* Almost the entire Illinois political world freaked out yesterday after this judicial ruling came down…
McCormick Place officials have lost a legal battle to keep labor changes in place temporarily while they appeal an earlier court ruling invalidating the measures.
U.S. District Judge Ronald Guzman issued a permanent injunction on Wednesday preventing McCormick Place from operating under labor rules imposed by the state legislature about a year ago.
The labor changes have allowed exhibitors to do more of their own booth setup, and have also limited labor overtime and crew sizes. The provisions, aimed at cutting exhibitors’ costs and hassles, were popular with trade show exhibitors, and led to new and renewed show contracts for the convention center.
Guzman ruled in March that the National Labor Relations Act pre-empts states from enacting legislation that would interfere with the ability of private-sector employees to negotiate employment terms. Most trade union employees who set up and tear down shows work for private contractors.
* Everybody who is anybody immediately signed onto a letter to trade show organizers assuring them that they were on the case…
The state’s and city’s top political leadership — including Democrats and Republicans — is pledging to do “whatever it may take” to preserve McCormick Place labor reforms that are under fire in federal court.
In an extraordinary letter to trade show organizers, Mayor Rahm Emanuel, Gov. Pat Quinn and the four top legislative leaders say they “are aware of the uncertainty” caused by U.S. District Court Judge Ronald Guzman’s decision to overturn the reforms.
That, says the letter, is “why we are committing to provide you the certainty you need to bring your show to our state. We want you to know that this effort has the complete and bipartisan support of state and city leadership, and we pledge to take whatever steps are necessary to provide you that certainty.”
* McPier will ask an appellate court to stay the judge’s order, but Judge Guzman doubts they have much of a chance…
In his ruling Wednesday, U.S. District Court Judge Ronald Guzman said it’s unlikely that MPEA will win its appeal.
“In sum, defendants have some chance of success on appeal, but it is not strong enough to outweigh plaintiffs’ interest in obtaining relief and the interests of the public and other stakeholders in eliminating the cloud hanging over the statute,” he wrote. “Therefore, the court declines to enter a stay.”
* And, as usual, everybody continued to refuse to recognize what’s really driving up costs…
Trade-show managers and exhibitors had complained for years about the high costs of hosting trade shows at McCormick Place, which they blamed on complex, restrictive union work rules. A double whammy of a full-blown recession and the threat of a trade-show exodus out of Chicago last year pressured the Legislature, and the governor, to intervene. In May 2010, the General Assembly adopted the reforms and named the new McPier board.
The reforms expanded exhibitors’ rights to put up their own booths on the show floor; reduced labor crew sizes under new rules of “straight” time, overtime and double-time provisions; and changed in-house electrical contractor operations, including pricing and service delivery. The labor changes prompted five trade shows to recommit their conventions to McCormick Place and several others to sign on.
* What’s the biggest cost driver at McCormick Place? It’s the huge markups by private contractors. And that continues unabated…
Trade associations and exhibitors likely will pay more for electrical services under agreements that keep McCormick Place electricians on the job but allow two private contractors to mark up the cost of the electricians’ work, Crain’s has learned.
The agreements appear to flout state legislation passed last year that requires McCormick Place to provide electrical labor at cost but opened the door to competition from the contractors, Las Vegas-based Global Experience Specialists and Dallas-based Freeman. The law also allows trade show exhibitors to choose the lower-cost McCormick Place option over potentially more expensive electrical services offered by the contractors.
Under the new arrangement, McCormick Place electricians will continue to work at cost, but their services will be billed through the general contractors, which are free to mark up the price of labor and materials. Exhibitors no longer will be able to choose among competing electrical providers.
* And the duopoly is getting stronger…
News of the electrical deal comes as Freeman continues to consolidate its hold on the trade show industry by acquiring two competitors, Champion Exposition Services and George Fern Exposition & Event Services.
Freeman’s acquisitions further strengthen the contractor’s hand at McCormick Place. Between Jan. 1, 2009, and mid-June of this year, Champion served as the general contractor for 12 McCormick Place trade shows, including the Chicago Boat, Sports and RV Show. George Fern ran one trade show, the Rock and Roll Chicago Race Expo.
Adding those shows to Freeman’s stable would give the company 82 of the 153 shows at McCormick Place in that period, or about 53.6%. With the 44 shows managed by GES, the two companies will now control four out of five McCormick Place shows.
The Justice Department’s anti-trust division really needs to take a look at this situation.
- Loop Lady - Thursday, Jun 23, 11 @ 11:07 am:
I am afraid that this issue could be the death knell of trade shows at Mc Cormick Place…
This issue will only stoke the anti-union sentiment running rampant in the MSM of late…
- And I Approved This Message - Thursday, Jun 23, 11 @ 11:18 am:
The utterly unscientific world of predicting what juries will do and when they will do it is a world that includes reading tea leaves, applying mathematical principles, examining goat entrails, tarot cards, historical precedent, navel gazing and TV crime show analogies, to name a few. I think the only reliable predictor is the day the jury shows up dressed in clothes nicer than they normally wore is the day they announce the verdict.
- And I Approved This Message - Thursday, Jun 23, 11 @ 11:19 am:
Whoops, posted on the wrong thread! Sorry.
- Plutocrat03 - Thursday, Jun 23, 11 @ 11:21 am:
Wait ’till you see how much the taxpayer will have to shell out to retire all the McPier bonds with no revenue from the trade shows…
Why are GES and Freeman so dominant here? Does it take someone who is sent to manage a show without these folks?
The labor agreements should probably stand, but a major focus should be these tow companies who profit from the public’s investments in infrastructure.
- wordslinger - Thursday, Jun 23, 11 @ 11:22 am:
–With the 44 shows managed by GES, the two companies will now control four out of five McCormick Place shows. –
And that’s why no one at MPEA, the state, or city, can can get tough with them. There’s a glut of convention space around the country. Freeman and GES have enormous influence as to where shows locate.
- dupage dan - Thursday, Jun 23, 11 @ 11:43 am:
Great info here, CapFax! Really cuts thru the bull. I am usually against anit-trust action since the market usually works these things out but in this closed environment that is not likely to happen. So, the customers get it from GES with higher prices and the electricians get it in lower wages from GES and guess who gets the best of it? GES. And since they are involved country-wide they get the best even if the show moves to another venue controlled by…GES.
- Statesman - Thursday, Jun 23, 11 @ 12:03 pm:
As shows exit McCormick place it will build the rationale for why it should become Chicago’s casino… Here comes the Set up.
- Loop Lady - Thursday, Jun 23, 11 @ 12:08 pm:
not a bad idea Statesman, but it will be a REALLY big casino/hotel complex if it happens…
- Angry Chicagoan - Thursday, Jun 23, 11 @ 12:08 pm:
Thanks for pointing this out about the private contractors’ markups. I’d also like to know the contribution from McPier’s debt load from their enormous expansion. It seems to me that overbuilding at McCormick must surely have led to higher costs.
- x ace - Thursday, Jun 23, 11 @ 12:09 pm:
Anti-Trust Violators and they blame the Union workers. Start the investigation now.
- wordslinger - Thursday, Jun 23, 11 @ 12:16 pm:
–It seems to me that overbuilding at McCormick must surely have led to higher costs.–
MPEA looks to break even on operations, including space leases. The debt service comes from a portion of hotel, restaurant and livery taxes.
When those fall short, the state’s general fund picks up the slack.
- Union Free - Thursday, Jun 23, 11 @ 12:18 pm:
when will all of you liberal union lovers learn that the Union establishment will do everything to preserve the jobs busting status quo- we need progressive leaders who understand that the day of union power is so yesteryear and to survive in this environment we need flexibility not job killing union work rules
- wordslinger - Thursday, Jun 23, 11 @ 12:22 pm:
Union Free, you didn’t read too deeply into the post, did you?
- Dan Johnson-Weinberger - Thursday, Jun 23, 11 @ 12:25 pm:
One interesting idea out of Crain’s report on this topic: require the associations that book the shows to disclose the kickback they get from Freeman and GES. That’s why the associations keep quiet while the exhibitors end up with the bill (according to the Crain’s report).
- 47th Ward - Thursday, Jun 23, 11 @ 12:25 pm:
Lol Word,
I think he was taking the headline literally so he screamed about the wrong thing.
- JN - Thursday, Jun 23, 11 @ 12:39 pm:
LOL, what anti-trust division? Maybe Illinois should apply for EU membership while we’re at it??
- Yellow Dog Democrat - Thursday, Jun 23, 11 @ 1:24 pm:
Rich -
If you’re expecting the Tribune to deviate from their “everything is the unions’ fault” storyline, don’t hold your breath.
- Redbright - Thursday, Jun 23, 11 @ 1:24 pm:
Freeman and GES are dominant in every convention city. I’m not sure people get that. They don’t care if conventions don’t come here. They get the biz wherever it goes.
- Rich Miller - Thursday, Jun 23, 11 @ 1:29 pm:
===They don’t care if conventions don’t come here. They get the biz wherever it goes. ===
The second sentence is true. The first sentence is not. They can jack up rates far higher in Chicago than elsewhere. Chicago is where they make their money.
- Bemused - Thursday, Jun 23, 11 @ 4:25 pm:
This blame the Union stuff has been going on for a long time. The sad part is it has been repeated so often in some circles people shake their head and go yep without even looking into the facts. I am glad that has not happened here.
Another example I can think of goes some years back. In a magazine article an actor that I still think is pretty good was asked why so many movies were filmed overseas or in Canada. His answer was the high cost of things like local teamsters.
This from a guy who I think at the time got about 10 Mil a movie. And I would bet a dollar to a doughnut about as much money was spent on snow as teamsters during productions in that timeframe.
- railrat - Thursday, Jun 23, 11 @ 4:27 pm:
just asking? is it the Union employees that carry the lunch box everyday, that mark up the margins? or could it be the Contractors that are taking advantage of the language in both labor and Venue agreements? also interesting fact for investigation how about the former Union members that receive 3 pensions because of “language” ie. union guy works for city dept. union guy goes to work for union or becomes a legislator union guy cashes in on 1) City Pension 2) Union Pension 3) Legisative, Agency or Union International Pensions!! Now there are the pigs at the trough!!
- Redbright - Thursday, Jun 23, 11 @ 5:21 pm:
I used to do conventions exhibits for a Fortune-50 company. It’s been a while but I don’t recall Chicago being any more or less expensive than anywhere else, at least in terms of booth budget. (Hotel rooms are a different thing, although also a racket everywhere.) We used GES nationwide.