In an open letter addressed May 5, the Pennsylvania Convention Center Authority (PCCA) along with SMG, manager of Pennsylvania Convention Center, issued an ultimatum to its six trade unions including Carpenters Local 8, who went on strike May 1 over failed negotiations involving work-rule changes.
A tentative agreement reached on May 1 at 1:30 a.m. between union leaders and facility officials was rejected by facility board members, bringing the move out of the 2014 American Academy of Neurology Annual Meeting at the Pennsylvania Convention Center to a grinding halt. Although the Carpenters had originally agreed to return to work on May 2 under the tentative agreement, conditional on the retroactive application of any finalized agreement, law enforcement locked out workers from the facility, leading to the strike.
Later that day, all parties decided to extend the collective bargaining agreement until May 10 until the release of an open letter from PCCA, requesting all six of its trade unions accept an updated Customer Satisfaction Agreement by May 5 at 11:59 p.m. The updated agreement would remove “arcane limitations upon Exhibitors’ rights, reduces Exhibitors’ potential costs, and provides a skilled, experienced and coordinated workforce to serve [Pennsylvania Convention Center] Customers’ needs” in order to “modernize” and compete with comparable venues in other cities.
An Open Letter
May 5, 2014
To Pennsylvania Convention Center Stakeholders:
The Pennsylvania Convention Center Authority (PCCA) with SMG, the Center’s new Operations Manager, have been fully engaged since December 2013 in substantive negotiations toward a new Customer Satisfaction Agreement (CSA) with the six trade unions representing workers who set up and dismantle events at the Center.
Customers have indicated to the PCCA, SMG, and our partners at the Philadelphia Convention and Visitors Bureau (PHLCVB) that the status quo related to the Customer Satisfaction Agreement and work rules at the building is unacceptable and places us at a competitive disadvantage to peer facilities in other cities. Modernizing work rules is necessary so the Center can compete effectively with convention facilities in other cities and meet the needs of our customers.
The Board of Directors and management team of the Pennsylvania Convention Center has a fiduciary responsibility to the taxpayers of the Commonwealth to ensure that we have in place the best policies that maximize our ability to attract and retain customers and fulfill the Center’s promise as the leading economic driver of the region’s hospitality industry. The hours, wages and benefits that unions working in the Center receive are a by-product of our success. Equally significant are the tens of thousands of hospitality industry jobs in hotels, restaurants, transportation and related industries that rely upon our being able to attract customers to the Center.
This is why our discussions over the past several months with unions on an updated Customer Satisfaction Agreement have been of critical importance. This effort follows a similar effort in the summer of 2013 that made some progress and led to an agreement to continue discussions while operating under the current CSA. During this period, the PCCA and SMG had worked cooperatively and in good faith with the six trade unions and had made significant progress on some issues, such as specifically outlining and agreeing to work jurisdictions that will significantly diminish any potential conflicts on the show floor.
As these discussions continued, one of the six trade unions decided to strike on May 1, 2014, resulting in the loss of significant business to the Center. This decision irrevocably changed the dynamics of what is an acceptable Customer Satisfaction Agreement. The damage caused by this union’s decision to strike is immediate, far reaching and quantifiable by comparison with lost business directly resulting from the previous strike this past summer.
We know for a fact that our competitors are notifying potential customers of this strike and reminding them that we have now experienced two strikes within the span of one year. As a result, the PCCA and SMG now face even more significant challenges to convince committed customers that they should still bring their shows to the Pennsylvania Convention Center and to convince potential customers that it is worth the investment and risk to select the Pennsylvania Convention Center.
To that effect, yesterday the PCCA transmitted an updated Customer Satisfaction Agreement to our six union members, establishing a deadline of Monday, May 5 at 11:59 p.m. for their approval. This new Customer Satisfaction Agreement that removes arcane limitations upon Exhibitors’ rights, reduces Exhibitors’ potential costs, and provides a skilled, experienced and coordinated workforce to serve our Customers’ needs. The Board of Directors of the Pennsylvania Convention Center Authority will meet on Tuesday, May 6 at 8 a.m. to ratify this new agreement with the labor union signatories.
By providing a long-term Customer Satisfaction Agreement with these elements, the Center will be well positioned to sell Philadelphia and the Pennsylvania Convention Center and meet the steepened challenges we now face. Immediate action is our only opportunity to save tens of thousands of man-hours and millions of dollars in union wages and benefits inside the Center (not to mention the hundreds of millions of dollars in economic benefit to the region, the City of Philadelphia, and the Commonwealth of Pennsylvania) that will certainly be lost due to the cancellation of shows and refusal of other shows to consider Philadelphia as a destination.
We look forward to working with all of the signers of this new Customer Satisfaction Agreement to ensure the long-term success of the Center as one of the nation’s leading convention center venues, as a regional economic engine for our hospitality industry, and to deliver a world-class experience for all of our customers, both now in the future.
The following is a synopsis of where we are now and how we arrived at this point in our decision making process. We are prepared to meet to discuss any aspect of the process and status as requested.
The Center Currently Operates at a Competitive Disadvantage:
The Pennsylvania Convention Center (PCC) currently operates at a significant competitive disadvantage against similarly sized and priced markets, due in large measure to both the negative perception and reality surrounding the labor structure in Philadelphia. The SMG/PCC and PCCA staffs have spent a great deal of time with customers, prospective customers, and producers who will not consider the Center as a destination until meaningful changes occur. We can summarize their concerns into three major categories:
- The costs associated with the production of shows at the Center are markedly greater than those costs in major multi-trade Centers such as Chicago, New York, and Boston.
- The efficiency of the work flow, impacted by the jurisdictional alignment, and antiquated rules, is materially less than those experienced in other markets.
- There is a significant “hassle factor” associated with producing shows in Philadelphia, again associated with arcane work rules.
The current trend in the industry is toward more business friendly labor environments. Some of the key initiatives include:
- Legislative action in Chicago that led to a number of changes at McCormick Place resulting in unlimited exhibitor rights.
- Cooperative collective bargaining efforts in cities such as Detroit that have opened up exhibitor rights and reduced cost drivers such as minimum manning and overtime hours.
Action by the PCCA Board of Directors:
The PCCA Board of Directors recognized the competitive disadvantage and agreed as a body to address deficiencies in how we operate the Center. This was, among many considerations, an acknowledgement by the Board that we would be asking our partners in the six labor unions to accept reasonable change and help us to realize a new and more competitive environment. The Board also recognized that the Center would benefit by having a resident team of professionals with greater customer reach, broad industry experience, and the ability to implement best practices in our building to remain competitive.
As a gesture of good business and good will, the Board decided to “go first” in bringing about meaningful administrative and operational change.
- Since 2011, the Board has invested significant dollars to provide hospitality training to all members of show labor as a means to center our culture on hospitality and customer service.
- In March 2012, the Board approved a measure to eliminate the 8 percent markup on labor to: 1) reduce the cost to customers, 2) establish transparency in labor billing, and 3) dispel the notion that labor in Philadelphia was prohibitively more expensive than in other peer facilities.
- In August 2012, the Board took action to solicit competitive proposals for a private operations management firm.
- In June 2013 the private operations management contract was awarded to SMG.
- SMG took control of the operations management function in December 2013 and is currently operating the Center.
New Management Efforts to Date:
The SMG/PCC staff understood immediately that changing the perception (reality) of labor issues would take a much broader effort than a collectively bargained agreement. Therefore, since SMG began managing the operations at the Center, a number of initiatives have been implemented to improve performance, including:
- Establishment of a Labor Management Department comprised of well-known industry professionals and tasked with working with contractors, show management and the labor unions to ensure a smooth and efficient work flow.
- Increased the amount and training of management personnel involved in ensuring a smooth production process.
- Establishment of a team focused on providing information and guidance to Show Management to review and audit labor cost billing to ensure accuracy and transparency.
Negotiation Process and Timeline:
The negotiation process over the past few months focused on developing an agreement acceptable to all six trade unions; provides for material and invaluable improvements to the current conditions; and does so without creating a public or political dispute that would harm further the reputation of the Center, the City, and the Commonwealth.
Therefore, the Center’s strategy included the following:
- A significant “shuttle diplomacy” effort with leaders of each of the six trade unions, ensuring that we were cognizant of their unique issues, while building consensus on the larger goals.
- A negotiation strategy that included easily achievable goals given the existing climate, while providing the leadership of each of the trade unions with an agreement that it could support.
- Creating a great deal of good will through the employment of lengthy group negotiation sessions.
Progress in Negotiations:
Our negotiations produced significant gains and improvements to enhance the workflow and overall customer satisfaction. Those improvements include:
- Expansion of the CSA to cover many areas that are addressed in individual Collective Bargaining Agreements (CBA)
- Comprehensive jurisdictional document that smooths the workflow and eliminates inconsistencies
- Clarification of Customer and Contractor Rights with the IBEW, Teamsters, Laborers, and IATSE
The new Customer Satisfaction Agreement incorporates these provisions as discussed over the course of the Center’s negotiations with the labor unions. The new CSA – in response to damage inflicted by the May 1 decision by one Union to strike — also addresses a number of other issues important to customers that are needed to restore customer confidence, restore the viability and reputation of the Center, avoid the loss of more customers and business, and fulfill the economic promise of the Center as an economic engine for the region. These changes include:
- Improved call by name provisions for the union workforce resulting in a Core Workforce comprised of “pacesetters” in the building
- Uniform drug and alcohol testing protocols
- Expanded exhibitor rights as they relate to work rules regarding use of battery power tools, ladders, and the ability of customers to perform setup work for booths up to 600 square feet in size.
The message has been clearly articulated that we must forge new agreements to achieve a more customer-centric approach and to make the Center more competitive. We appreciate the willingness on the part of large majority of unions to remain at the table in productive negotiations over the past few months and put in place a new CSA that addresses customer concerns and makes the Center more competitive.
It is important to note that our commitment to elevating the Center to competitive industry standards is unwavering. We have anticipated and are prepared for a range of outcomes, but prefer a cooperative path forward. If successful, we will secure hundreds of thousands of hospitality and tourism related jobs, and generate hundreds of millions of dollars in economic impact to the City of Philadelphia, the region, and the Commonwealth of Pennsylvania. However, any outcome that is perceived by the industry to be less than a major step forward will have lasting negative effects on the local hospitality industry, the Center, the City and the Commonwealth.
We need your support and hope you will join with us in this effort.
See related articles:
Smooth move out under new Philly work rules
Carpenters and Teamsters ousted from Pennsylvania Convention Center
Carpenters’ strike at the Pennsylvania Convention Center becomes lockout