Models & Money
The Economics Behind the Big Auto Shows Don’t necessarily trickle down
2008-01-16
By: Frank S. Washington

Auto shows generate big, big bucks. Detroit’s North American International Auto Show will ripple $500 million through the local economy. In New York, it was estimated that for every $1 million spent on producing the auto show there, $1.6 million in revenue was generated for local businesses.

In Chicago, which hosts the biggest auto show in terms of space, 1,700 professional carpenters, decorators, teamsters, riggers, electricians, cleaners, porters, crate handlers, stage hands and official contractor personnel help put together that show.

And the Windy City’s auto show is like most of the more than 100 automotive consumer, fleet and commercial shows held annually in the U.S., it’s a turnkey operation. Local dealer associations sponsor auto shows but they contract for the set up, dismantling and day-to-day operation of their shows. Contracts even include manning the turnstiles and depositing the daily receipts.

Meanwhile, automakers contract with outside companies to create, produce and supply every aspect (except the vehicles) of their auto show exhibits including the product specialists.

Here’s the beef. Most of the primary contractors, general contractors, sub contractors and small service businesses like audio and video firms, caterers, computer technology outfits, detailers, graphic artists, travel agents, florists, hair stylists and makeup  artists that work auto shows are white-owned. That would be just dandy – if all auto shows were held in mostly white Montana.

But the convention centers and exposition halls that host most auto shows are located in the nation’s urban centers. Go into any auto show and ethnic consumers abound. Yet businesses rooted in minority communities don’t benefit from the auto shows held in their midst .

In other words, the auto show production industry is one of the last bastions where the good ole boy system in the extreme is still at work.

Gwen Thomas, CEO of Promotions Unlimited 2000 struggled for almost 20 years before she was able to crack a billion dollar cottage industry. Thomas didn’t get her contract because of GM’s supplier diversity program. She got her contract because of her contact with the boss. However, Thomas notes that “a lot of the people at the top of a company may have a passion about diversity but they don’t really know that the people below them are not exercising diversity.

Top executives at all of the major auto companies have been on a crusade to be more inclusive across their businesses which include suppliers and that encompasses auto shows. “

Thomas’ Detroit-based company provides models for event marketing campaigns. And it wasn’t until she bumped into the head of General Motors’ global purchasing operation last year and told him of her struggle that she was able to get an automotive contract. Thomas now provides product specialists (24 models) that work auto shows for GM in seven cities. The contract is worth about $400,000.

That happened, Thomas said, at Rainbow/PUSH’s Annual Automotive Conference two years ago, when she stated that she would not vote for a bond initiative to expand Detroit’s Cobo Hall.

“Detroit is 85 percent African American and African American companies are not getting any of the business from (Detroit’s) North American International Auto Show which is the largest trade show in the state,” she said. “So who would be the benefactors of an expanded Cobo Hall?”

This issue has been brought up over the year by Rainbow/PUSH and other industry followers, but apparently was lost in a relative jumble of  other significant diversity issues plaguing the auto industry. However, Thomas has struck upon a possible wedge to open up the auto show industry to diversification.

Most large convention and exposition facilities are publicly financed and managed facilities. In effect, they are government owned buildings. Why then Thomas reasons, shouldn’t it be illegal for any group that practices discrimination by intent or effect, to lease government property?

A challenge along those lines would most likely get the attention of automotive manufacturers and dealers alike since the intent of auto shows is to drive consumers to dealerships where they can purchase them. Threatening the money always gets results.

Frank S. Washington is managing partner/editor of AboutThatCar.com