Chicago Back to Square One on McCormick Costs

HIL ANDERSON, SENIOR EDITOR
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Chicago, IL – Chicago’s convention industry and political leadership united last month to respond to the high-profile decision by one, if not two, major trade shows to leave McCormick Place due to cost considerations.

The Metropolitan Pier and Exposition Authority (MPEA) announced the formation of a task force it said would carry out a stem-to-stern review of the business practices at the nation’s largest convention center and push through any changes needed to improve Chicago’s competitiveness.

There was no word on a timetable for the review, but Chicago’s leadership vowed it would produce results. “We are trying to turn lemons into lemonade,” said MPEA Chair John Gates. “We get it, we understand our customers’ concerns and we are going to be more aggressive in finding a solution together.”

The panel of stakeholders, including show contractors, unions, the hospitality industry and a political leadership from the governor’s office on down, was formed due to a citywide sense of urgency brought on by the parting shots fired by the two departing shows.

The first defection was the Healthcare Information and Management Systems Society (HIMSS), which announced it had selected Las Vegas over Chicago for its 2012 Annual HIMSS Conference & Exhibition. H. Stephen Lieber, president and CEO of the association, did not specifically say that costs were the deciding factor. He said Las Vegas and Sands Expo Convention Center had won the booking “based on specific input from our members and exhibitors and our lengthy discussions with both cities.”

A lack of specifics in the HIMSS announcement was not the case on November 17 when the SPI: The Plastics Industry Trade Association announced that it was moving its triennial NPE trade show to Orlando in 2012. The association stated that moving from McCormick Place, the home of the show since 1971, would save the industry approximately $20 million and create a better event overall. “The lower costs, simpler work rules, and more-flexible logistics at the Orange County Convention Center will cut costs dramatically as well as enable SPI to build a more dynamic show by attracting new participants and encouraging bigger and better exhibits,” said John Effmann, chair of NPE2012.

Setback After Progress With Unions

The HIMSS and SPI announcements stung Chicago. The 2008 HIMSS Annual Conference & Exhibition, which spanned 407,200 net square feet of exhibit space, was ranked 46th in the Trade Show Executive Gold 100 directory. The SPI said the 2009 edition of NPE in June drew 1,851 exhibitors and totaled 977,650 square feet of paid exhibit space.

The news also came amid what had been a positive Fall in Chicago. The MPEA announced in September that the American Society of Clinical Oncology (ASCO) had agreed to hold its high-profile annual cancer conference at McCormick Place through 2019. Later that month, the MPEA reach an agreement with the International Brotherhood of Electrical Workers Local 134 to reduce its pool of electricians at McCormick Place from more than 150 down to 50 supervisors supplemented by an on-call workforce.

In July, the Trade Show Exhibitors Association (TSEA) awarded McCormick Place its Exhibitors’ Choice Award in the Best Convention Center category. But in the wake of the SPI announcement, TSEA issued a statement scolding Chicago as “a great city for exhibitors” that had been undone by high labor costs. “We hope the loss of these shows will motivate leaders in Chicago’s exhibition industry to adjust the cost of doing business so that they can compete on a level playing field with cities like Orlando and Las Vegas,” the statement said.

Other Costs Cited as Well

SPI said moving its trade show from McCormick Place to the Orange County Convention Center would reduce the drayage and rigging costs for its exhibitors by 19% –not a small sum considering the amount of heavy machinery that will be on display at NPE2012. The association also stated its utilities costs would be a whopping 48% lower in Orlando and travel and lodging would be roughly 20% lower.

SPI declined to elaborate on how it calculated the savings. An MPEA spokesperson told Trade Show Executive that the service charges for utilities at McCormick Place included water, materials and labor, as well as the base cost of the electricity consumed.

The MPEA also maintained that its facilities were not subsidized by government funding. Chief Executive Officer Juan Ochoa said that meant show revenues provided 100% of the agency’s budget. “We will look to revise our business model to determine how Chicago can be more competitive against other cities that have an advantage over us because their financial structure allows them to lower their costs and undercut Chicago’s pricing,” he said.

Reach Juan Ochoa at (312) 791-7500 or jochoa@mpea.com; Gene Sanders, senior vice president trade shows for SPI, at (202) 974-5250 or gsanders@plasticsindustry.org; H. Stephen Lieber at (312) 664-4467 or slieber@himss.org