Illinois facing jobs assault from other states

Back to TopCommentsE-mailPrintBookmark and Share

Even as Illinois Gov. Pat Quinn hailed the start of a construction project Tuesday that will create 1,200 short-term jobs, Indiana and South Dakota kept up a push by other states to chip away at Illinois' vulnerable economic image and lure jobs away.

Quinn announced a $146 million infrastructure project at a Ford Motor Co. assembly plant on Chicago's southeast side, which he said would ease rail and vehicle congestion. But Blue Island, Ill.-based Modern Forge Cos., which makes truck, RV and aerospace parts, at the same time announced plans to expand in Indiana and possibly leave Illinois entirely. It plans to hire up to 240 people in permanent jobs over the next three years.

"I don't think it takes a genius to figure out the business climate in Indiana is better than Illinois, and that's been coming on for a long time," said Modern Forge general manager Patrick Thompson, who said he expects a large number of the company's 275 Blue Island employees to take jobs 35 miles east in Merrillville. The company will close the 97-year-old Blue Island plant if its new facility does well, he said.

"It's not just about state income taxes," Thompson added, citing worker's compensation costs and other factors.

The move fueled more debate over Illinois' business climate, and how much its recent corporate and personal income tax increases have damaged its image among business owners. While some Illinois business leaders commented that states in the area should stop bickering and work to develop a regional economy, Indiana's secretary of commerce said Illinois' high taxes and battered image make that unlikely.

Illinois' corporate tax-rate increase, from 4.8 to 7 percent, was intended to help ease the state government's multibillion-dollar budget deficit. But it made the state a target for Indiana, New Jersey and other states trying to lure businesses away. Over the past month, a smiling South Dakota Gov. Dennis Daugaard has joined the dogpile, asking via direct-mail postcards sent to businesses in Illinois, Minnesota and California, "Tired of taxes? Call me."

Quinn, for his part, talks up Illinois' successful bid last year to keep Navistar International Corp.'s headquarters in state, and bring about 1,000 jobs with it from Indiana.

For months now, though, a number of Illinois businesses have said they just might leave if the state doesn't listen to their complaints.

Quinn, as he announced the Chicago project, said Illinois made Modern Forge an offer to stay and maintained that the state remains the cornerstone of the Midwest's economy.

"I wish they would stay here. We did make, I thought, a generous offer to them, but it's their choice," he said. "We're a regional economy in the Midwest and I think it's very important to understand that Illinois is the capital of the Midwest and always will be, and we are the biggest economy."

Illinois Chamber of Commerce President Doug Whitley has been a harsh critic of the income tax increase, but he said regional cooperation makes far more sense than the scrambling states are doing now to lure jobs from each other. It's an argument many economists make, too, saying that working to draw companies from one location to another doesn't create new jobs.

"The reality is, our economies are very much intertwined; when a plant is built in Indiana there's a very good likelihood that they're getting products and they're getting components from Illinois," Whitley said. "It is in Illinois' interests to have a better relationship with our neighboring states."

Indiana Secretary of Commerce Mitch Roob, though, said his state sees no benefit in trying to work with its higher-tax neighbor — particularly given how its image has suffered since the tax increase.

"We've got to differentiate ourselves nationally and internationally from Illinois," he said. "It would be better for us if Illinois were perceived as a business friendly state. ... As long as Illinois is not a competitive location from a tax standpoint, there's no way we can market with them."

Indiana Gov. Mitch Daniels, who was in Merrillville on Tuesday for Modern Forge's announcement, has said state economic development officials have met with more than a dozen unhappy Illinois companies since the tax increase in January. State officials have said that, as of earlier this month, 13 Illinois companies have pledged to move about 1,000 jobs to Indiana this year.

After hearing companies like Caterpillar Inc. complain about the state's business environment and others like CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, threaten to leave, Illinois lawmakers have been holding hearings on the tax increase. The third was held Tuesday in Springfield, with one more planned later in Marion.

A spokeswoman for Senate President John Cullerton, who called the hearings, said he won't comment on what — if anything — could come from the hearings until after they're finished.

No surprise, business owners and trade groups have told lawmakers they'd like the tax rate to be dropped.

"Illinois should never have a higher corporate tax rate than our neighboring states," Whitley said.

Whitley doesn't expect radical changes from the hearings, but he is optimistic that the bait Indiana, South Dakota and others are throwing in the water may eventually have an unintended effect in Illinois.

"I think that the other states that are doing that are doing us a favor in that they're raising the consciousness of Illinois politicians," he said. "They have to be concerned about the business climate in Illinois that would cause a company to want to be someplace other than Illinois."


  • Quality Of Life
    It would seem a regional approach would produce better results. All we are doing is spending taxpayer dollars on incentives that are not produceing new jobs. We are picking low hanging fruit harvesting each others jobs. We should also look at quality of life issues. Yes we have a lower tax rate but somtimes you get what you pay for. Surly we do not want to compare ourselves with Illinois line item by line item. It seems to me that spending $$ on highway signs and throwing gasoline on the fire at every news conference is smalltownish and lacks true leadership. With the recent headlines of Department of Education taking over schools in Gary and the inability of some school systems to provide basic bus transportation because of property tax caps... Do you think that we should really be blowing our own horn.
  • False data
    It may seem like Indiana is "winning" in the short term. What is really happening is that we lower our taxes for businesses and then pay them money to locate here when we should be focusing on the midwest as a region for job potential. We pour huge sums of money into shifting jobs around these few states instead of trying to capture foreign investment. Does a weak Illinois really make a stronger Indiana? Does a struggling Michigan really make our state seem so much better. The truth is, the real investment from other countries views us as a region. They here horror stories of the declining midwest and by laughing at the struggles of our similar states, we promote that perception. Mitch wouod have you believe we are doing well, but we are simply paying money for the same over all product.
  • Raise taxes
    What's the problem? According to the Democrates and the Pres. we all want our taxes raised?

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I think the poster was being sarcastic and only posting or making fun of what is usually posted on here about anything being built in BR or d'town for that matter.

  2. Great news IRL fans: TURBO the IMS sanctioned movie about slugs running the Indy 500 has caught the Securities and Exchange Commission because Dreamworks had to take a $132MILLION write down...because the movie was such a flop. See, the Indy/IMS magic soiled another pair of drawers. Bwahahahahahaha! How's CARTOWN doing? HAHAHAHA...Indy is for losers.

  3. So disappointed in WIBC. This is the last straw to lose a good local morning program. I used to be able to rely on WIBC to give me good local information, news, weather and traffic on my 45 minute commute.Two incidents when I needed local, accurate information regarding severe weather were the first signs I could not now rely on WIBC. I work weekend 12 hour nights for a downtown hospital. This past winter when we had the worst snowfall in my 50 years of life, I came home on a Sunday morning, went to sleep (because I was to go back in Sunday night for another 12 hour shift), and woke up around 1 p.m. to a house with no electricity. I keep an old battery powered radio around and turned on WIBC to see what was going on with the winter storm and the roads and the power outage. Sigh. Only policital stuff. Not even a break in to update on the winter storm warning. The second weather incident occurred when I was driving home during a severe thunderstorm a few months ago. I had already gotten a call from my husband that a tornado warning was just southwest of where I had been. I turned to WIBC to find out what direction the storm was headed so I could figure out a route home, only to find Rush on the air, and again, no breaking away from this stupidity to give me information. Thank God for my phone, which gave me the warning that I was driving in an area where a tornado was seen. Thanks for nothing WIBC. Good luck to you, Steve! We need more of you and not the politics of hatred that WIBC wants to shove at us. Good thing I have Satellite radio.

  4. I read the retail roundup article and tried Burritos and Beers tonight. I'm glad I did, for the food was great. Fresh authentic Mexican food. Great seasoning on the carne asada. A must try!!! Thanks for sharing.

  5. John, unfortunately CTRWD wants to put the tank(s) right next to a nature preserve and at the southern entrance to Carmel off of Keystone. Not exactly the kind of message you want to send to residents and visitors (come see our tanks as you enter our city and we build stuff in nature preserves...