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Saturday, March 5, 2011

Paul Davies: Expanded center, same problems

Would you invest $786 million in a business that lost millions every year, charged more than most of its competitors, and left many customers angry and unwilling to return?

Well, you just did.

Welcome to the bigger, but not much better, taxpayer-financed Pennsylvania Convention Center.

State and local officials cut the ribbon Friday on the expanded Convention Center. The event marked the end of the most expensive public works project in state history.

The added space is expected to help the center compete for bigger conventions, which should attract more visitors to Center City hotels, restaurants, and retailers.

But the expansion comes with risks. The recession has hurt the convention industry. Customers are mobile and know it’s a buyers market.

Even before the slowdown, the center lost millions most years. The losses are projected to grow in the short term due to increased debt service to pay for the expansion. The hope is that more and bigger conventions will cover the increased costs.

But it’s not a matter of building a bigger hall and the customers will come.

Amazingly, the state plowed ahead with the $786 million expansion without resolving the cost and labor issues that have plagued the building for years.

According to a recent study, the price of labor at the Convention Center cost the city’s hotel industry 400,000 nights of business between 2007 and 2009.

The high cost of labor was the main reason dozens of conventions went to other cities.

Cockamamy work rules by the six labor unions also chase away business. No city has so many unions working at a convention center.

Consider the laptop computer rules. Exhibitors can set up laptops for their own personal use.

But if a laptop is used for audiovisual purposes, then a member of the stagehands union must do the job. Cost: $37 an hour.

Using a laptop to register conventioneers requires someone from the electricians union at $46 an hour.

Just to set up a booth, the carpenters charge $107 an hour, almost 30 percent more than the national average.

It’s not just nonunion cities that are cheaper. Some costs are higher here than in Chicago, Boston, and Washington.

Exhibitors also complain about shabby treatment from the unions.

Ahmeenah Young, the center’s executive director, is negotiating a new agreement with the unions. She declined to discuss details but said workers need to know they are in the hospitality industry. But deals and promises have been made before, with improvements being incremental at best.

And while the unions are part of the problem, they don’t run the center. (It just seems that way.)

Where’s the management? They’re in charge of attracting business, managing costs, and ensuring that happy customers want to come back.

The problem is that the Convention Center is run by a gaggle of politicians and their cronies. The state owns the building but the board is made up of political factions from the city, state, and suburbs. Sort of like the DRPA without the guys from Jersey.

The board doesn’t know much about running a large entertainment venue. Even Young, the executive director, is a political ally of state Rep. Dwight Evans. Some other key management jobs have seen lots of turnover and positions left unfilled during the expansion.

On top of that, the management and the board don’t really oversee the conventions, they just maintain the building. Instead, a show promoter who works on behalf of the convention exhibitor and a labor supplier work with the six unions to set up and dismantle the shows.

As a result, everyone is working in their own self interest. When labor troubles flared up years ago, the board negotiated a so-called customer satisfaction agreement with the unions.

But the agreement has not been well enforced. Elliott-Lewis, the private company hired to manage the unions, gets paid 8 percent of the labor costs. That leaves no incentive to reduce those costs.

Can the problem be fixed?

There was talk of replacing the union workers with state employees. That may ease the union turf wars. But it is unlikely to lower costs or improve customer service. (See State Stores.)

For years, John Dougherty, the head of the electricians union, has called for privatizing the center. He suggested putting Aramark or Comcast Spectacor in charge. Both companies are headquartered in Philadelphia and run facilities around the country.

Dougherty may be right. The current arrangement is too costly and inefficient. So maybe it’s time to remove the politics from the center, and hire professionals.

Then taxpayers could feel they made a wise investment.

E-mail deputy editorial page editor Paul Davies at pdavies@phillynews.com.
Posted by Paul Davies @ 12:05 PM  Permalink | 1 comment
Comments   
  • 0 like this / 0 don't   •   Posted 9:30 AM, 03/07/2011
    A few corrections
    Electrican is almost $100 and hour with Ellott Lewis and convention center mark up
    Carpenter does not make $107 an hour that is with the contractor's and the Elliott Lewis mark up.
    Convention Center let go most of the managers who ran the day to day operations in the building.
    — gophilly66


1 comments
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