Perspective on this week’s surprise announcement that Caterpillar is leaving Illinois, its home for more than a century, comes to today’s Juice from Crain’s columnist Joe Cahill:
Stop corporate defections now
By Joe Cahill
There’s an old saying in journalism that two examples are a coincidence, and three is a trend.
Based on that principle, Illinois is perilously close to a trend of major corporate defections. Caterpillar announced Tuesday that it plans to move its headquarters to Texas after nearly a century in Illinois. Long based in Peoria, the heavy equipment manufacturer moved to suburban Deerfield just five years ago.
Caterpillar’s bombshell comes barely a month after a Dear John letter from Boeing. The aerospace giant is moving its headquarters from Chicago to northern Virginia.
EARLIER: Caterpillar HQ move sets off shock waves
Both moves involve the loss of a few hundred corporate headquarters jobs. Far more important is the message they send and their impact on thinking in executive suites around town. Corporate executives, like most humans, are influenced by the actions of others in similar positions.
One headquarters move out of Chicago gets their attention. Another gets them thinking. A third makes them wonder if they’re missing out on something.
Illinois has a lot to lose if more major companies follow the lead of Boeing and Caterpillar. Big corporate headquarters have always been a cornerstone of our economy. When we lose marquee companies, our reputation as a business center suffers.
We’ve been down this road before. In the late 1990s, Chicago lost a string of major hometown corporations to takeovers. Amoco, Ameritech, Inland Steel and others succumbed to buyouts that cost Chicago well-paid jobs and international prestige while putting decisions about capital investment in the hands of out-of-town interests with no stake in the region’s economic future.
City and state leaders responded with an all-out effort to land Boeing’s headquarters when the company decided to leave Seattle. They won, restoring Chicago’s reputation and ushering in a golden age of corporate moves to the city.
It’s time for another such effort. Chicago needs to stop the trickle of corporate defections before it becomes a flood.
EDITORIAL: Boeing’s Chicago era ends, not with a bang but a whimper
The recent departures are even more unsettling than headquarters losses of the ’90s. Most of those were the result of takeovers, which usually move the combined company’s headquarters to the acquirer’s base.
Boeing’s and Caterpillar’s moves are voluntary, reflecting the judgment of executives that Illinois isn’t the best place for their companies. That’s a stinging indictment of the local business environment.
I hope our political leaders realize that. Gov. J.B. Pritzker tried to minimize the Caterpillar move as merely the loss of 240 jobs. He emphasized the fact that Caterpillar still has tens of thousands of manufacturing employees here and touted the number of small businesses in Illinois.
If Pritzker thinks those manufacturing jobs are secure, he’s kidding himself. Moving a headquarters out of a state makes it easier to move factory jobs eventually; company bosses are insulated from the local fallout.
After Boeing moved to Chicago, it shifted manufacturing jobs from Seattle to South Carolina. Chicago could find itself on the wrong end of that equation this time. Caterpillar has been opening new plants in southern states, and recently moved one of its divisions to Texas.
As for small businesses, Pritzker should remember why they’re here. Big companies often spawn small ones, and generate business for constellations of small suppliers. And a state’s business climate matters just as much to small businesses as Fortune 500 corporations.
Caterpillar and Boeing haven’t said what they found lacking in Illinois’ business climate. But it’s not hard to guess—high taxes, fiscal disarray and rising crime come immediately to mind.
Caterpillar’s comments on Texas were telling. The company told Bloomberg the move would improve access to talent and praised Dallas’ two airports.
That should puncture any complacency about Illinois’ assets. We pride ourselves on workforce talent and airport connections, among other things. Apparently they’re not as unique as we thought.
The notion that blue-state social policies are an economic drawing card also took a hit. Caterpillar and Boeing are moving to states where progressive priorities are under attack.
Illinois politicians should take these two setbacks as the wake-up call they are. They can’t assume that Illinois’ hold on any corporate headquarters is secure. Cat’s move shows that even companies with deep roots here can suddenly bolt.
Pritzker needs to reach out to the state’s biggest employers and find out if any are considering leaving. If so, he should ask what it will take to keep them—and try to provide it.
More broadly, government officials should talk to companies large and small about the difficulties of doing business here. Based on those conversations, politicians should formulate a plan to make Illinois the best state for business.
It will take an all-hands effort, involving state and local leaders. But Illinois has done it before, to win Boeing’s headquarters. We can do it again.
