Labor Costs: Low Rates Are Work of Many

By Vanessa VanderZanden -- Tradeshow Week, 6/28/2004

Everybody knows the cost of living continues to climb inexorably, but many in the tradeshow business can at least take comfort in the fact that labor rates seem to have reached a relative plateau.

Now in its 24th year, the Tradeshow Week Annual Survey of U.S. and Canadian Labor Rates (beginning on p. 10) this year indicates that the average cost of labor across the United States has remained essentially the same as it was last year. For instance, the average cost of a general labor decorator working during regular time went from $64.74 an hour last year to $64.83 this year, an increase of only 0.1 percent. The average cost per hour of a carpenter during regular time jumped from $65.98 last year to only $66.29 this year, a mere 0.5-percent increase.

These findings are rather unusual because, according to TSW Associate Publisher and Director of Research Services Michael Hughes, rates in the past have spiked an average of 5 to 10 percent a year. Yet, they come as little surprise to many in the industry who have worked tirelessly to keep labor costs down.

For instance, it was just this past October that the Pennsylvania Convention Center began operating under a customer satisfaction agreement that was intended to end labor disputes among the six trade unions that work in the facility. The Elliot Lewis Corp. was brought in to manage and unify the workforce, which had long suffered under a poor reputation. "While it isn't as simple as turning on a light switch, we are in a much better place now with the agreement," explained Patti Spaniak, public affairs manager with the Pennsylvania Convention Center Authority. "We continue to make progress, and maintain our commitment to provide excellent customer satisfaction to our customers," she went on.

With many convention centers planning expansion projects, "It's a trend, absolutely," said Jim Ellsworth, vice president of national sales and marketing with Champion Exposition Services in Bolingbrook, Ill. He pointed out that as nearby McCormick Place in Chicago continues to expand its facility, the city, union laborers, general contractors and facility managers who work in the building all need to sit down and discuss how to keep exhibitors happy to guarantee success. Metropolitan Pier & Exposition Authority CEO Leticia Peralta Davis called a summit meeting the first week of June, and Ellsworth said show managers and facility managers are becoming more upfront about labor problems.

In addition, Detroit's Cobo Conference/Exhibition Center recently caught flack from the Detroit Times for the high cost of its labor force, claiming that show managers had snubbed Cobo because of it. The newspaper reported as its source a survey by the Detroit Metro Convention & Visitors Bureau, but Renee Monforton, director of communications for the DMCVB, explained it was really more of an internal memo. "It was a working document," Monforton clarified. "It wasn't a published report at all."

Monforton added that high labor costs are only one part of the puzzle, with show managers citing a number of other reasons for choosing venues other than Cobo. Still, it underlines labor costs as a top concern for many cities in need of business travelers. Cobo has had a recent management change, and labor contract negotiations are still under discussion, to be resolved "sooner rather than later," according to Monforton.

Andrew Darmohraj, vice president and deputy managing director with the American Pet Products Manufacturers Assn., agreed that as a general trend, cities — and their labor forces — are doing what it takes to bring rates down and create a more cost-efficient labor force. He added that, while "labor rates won't be a make-or-break factor, it is one of three to four key things we look at for our site selection." The other considerations in deciding where to hold The APPMA Show include whether the facility has enough contiguous space and hotel rooms to hold the large event, and the relative attractiveness of the city.