beginning with the Moscone Center in San Francisco.
“Probably the best line I’ve ever heard was from a meeting planner from San Francisco who said, ‘Nobody ever talks about the Moscone Center as ‘that union building,’” McClintock said. He continued: “The key with labor in any community is cost certainty — that the customer knows exactly what their costs will be going in.”
McClintock said that SMG is involved in the labor negotiations regarding the soon-to-expire Customer Satisfaction Agreement.
“Philadelphia made huge inroads in the Customer Satisfaction Agreement,” he said. “The discussions that are ongoing are about moving on to the next level by looking to improve the production environment and provide a cost-effective and cost-certain environment.”
Under SMG management, the unions at McCormick Place in Chicago agreed to major labor concessions. A 2011 press release from McCormick boasted that the new work rule reforms make them “the most customer-friendly convention and tradeshow destination in the country.” Reforms included allowing managers and exhibitors to do the work in their own booths of any size, decreasing the amount of overtime during the workweek, allowing exhibitors to load and unload their own vehicles, and reducing crew sizes from three to two.
SMG also recently partnered with Synterra, Ltd. to address minority participation in the labor workforce, among its other responsibilities. Synterra Ltd. is a private firm headed by Bill Wilson, that will help recruit, train and subcontract in the convention center.
“Bill and his group already have a team established that has shown a proven value to the community in making sure that any projects — whether it’s a short term or long-term project — reflects the diversity of the community,” Caren said.
In 2008, the labor unions working on the convention center expansion signed a Project Labor Agreement that stated they would make an effort to have a workforce composed of 50 percent Philadelphia locals, 25 percent African American, 10 percent Hispanic, 10 percent women, and 5 percent Asian. The convention center webpage states that women and minorities made up 35.2 percent of the total number of those employed, 32.8 percent of the skilled laborers, and 48.7 percent of the laborers.
In comparison, the 2011 census shows that African Americans make up 43.4 percent of Philadelphia’s population. Hispanics make up 12.3 percent while Asians make up 6.3 percent.