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Labor Issues and the Cost of Exhibiting Heat up Again
at the Philadelphia Convention Center

By Marcia Gelbart, The Philadelphia InquirerMcClatchy-Tribune Regional News

Sept. 05, 2010--The rules that govern workers at the Convention Center have long confounded planners wishing to bring their business to Philadelphia. Even those who have learned the byzantine code marvel at what it takes -- and what it costs -- just to set up and dismantle an exhibit.

Consider the ubiquitous laptop. If it is for personal use, an exhibitor can set it up. For audiovisual purposes, a member of the stagehands union must do the job, at $37 an hour. And if it is used to register conventioneers, the task falls to a union electrician, at $46 an hour.

Or consider the cost of a booth, the mainstay of conventions. When you add up everything, the work of a carpenter comes in at $107 an hour in Philadelphia -- more than $24 higher than the national average and more costly than in Washington, Boston, Chicago, and Baltimore, according to a 2009 survey by an industry trade magazine.

Now, with the $786 million publicly funded expansion nearing completion, the Pennsylvania Convention Center Authority is seeking sweeping changes to simplify the rules that govern the building's union workforce and, in the process, reduce costs for hosting events. Among the most contentious proposals: Cutting the number of unions from six to as few as three and making the center's workers employees of the state.

The authority argues that changing work rules and imposing a different management structure for the labor force are needed to make the bigger center, scheduled to open in March, more competitive in a challenging market. But in Philadelphia, where unions are a political force, the proposals have created a showdown between the Convention Center's top officials and one of the city's most potent labor leaders.

"We need a workforce with a hospitality mind-set in this building if we are going to compete nationally," said Ahmeenah Young, president and chief executive of the Convention Center since 2008. "I don't care what union you are in. We can't go into the new building with a hangover of problems from this one."

John J. "Johnny Doc" Dougherty, business manager of Local 98 of the International Brotherhood of Electrical Workers, contended that Young's true agenda was to decimate his union's share of work at one of the region's most reliable job sites.

"Instead of treating us like partners, the Convention Center management has decided to engage in this cloak-and-dagger, clandestine-type operation to cut some unions out of the center," Dougherty said.

Also embroiled in the fight is State Rep. Dwight Evans (D., Phila.), who appointed Young and stands firm behind her proposals.

"The model should change. There is no debate about that," said Evans, chairman of the House Appropriations Committee. "The only question is who will be there, and who will be doing the work."

Built to attract tens of thousands of people to sleep in Philadelphia hotels, eat in its restaurants, and buy merchandise in its stores, the 17-year-old Convention Center is a chief economic driver in the region.

The facade of the expanded building looms over Broad Street, stretching the center an additional block between Arch and Race Streets. It is bordered on the east by 11th Street and will offer convention planners a total of one million square feet of meeting and exhibit space, or 60 percent more than now.

With so much spent to add so much room, a lot is at stake.

"If we don't stay competitive and if we are not cost-effective in the customers' eyes, you bet we won't win," said Jack Ferguson, incoming president of the Philadelphia Convention and Visitors Bureau, which books the center's conventions.

He argued that the workforce structure needed to be altered to reflect cost pressures on the shrinking meetings industry -- or risk losing conventions to other cities.

"The customer says to me, 'Why in Philadelphia does it take six people to do something when in other cities it might take one or two?' " Ferguson said.

It is a familiar refrain from convention planners, who face hassles and higher costs, often because of outdated labor rules, in a very competitive marketplace. In May, under similar pressures, Illinois lawmakers restructured the workforce at Chicago's McCormick Place, which has the most exhibit space of any U.S. convention center. The new law retains all five unions but cuts crew sizes and overtime hours and places the workforce under private management. It also removes restrictions on how much work exhibitors can do on their own.

Young applauded those changes. "Our customers don't want to talk about jurisdictional rules that impede them from doing business," she said. "And, more importantly, they have choices."

There are 378 convention centers nationwide, including significant players in cities that compete with Philadelphia, among them Boston, Washington, Baltimore, and New York. In such an environment, the reputation of a center as friendly or challenging is well-known.

Dave Larsen, director of meetings for the American College of Chest Physicians, which was last here in 2008 with 7,000 people, offered his view of Philadelphia:

"It is one of the more difficult convention destinations. I'm not blaming anyone, but it's not an experience you have to go through in every city."

A familiar fight

If the battle over work rules sounds familiar, it is because it was fought seven years ago, when labor issues threatened the expansion. The result was a 21-page agreement aimed at creating a more efficient and less costly workforce. The number of workers varies based on the size and complexity of a convention, and can range from a few dozen to a few hundred.

Evans and Convention Center officials said that settlement, named the Customer Satisfaction Agreement and in force until 2013, had fallen far short of its goals.

The 2003 rules were designed to quell jurisdictional disputes among the center's six unions: Local 98 of the International Brotherhood of Electrical Workers; the Metropolitan Regional Council of the United Brotherhood of Carpenters and Joiners; Local 332 of the Laborers' International Union; Local 107 of the International Brotherhood of Teamsters; Local 161 of the International Association of Bridge, Structural, and Ornamental Iron Workers; and Local 8 of the International Alliance of Theatrical Stage Employees.

The agreement also contracted with the Elliott-Lewis Corp. to provide workers to convention exhibitors and enforce the terms. The idea was to create transparency in billing and prevent independent contractors hired by convention exhibitors from adding to the cost of labor.

Based in Northeast Philadelphia and created nearly a century ago, Elliott-Lewis is a mechanical services company that does work regionwide, often with the same unions that work at the center. Before becoming the labor supplier, the company oversaw the mechanical systems in the center. It is also the building's in-house electrical contractor.

Young, Evans, and others say the center needs more direct control of the workers. Evans, who years ago supported putting workers on the state payroll, described the 2003 agreement as "a political settlement" created to help secure funds for the expansion.

"It was not necessarily in the best interest of the center itself, from a hospitality perspective," he said.

Union leaders vehemently disagree. Michael Barnes, business agent for the stagehands union, said the problem was not the agreement but its lack of enforcement.

"Management has failed to implement portions of the agreement that would lower costs," he said.

The authority has hired two Center City law firms -- Blank Rome and Ballard Spahr, where Gov. Rendell once worked -- to explore whether, and how, it can amend the agreement.

For Young, who joined the Convention Center authority in 1987, the ability to exert more control over workers would give her -- and Evans -- more influence in hiring. Right now, that is chiefly determined by the unions.

Rendell has remained publicly quiet on the proposals. In the past, he pushed for the center to be run by a private company, an idea Dougherty also supports.

Mayor Nutter, the authority's chairman from 2003 to 2007, has been more forthcoming, acknowledging that change is coming. "We have to stay focused on three issues: customer satisfaction, superior performance, and low costs," he said. Figuring out a new model is "complicated but achievable," Nutter said.

Measuring success

So how competitive is the center, and how has it performed? Has the 2003 agreement addressed the labor issues, as intended, or has it perpetuated a system that makes the center less competitive?

Although the center generates money -- its operating revenue was about $9.4 million last year -- it routinely runs a deficit, with operating expenses climbing last year to $28 million. But that is not a yardstick of success, since the facility was not built as a moneymaker in and of itself.

Under an arrangement with the city, Philadelphia subsidizes the center each year to cover the operating deficit and pay debt service on bonds used to cover initial construction costs. Those subsidies have been steady in recent years, ranging from $31 million to $39 million, but dropped last year to $22.7 million because of a structural change in the debt payments.

If measured by the number of meeting planners willing to rebook a convention, the center has improved but still lags by national standards. In 2008, for example, 32 percent of planners said they would return to Philadelphia, up from 8 percent in 2001. The industry standard is about 40 percent.

But establishing whether the 2003 agreement functioned as intended is difficult, in great part because the Convention Center authority did not produce the required data. The 2004 state law that governs the center says a performance audit should examine labor costs and include comparisons with other convention centers. It also requires performance reports to document customer satisfaction, work-rule violations, and actions taken to enforce work rules.

Neither the audits nor the reports were ever done. "We are out of compliance," Young said, adding she would take steps to make amends.

Authority chairman Thomas "Buck" Riley also acknowledged the errors, attributing them to other issues that had occupied the board, including securing expansion funding and completing an operating agreement for the new building. "I'm not even aware that we had any other reports due to the commonwealth," he said.

Another part of the agreement, creating a "unified workforce," was never fully implemented. One aim was to allow Teamsters, laborers, and carpenters to perform one another's work without regard to union membership.

Officials at Elliott-Lewis acknowledge that this was not done, in part because varying skill sets among workers made it difficult. Carpenters, for example, don't normally operate forklifts. However, they said another aim of unifying the workforce -- decreasing jurisdictional disputes -- had been met. There have been no work stoppages since the 2003 agreement.

With no independent assessment of the agreement available, the most relevant information may come from Tradeshow Week, a publication that covered the convention industry before ceasing publication recently.

In its 2009 annual survey, Philadelphia's labor costs were generally higher than costs in many competitor cities, except for Boston and New York, according to the publication. Philadelphia had among the highest rates for operating forklifts, ranging from $340 to $518 an hour, depending on what was moved.

The survey was based on responses from trade-show contractors, who hire union workers from Elliott-Lewis, and included their charges as well as actual worker wages and benefits.

Local labor officials called the survey misleading. For instance, the magazine listed $107 as the hourly rate for carpentry work, when Elliott-Lewis charges $77. The difference is the average markup by contractors.

There is anecdotal evidence as well, provided by planners whose experience allows them to compare host cities. Although the work rules here continue to baffle, some take the longer view and find improvements.

"Philadelphia, like many cities, used to have unique loopholes that can make things difficult," said Bobbie Turner, convention director of the American College of Physicians, which met here in 2009.

In a qualified assessment, Turner said: "I think they eliminated quite a few of those obstacles."

Coming Tuesday Convention Irony

Labor unions, which have big annual conventions, aren't coming to Philadelphia. Why? Because there are too few union hotels. The city's two big convention headquarters hotels -- those closest or attached to a convention center, in this case the Philadelphia Marriott Downtown, above, and the Loews Philadelphia across

Market Street -- are nonunion.

Contact staff writer Marcia Gelbart

at 215-854-2338 or



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