In yesterday’s excerpt from my interview with Jay Walder, the MTA head and I spoke about the economic pressures which the authority is currently facing. Walder spoke at length about avoiding future service cuts and ensuring that money promised to and raised for the MTA actually finds its way into the authority’s coffers.
Today, we pick up the thread of the MTA finances but with a different bend. One of Walder’s biggest failings — and he’ll admit it himself — has been management’s strenuous relationship with labor. The TWU, the authority’s largest union which is currently suffering through dissension in the ranks, has not shown a willingness to compromise on benefits, pensions or raises, and with contract negotiations on tap for late 2011, the MTA is searching for ways to rein in runaway labor costs.
Meanwhile, while maintaining spending levels are a priority, so too are increasing revenues. To do so without service cuts or fare hikes, the MTA has looked to non-traditional sources of advertising. By offering station branding and full train wraps, the authority can drive marketing opportunities and generate more dollars to fill its depleted coffer. Even station names are for sale.
Second Ave. Sagas: One of the assumptions in the 2011 budget projections, as far as I can tell, is that the labor costs won’t really be increasing over the next two years. Do you think that that’s a realistic and obtainable goal?
I strongly believe that labor has to be part of the solution. That is a view that has been stated by the governor-elect. It’s a view that has been stated by the mayor.
Jay Walder: I’m actually very proud of what the MTA has achieved in reducing costs so far, but an area where I’m terribly disappointed that we clearly have not achieved what we’re trying to do is in forming partnerships with our labor unions, to be able to look at this and in essence, say that we’re talking about a historically difficult time in which businesses and families all across the state are struggling. One might have hoped that we might have found the context to stand together with our workforce, shoulder to shoulder and show that we were able to do things differently, that we were able to find different productivity. We recognize that some of the arrangements that had existed for long periods of time, even if you don’t change them for existing employees, need to change on a going-forward basis. We didn’t find a way to be able to do that.
Having said that, I strongly believe that labor has to be part of the solution. That is a view that has been stated by the governor-elect. It’s a view that has been stated by the mayor. People are saying, “Look, we can’t do this apart from labor. We have to do this with labor.” Some people point to the period in the 1970s when the city was in the midst of its financial crisis, and labor and management did stand together and did try to find a solution to be able to deal with that crisis. It allowed the city to get back on its feet and prosper and grow. I think we’re at that same sort of time.
Do I believe that it is possible to do it? Yes. It is easy to do it? Obviously not. We haven’t succeeded to this point. I’d be kidding you if I said that. But I do think it’s possible to do it.
The point that we made is not that our workforce should not be compensated; it’s to say that you really should be tying compensation into the achievement of productivity improvements. Everybody I’ve talked to inside and outside of our organization believes productivity improvements are possible. What we need to do is bring it to the table, to stand together to be able to do this and to say, “Hey, if we’re really trying to figure out how to do this, to protect our transit system, to continue to have jobs for people but to show people that we are really using every dollar wisely, how do we do it together?” I’m not giving up on that. I haven’t given up on that. I believe it is achievable. I think we’ll get there.
Second Ave. Sagas: The Chicago naming rights deal with Apple has gotten a decent amount of attention over the last few weeks. I know the Barclays deal was the first major MTA naming rights deal. Are there other efforts being made to identify naming partners? Is there a push to look out of the box beyond the traditional sources of revenue?
Walder: I wasn’t here at the time that the Citi Field issues came up, but I gather we didn’t succeed in that. I think the Barclays deal is the first time we have succeeded in doing something of that nature. Should we be thinking out of the box? What are the ways we should bring revenue in? The answer is yes.
I hope you’ll think of our advertising contracts in that way. What you saw this year were some real efforts to break down some of the barriers. We’ve done some really neat things in terms of advertising that are bringing real money in, and I think that the win-win on this is where you’re doing some things that both improve the ambiance of the subway environment and the bus environment but also raise some money for the transit system. My favorite one was the wrap on the train for TBS with the television screens. I think that’s a great example of breaking down some barrriers. We’re bringing about $100 million in doing that.
Let me give you another example which I just looked at this morning which I really like. You’ll look at this and say it’s not revolutionary but I don’t think you need revolutionary. We just opened up a Bank of American ATM location inside the subway station at 42nd St. and 8th Ave. in the mezzanine level above the 8th Ave. Line. Why do I like it so much? Because it’s bringing into the subway environment the type of retail presentation that we’re used to above ground. In other words, you look at this and you’ll say this doesn’t look very different from another type of ATM space that I might go into. But that’s exactly my point. What’s that doing is raising money for the subway but it’s also actually making people feel that this is what I see underground, it is the way I do it, it is bringing me that kind of retail that I want to see. I thought it was terrific because it was doing that.
All of these things come together. Can we make some money on some of these initiatives? Yes. We will make more money if we can improve the retail environment in the subway system, get greater value out of the spaces that we have there, improve the ambiance and the customer satisfaction. We’ll make more money than all of the naming rights deals that you’re talking about.
These other things are much more valuable to us if we can find a way to do that. The wrap that we did — the Target wrap — was terrific. There are lots of things you’re seeing this year that are breaking down some barriers.
I also believe that the way we incorporate technology into our stations also provides an opportunity to be able to increase revenue flow. In that case, we might well be able to actually meet three objectives. We can make some money off of the way we bring digital into our stations. We can be improving ambiance, and we may well come up with some ways to be able to provide useful real-time information to customers that follows and is all part of the same goal. If we can do those three things, than we really knock the ball out of the park.
Still to come, Jay Walder discusses capital expansion plans, the Second Ave. Subway and next-generation fare payment technologies.